Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, September 6, 1995                   TAG: 9509060072
SECTION: VIRGINIA                    PAGE: C-1   EDITION: METRO 
SOURCE: LAURENCE HAMMACK STAFF WRITER
DATELINE:                                 LENGTH: Medium

FORMER BANK PRESIDENT GETS 13 MONTHS FOR LOAN SWITCH

Gary A. Peck, who resigned as president of First Security Bank four months before it was shut down by federal regulators in 1991, pleaded guilty earlier to money laundering.

Peck admitted that he arranged a $40,000 loan for a businessman who owed him money. He then converted almost $15,000 of the money into a cashier's check that he used to pay off two outstanding loans he had at another Roanoke bank, according to earlier testimony.

Federal law prohibits a banker from arranging a loan in which he or she gets part of the proceeds; the bank was told the loan was for construction expenses.

At the hearing Tuesday in U.S. District Court in Roanoke, Judge James Turk said Peck's crime did not meet the more serious definition of money laundering, and rejected sentencing guidelines that set punishment at 22 to 33 months.

Turk said a more serious example of money laundering would be a drug dealer concealing profits. The judge also noted that Peck has cooperated with federal prosecutors in a continuing investigation of First Security Bank.

"I'm trying to be as lenient with you as I possibly can, under the circumstances," the judge told Peck. He gave Peck until Oct. 2 to report to a federal prison in West Virginia.

Peck had asked the judge to give him probation and "let me move on with my life." He said he already had been "greatly punished" by having to put his life on hold during the four-year investigation, and by "the humiliation of being labeled a felon."

The illegal loan was made in 1989 - one month after Peck became president of First Security Bank.

After arranging the $40,000 loan, Peck took $14,966.80 out of it to pay off two loans he had at Sovran Bank, the predecessor to NationsBank. He since has paid the money back, but was ordered Tuesday to pay a $5,000 fine.

First Security Bank was shut down by federal regulators in May 1991.

Federal officials continue to investigate the bank's collapse, and Assistant U.S. Attorney Jennie Waering said Tuesday that additional charges are likely.

So far, the only two people to be charged have been Peck and another bank officer, Thomas E. Hartman, who pleaded guilty to accepting bribes in 1992.

Peck said he had been cooperating with federal investigators as they continue to look into the failed bank. "I have told the truth and done everything in my power to help the government," he said.

But Ron Buckley, an FBI special agent, testified that most of the information Peck has provided has been of little use in the investigation. For that reason, prosecutors did not ask that Peck receive a reduced sentence for his cooperation.

"We think it's a very harsh punishment for an incident that occurred some six years ago," defense attorney Guy Harbert said of Peck's sentence. "But we accept the judgment of the court."