15-Year Prison Sentence for Man Involved in $12 Million Credit Union & Bank Fraud

A 39-year-old Alabama man, Christopher A. Montalbano, was sentenced to 15 years in federal prison for running a fraudulent loan scheme with his 77-year-old father Gus Montalbano, stealing nearly $12 million from credit unions and banks.

From 2016 to 2020, the Montalbanos’ crimes victimized five credit unions and nine banks in several states, according to prosecutors for the Northern District of Alabama in Birmingham.

In addition to his prison sentence, U.S. District Judge Annemarie C. Axon ordered Christopher Montalbano last month to pay $11,924,471 in restitution. He pleaded guilty to conspiracy to commit bank fraud, bank fraud and money laundering in November 2021, court documents showed.

His father pleaded guilty to conspiracy to commit bank fraud and is scheduled for sentencing in August.

Prosecutors said Christopher Montalbano used shell companies to obtain millions of dollars in loans by submitting phony information and documentation to the financial institutions on more than 140 loans. He used loan funds to pay for an extravagant lifestyle, which included traveling on a private jet, employing private pilots and a personal assistant, purchasing multiple high-end vehicles including Lamborghinis and Ferraris, and buying multiple properties, including a home in a gated community, a lake house and farm land, prosecutors said.

Three of the five credit unions identified in court documents wrote letters to Judge Axon before Christopher Montalbano was sentenced.

Jamie Payton, president/CEO of the $177 million Heritage South Credit Union, wrote that the Sylacauga, Ala.-based credit union was made aware in February 2018 of some inconsistencies with Christopher Montalbano’s collateral and began to review each of his loans.

“The balances for personal loans and loans in the business entities totaled $591,424,” Payton wrote. “We were able to collect payments over a period of time but ended with a charge-off amount of $230,913. We had to use numerous resources during this time and the amount of the charge-off was significant for our financial institution. We ask you to please take this into consideration with the defendant’s sentencing.”

Timothy Hollern, senior fraud investigator for the $35.3 billion PenFed Credit Union in Tysons, Va., said in a letter that the fraudulent actions by the Montalbanos caused the credit union to suffer a significant loss of more than $300,000.

“Unfortunately, fraud losses, such as this large loss caused by the defendants, have a direct impact on PenFed’s operating expenses and the credit union’s ability to serve each of our members efficiently,” Hollern wrote. “When considering sentencing in this case, please bear in mind that not just PenFed as a whole is a victim, but each of our honest members as victims as well.”

In addition to Heritage South and PenFed, Jessica Watson, fraud investigations supervisor for the $15.3 billion Alliant Credit Union informed Judge Axon that the Chicago-based credit union suffered a loss of $370,000 from fraudulent loans that were used by Gus Montalbano to buy a Mercedes, Land Rover, Corvette and Mastercraft boat and trailer, while his son received phony loans to purchase a Tesla and Mastercraft boat and trailer.

Other credit unions victimized were the $182 million AlaTrust Credit Union in Hoover, Ala., and the $4.4 billion Connexus Credit Union in Wausau, Wis., court records showed.

Banks victimized by the father and son included USAA, Bank of the West, Southern States Bank, Peoples Bank of Alabama, BBVA Compass Bank, Equity Bank, BCI Capital, PNC Bank and Cross River Bank, according to court documents.

To further facilitate the bank fraud scheme, Christopher Montalbano created websites for some of his shell companies including Land Work Tractor & Equipment (LWT&E), previously located in Florida and then Vincent, Ala. On the LWT&E website, he posted photographs of agricultural and construction equipment, UTVs and boats which were purportedly in LWT&E’s possession and for sale. However, the majority of these photographs were copied and taken from websites of legitimate equipment dealers, prosecutors said.

What’s more, Christopher Montalbano purchased adjoining properties totaling approximately 150 acres in Vincent where LWT&E was purportedly located. He then gated the private access roads which both prevented unscheduled access and severely limited the lenders’ ability to verify LWT&E’s possession of the equipment being sold and/or the validity of the equipment pictures on LWT&E’s website, prosecutors said.