By Lori Ehde
Fraudulent lending and other illegal activities cost the Jasper State Bank $2.7 million and forced its sale last summer, according to a federal grand jury indictment last week.
Former co-owner Keith G. Eitreim and former head teller Joyce Y. Foster were indicted Wednesday, Jan. 15, for illegal activities alleged to have taken place between July 2000 and last March.
Eitreim, 46, was charged with bank fraud, false bank entry and misapplication of bank funds.
He’s specifically accused of making $800,000 in fraudulent loans to several bank customers, creating false account entries to hide his activities and using loan collateral to buy a car.
He co-owned the Jasper State Bank with his brother-in-law David Smith until last May. Smith remains bank president and has not been implicated in any wrongdoing.
Foster, 56, faces fraud charges for allegedly padding the inventory for Wall Street Motor Co., a used-car dealership in Jasper, so it could qualify for more bank financing.
According to the indictment, filed in U.S. District Court, Minneapolis, Foster also falsified delinquent loan accounts at Eitreim’s direction.
When bank regulators discovered the financial irregularities last May, Eitreim resigned from all his bank positions and Foster was placed on administrative leave in July.
Jasper natives Chuck Hey, Sioux Falls, and Bill Sexton, Scottsdale, Ariz., reportedly formed a new bank holding company, Pipestone County Bancorp, and have purchased the bank from its former parent company, Jasper Investment Co., last June .
Pipestone County Bancorp also put $3 million in the bank to prevent its failure, according to the indictment.
Eitreim and Foster each face up to 30 years in prison and a $1 million fine for each count. They were scheduled to appear in Minneapolis early this week.
