One of the two men who masterminded a loan fraud scheme that crippled the Bank of Lancaster County was sentenced Monday to 15 years in federal prison, U.S. Attorney Zane Memeger said.
Joseph M. Braas, 46, of Lititz, pleaded guilty in December to conspiracy and mail fraud charges. His co-defendant Michael J. Schlager is scheduled for sentencing today; six other defendants are to be sentenced between now and April.
Braas was the chief operating officer of Equipment Finance, known as EFI, a company that provided loans to loggers. Sterling Financial Corp., the parent of Bank of Lancaster County, acquired EFI in 2002 and made it a subsidiary of the bank.
From 2001 to 2007, Braas and Schlager ran a conspiracy that created fictitious loans through EFI and concealed real loans that went bad, federal prosecutors said. The scheme cost EFI about $53 million and led to Sterling’s liquidation, said Memeger, who serves in Pennsylvania’s Eastern District.
Braas was ordered to repay the $53 million as part of his sentence.
PNC Bank took over Bank of Lancaster County in 2008.