Mon May 9, 2011
Former head of Pyramid Cos. re-indicted on fraud charges
The federal government has filed a new indictment against former St. Louis real estate mogul John Steffen for allegedly misusing funds he had promised as collateral for a bank loan.
The scheme Steffen was charged with today is the same as in the old indictment:
- In March 2007, Steffen received $1.5 million in brownfield tax credits for a project that turn the Metropolitan Building in the Grand Center arts district. He wanted to turn the building into commercial and hotel space.
- In May 2007, Steffen used the tax credits as collateral for a $1.1 million loan from the Business Bank of St. Louis to do environmental remediation and clean-up.
- In December 2007, Steffen turned around and sole almost $830,000 of the credits without the knowledge of the bank and used the proceeds to fund other redevelopment projects. That is where the fraud comes in, the indictment alleges, because the Business Bank of St. Louis understood that the credits were serving as collateral.
Steffen faces four felony counts: two of bank fraud, and one each of mail and wire fraud. Each charge carries the possibility of 30 years in prison and a $1 million fine, though Steffen would likely receive a much lighter sentence.
The building is currently owned by Centrue Bank.