Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, January 23, 1992 TAG: 9201230152
SECTION: VIRGINIA PAGE: B3 EDITION: METRO
SOURCE: DAVID M. POOLE STAFF WRITER
DATELINE: LENGTH: Medium
EX-CLUB OWNER PLEADS GUILTY TO BANK BRIBE
A former Roanoke County nightclub owner pleaded guilty Wednesday to bribing a bank loan officer and agreed to cooperate with an FBI investigation of bank fraud in the Roanoke Valley.Joseph Gray Marshall of Plantation Road admitted participating in a "straw-man" loan scheme that funneled more than $400,000 to a proposed hotel in North Carolina during 1987 and 1988.
Prosecutors hope Marshall's testimony will pressure another partner in the hotel deal, Richard A. Hess, to cooperate with authorities.
Investigators believe Hess, a former loan broker, has knowledge of questionable loans at several area banks and fraudulent land sales at Smith Mountain Lake.
Hess acknowledged Wednesday that he expected to be indicted in connection with the straw-man loans for the proposed hotel in Mount Airy, N.C.
Hess said he has met with the FBI on several occasions - most recently Monday - to discuss a plea bargain.
But Hess said he would not cooperate without certain written assurances from prosecutors.
Hess said he could not understand why he had emerged as the main suspect in the FBI's two-year investigation of bank fraud.
"I just believe somewhere along the line they're trying to cover some of this stuff up," Hess said.
So far, criminal charges have been limited to an ill-fated hotel that four partners hoped to build at an Interstate 77 interchange near Mount Airy, N.C.
FBI agent Ronald Buckley testified Wednesday that the hotel was a risky, speculative venture that did not qualify for conventional bank financing.
As a result, the partners used a "straw-man" loan scheme to finance the deal, Buckley said.
Under the scheme, the partners recruited about 22 straw-man investors to obtain loans in their own names at First Virginia Bank-Southwest totaling $400,000. The straw men gave the money to the hotel partners, who promised to pay off the loans and also pay them a profit, Buckley said.
Marshall, a former owner of the now-defunct Barn Dinner Theatre, testified Wednesday that he gave a First Virginia loan officer who approved the loans about $40,000 in bribes.
"We agreed that we would pay a `commission' to Mr. Hartman for loans to each of these so-called investors," Marshall, 58, said.
Thomas E. Hartman, a former senior vice president at First Virginia, has pleaded guilty to bank fraud and conspiracy and has agreed to testify for the prosecution.
Marshall and Hartman each face a maximum sentence of 25 years in prison and a fine of $1,250,000.