The United States Attorney's Office for the Northern District of California announced today that Luther Kristian Armstrong was sentenced today to 27 months in prison for bank fraud.  The sentence was handed down by U.S. District Court Judge Charles R. Breyer following a guilty plea on one count in violation of 18 U.S.C. § 1344.

Mr. Armstrong, 46, of San Francisco, was charged in a federal information on March 15, 2004, with one count of bank fraud in violation of 18 U.S.C. § 1344.  Under the plea agreement, Mr. Armstrong pled guilty to the single count information.  Mr. Armstrong was initially charged in a criminal complaint on October 23, 2003.

In pleading guilty, Mr. Armstrong acknowledged that at the time he committed the offense in 1999 he was a Vice President in the Product Origination Department of Union Bank of California (UBOC).  Mr. Armstrong admitted that in March of 1999 he created a fraudulent lease agreement and accompanying documents pertaining to a purported $2.3 million lease deal between UBOC and the University of California, Davis.  Mr. Armstrong admitted that he forged the signatures of the supposed parties to this agreement.  Mr. Armstrong also admitted that he created the phony accompanying documents, which included purported wiring instructions and a cover letter, and wrote his initials and information regarding the fictitious lease on these documents.

Mr. Armstrong admitted that in April of 1999, he faxed the fraudulent documents to UBOC's Securities and Funding Operations Department in Los Angeles.  In the fax, Mr. Armstrong directed the Funding Operations Department to wire $1.355 million to an account in the Bahamas, purportedly to pay a vendor for equipment associated with the lease.  Mr. Armstrong admitted that in reality, he controlled the Bahamas account, that the transfer was not part of any legitimate lease transaction, that the March 1999 lease deal and accompanying documents were fictitious, and that he intended to defraud UBOC by faxing the documents to the Funding Operations Department.  Mr. Armstrong acknowledged his obligation to make restitution in an amount to be determined by the Court, but in no event less than $1.355 million. 

Judge Breyer sentenced the Defendant to 27 months in federal prison and a five-year term of supervised release.  The Court also ordered Mr. Armstrong to pay restitution of $1,719,804.  The Defendant will begin serving the sentence on January 7, 2005.

The prosecution was the result of an 18-month investigation by the Federal Bureau of Investigation.  Haywood S. Gilliam, Jr. is the Assistant U.S. Attorney who prosecuted the case with the assistance of legal secretary Nancy Dick.

All press inquiries to the U.S. Attorney's Office should be directed to Assistant U.S. Attorney Cynthia Caporizzo at (415) 436-6740.