Sean Clark Cutting, the former CEO of Sonoma Valley Bank, and Brian Scott Melland, the former chief loan officer, have been sentenced to 100 months in prison each for their roles in a massive bank fraud scheme. Cutting and Melland were convicted in December 2017 of conspiracy, bank fraud, wire fraud, money laundering, falsifying bank records, lying to bank regulators, and other crimes. Their crimes directly caused the failure of the bank, resulting in at least $47 million in losses for taxpayers and other victims.
The bank’s regulators at the FDIC, the California Department of Financial Institutions (DFI), and the Troubled Asset Relief Program (TARP) were also victims of the scheme. The defendants used ‘straw’ or nominee borrowers to make excessive and illegal loans to real estate developer Bijan Madjlessi for projects in Santa Rosa and Petaluma, California.
David John Lonich, the attorney for Madjlessi, was also sentenced to 80 months in prison for his role in the scheme. Lonich was convicted of conspiracy, bank fraud, wire fraud, attempted obstruction of justice, and other offenses. The convictions and sentences followed an eight-week trial before the Honorable Susan Illston, U.S. District Judge.
Acting U.S. Attorney Alex G. Tse praised the significant sentences, saying that senior bank executives and corrupt attorneys who help them must always be held accountable for threatening the safety and soundness of federally insured banks. SIGTARP Special Inspector General Christy Romero commended the law enforcement partners for bringing accountability and justice to the case.
The evidence at trial demonstrated that Cutting, Melland, and Lonich were involved in multiple schemes to defraud numerous financial institutions. Their crimes caused losses to taxpayers of over $47 million, as well as to the FDIC (approximately $39.18 million) and to TARP (approximately $8.65 million) of the United States Treasury. The shareholders of Sonoma Valley Bank also suffered losses.
The sentencing marks a significant victory for law enforcement and regulators, who worked tirelessly to bring the defendants to justice. The case serves as a reminder of the importance of holding senior bank executives and corrupt attorneys accountable for their actions.
The defendants’ crimes have had far-reaching consequences, including the failure of Sonoma Valley Bank and the loss of trust in the banking system. The significant sentences handed down in this case are a step towards restoring that trust and holding those responsible accountable for their actions.
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Key Facts
- State: California
- Category: Fraud & Financial Crimes|White Collar Crime
- Source: DOJ Press Release â†â€â€
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