Former Officers : 2 Sentenced in Continental Bank Scheme

CHICAGO —  A federal judge sentenced two former bank officers to prison Tuesday for contributing to the near-collapse of Continental Illinois National Bank & Trust Co. in the early 1980s.

U.S. District Judge Milton Shadur sentenced John R. Lytle, a former Continental vice president, to 3 1/2 years in prison.

William G. Patterson, former head of energy lending at Penn Square Bank of Oklahoma City, was sentenced to two years.

Lytle, 53, and Patterson, 38, had pleaded guilty June 30 to criminal charges in an alleged scheme that involved risky loans and kickbacks.

Penn Square failed in 1982, and Continental came close to collapse two years later after the largest run on deposits in banking history.

Lytle Requests Probation

Lytle and Patterson are scheduled to report to prison authorities Oct. 11.

Testifying before his sentencing Tuesday, Lytle said he accepted responsibility for his actions. He asked the judge to sentence him to no more than six months in jail and then put him on probation and allow him to work with the poor on Chicago’s West Side.

“I wish desperately that I could reverse the events of the 1980s,” Lytle told Shadur. “In various ways and in increasing amounts, I have a desire to redeem myself.

“Working with poor children is an area where I’m experienced, where I have great love and where I have a track record. Please, your honor, give me an opportunity to give service,” Lytle pleaded.

Patterson, who held his head and cried as he spoke, said he was sorry for his actions and was concerned about his family.

“I’m sorry for the people in Chicago and Oklahoma,” he said. “I think of that a lot.”

But prosecutor Joe Duffy said the two men must be punished because they had abused a special trust.

Third Man Acquitted

“Society’s rights and needs must take precedence over the defendants and their family,” Duffy told the judge. “Anything less would send a confusing message to the American people.”

Lytle pleaded guilty to misapplication of bank funds and Patterson pleaded guilty to charges that he aided and abetted Lytle. The pleas came two months after the trial of the two men ended with a deadlocked jury.

Prosecutors charged that Patterson had manipulated Lytle and a third man, Oklahoma drilling contractor Jere Sturgis, in schemes to save his own failing bank. Sturgis was acquitted of wire-fraud charges.

The government accused Lytle, caught in spiraling personal debt to finance a luxurious life style, of accepting kickbacks from Patterson in exchange for buying risky energy loans from Penn Square for Continental.

Defense lawyers contended that Continental, which was kept afloat by a $4.5-billion government bailout, was saddled with the troublesome energy loans because of an aggressive lending policy.