KeyBank SVP Arrested in Alleged $29 $40 Million Embezzlement John S. Burnett, BOL Associate Editor
The FBI announced the arrest on November 11, 2006, of David Francis Verhotz, senior vice president of KeyBank's Global Trade Services division. According to the FBI, the arrest followed an investigation by the Bureau and KeyBank into an alleged $29 million embezzlement. The arrest took place at Cleveland, Ohio's Hopkins International Airport, as Verhotz arrived on a flight from Dallas.
Verhotz appeared in U.S. District Court in Cleveland on Monday, November 13, and was assigned a federal public defender.
Verhotz is alleged to have booked fictitious loans in the names of Keybank-client overseas banks, diverting the proceeds to his own use.
According to FBI spokesman Scott Wilson, Verhotz will probably be charged with bank fraud and embezzlement by a bank officer. Each of those charges could result in a 30-year prison sentence and a $1 million fine. Wilson said that the alleged embezzlement began in January 2004 and continued until the arrest. He said that KeyBank discovered suspect transactions and called in the FBI.
A KeyBank spokesman said that Verhotz is no longer employed by the bank, and his duties had been reassigned.
KeyBank is owned by KeyCorp, which has over 900 branches in 13 states.
Update: On Thursday, November 16, Verhotz was ordered held without bail as a flight risk, to await trial. The federal magistrate noted that $8 million of the allegedly embezzled funds were still unaccounted for.
The FBI has now amended the charges in this case. After interviewing Verhotz, they are now charging him with the theft of up to $40 million over ten of his eleven years with KeyBank.
First published on BankersOnline.com 11/15/06; last updated 12/06/06.
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