A former president of the McLean Bank who was forced to resign in 1974 following disclosure of more than $2.6 million of bank loans made in a fraudulent wine scheme has been indicted by a federal grand jury on 14 counts of embezzlement and misuse of bank funds.
Walter P. Johnson was charged in the indictment handed down Tuesday in U.S. District Court in Alexandria with the alleged misuse of $145,700 and embezzlement of $26,500 from the bank in activities unrelated to the wine scheme.
In addition, Johnson is charged with allegedly securing a $20,000 loan for himself in the name of John H. Lange, after threatening Lange with "adverse economic consequences and damage" if he did not sign the loan note. Lange owed the McLean Bank money at the time.
The indictment further charges that Johnson fradulently concealed the loans from the bank's loan committee and its board of directors. The grand jury charged that Johnson held an interest in the N&A Equipment Co., which was the recipient of some of the loans.
The count charging extortion of Lange's signature is a violation of the Hobbs Act which carries a penalty of up to $10,000 or both. The other 13 counts each carry penalties of a maximum five years imprisonment, a fine up to $5,000 or both.
The fraudlent wine scheme involved about 400 investors. A $1.4 million suit brought by the bank against Johnson charged that the former bank president had been involved in making "dishonest or fraudulent" loans to persons investing in the wine scheme. The suit was settled in December 1975 for $950.000.
The suit also charges that Johnson made most of the loans without the bank's knowledge. In addition, the suit said that despite warnings by the Federal Insurance Deposit Corp., which regulates banks and insures depositors against loss. Johnson continued to make almost $1 million more in loans before the schemes lapsed in June, 1974.
The pyramid wine scheme was discovered by the Securities and Exchanged Commission and amounted to a total investment of $25 million from all over the country, according to the SEC.
A pyramid scheme is one in which a new investor's money is used to pay off earlier investors.
Robert Dale Johnson (who is not related to the former bank president) was subsequently convicted in connection with the wine scheme and sentenced to six years in a federal penitentary.