West Des Moines Developer Kline Pleads Guilty to Federal Bank Fraud

Developer John Kline. one of the principals in West Des Moines-based Oaks Development, pleaded guilty to two counts of bank fraud in federal court Friday, admitting that he fraudulently used loans for housing projects to support various aspects of his business.

The plea means Kline will avoid a trial in which his former business partner, Randal Walters, might have offered testimony against him, the Des Moines Business Record reported.

Both men were indicted in November 2011 on nine counts of bank and wire fraud for allegedly using $6.7 million in construction loans for other purposes, including buying a condominium in Florida and paying delinquent property taxes in Johnston, the Business Record said.

In exchange for his plea to two counts of bank fraud before Chief Judge James Gritzner, federal prosecutors dropped seven counts of wire fraud and recommended a lighter sentence – 30 months in prison, compared with up to 51 months under federal sentencing guidelines. He also could have been fined up to $1 million,  required to pay restitution and remain on five years’ supervised probation after his release from prison.

In an earlier proceeding, Walters pleaded guilty to one count of bank fraud and avoided prison time.

Walters will be sentenced on Feb. 6 and Kline on April 12 in Gritzner’s court.