Former Westar Energy CEO David Wittig on Friday was sentenced by U.S. District Judge Julie Robinson to 51 months in federal prison, without parole, to be followed by three years of supervised release, and ordered to pay a $1 million fine after Wittig last summer was found guilty of one count of conspiracy, four counts of making false bank entries and one count of money laundering.

Wittig will be allowed to self-surrender to the Bureau of Prisons. The court took under advisement Wittig’s request to remain on bail pending appeal.

According to U.S. Attorney Eric F. Melgren’s office in Kansas, Wittig and his banker, former Capital City Bank CEO Clinton Odell Weidner II, who was also indicted, falsified bank documents to obtain $1.5 million to invest in Arizona real estate. Wittig was convicted in a 10-day jury trial.

According to the indictment, starting on April 3, 2001, Weidner and Wittig agreed to conceal facts regarding an extension of credit to Wittig of $1.5 million by Weidner, as an officer of Capital City Bank. While documents state the loan was being used “to purchase stock and make business investments” and to “complete the final renovation costs of the Landon mansion as well as their personal funds,” it actually was used by Weidner to make a down payment on a real estate development in Scottsdale, AZ, in which Weidner would thus acquire a 50% interest.

“The defendants submitted and caused to be submitted deceptive personal financial statements to Capital City Bank to conceal the true beneficiary of the $1.5 million in loan proceeds,” the indictment said. “[They] caused deceptive loan records to be submitted to and maintained by Capital City Bank. [And they] falsified and caused to be falsified a loan proposal to increase Wittig’s line of credit by $1.5 million…In truth and in fact, as the defendants well knew, the $1.5 million was going to be used to make the down payment on a real estate development in Scottsdale, AZ.”

Weidner was ultimately found guilty of one count of conspiracy, two counts of making false bank entries, one count of money laundering and one count of forfeiture of $1.5 million. Weidner entered a guilty plea on June 30, 2003, to two counts of making false bank entries.

The U.S. attorney on Friday said that Weidner was sentenced on Feb. 26, 2004 by Robinson to 78 months in federal prison, without parole, to be followed by three years of supervised release. Weidner was further ordered to forfeit his interest in the real estate development in Scottsdale, AZ. Bail was denied pending appeal, but Weidner will be allowed to self-surrender to the Bureau of Prisons.

Wittig and Douglas T. Lake, ex-executive vice president, were indicted in December by a federal grand jury on 40 counts of conspiracy, fraud and related criminal charges (see Daily GPI, Dec. 5, 2003).

A grand jury in Topeka, KS, charged Wittig and Lake with one count of conspiracy to defraud the Kansas-based energy company, 14 counts of skirting internal accounting controls and falsifying books and records, eight counts of wire fraud, 10 counts of submitting false statements to federal agencies and six counts of engaging in illegal money transactions.

This indictment charged that while Westar Energy’s stock plunged, Wittig and Lake reaped more than $25 million and $7 million, respectively, in salary and benefits under “false pretenses” between 1995 and 2002; sought to “systematically loot” the company’s assets and money; and flouted internal controls that were in place to ensure accountability.

It further alleged that Wittig and Lake set up a subsidiary, Westar Industries Inc., for the express purpose of looting the assets of the utility and leaving the debt behind for ratepayers, and used corporate aircraft for their personal benefit. The two men also were accused of destroying or attempting to destroy company records to hinder the grand jury investigation into their activities.

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