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Dan Heine and Diana Yates were to report to prison this week, but the Ninth Circuit Court of Appeals has reversed that order

HEINEFormer Bank of Oswego executives Dan Heine and Diana Yates, who were scheduled to report to jail this week after being convicted of conspiracy to commit bank fraud and other charges, will instead remain free on bail while their appeals work their way through the courts.

Heine and Yates were each found guilty in November 2017 of falsifying bank records and conspiracy to commit bank fraud following a six-week trial that stemmed from an investigation into a series of bad loans that were hidden from the bank's board of directors and the FDIC.

After a series of delays, Heine was sentenced to 24 months in prison and Yates received 18 months at a sentencing hearing on June 14. Both defendants immediately appealed their convictions and filed motions seeking to delay the start of their prison terms until after the appeals are resolved.

YATESU.S. District Court Judge Michael Simon denied both defendants' requests and ordered them to report to prison on Oct. 9. But on Sept. 28, the Ninth Circuit Court of Appeals reversed Simon, saying the defendants had shown that their appeals raise a "substantial question" of law or fact that is "fairly debatable," and that "if that substantial question is determined favorably to defendants on appeal, that decision is likely to result in reversal or an order for a new trial of all counts on which imprisonment has been imposed."

Even if a new trial was ordered, the court ruled, it was likely to result in sentences that did not include imprisonment or reduced prison terms that would be less than the total of the time already served plus the expected duration of the appeal process.

The court also said Heine and Yates had shown "by clear and convincing evidence" that they were unlikely to flee or pose a danger to society. The case was therefore sent back to Simon with orders to establish appropriate conditions for Heine and Yates to follow while they are free. Both already must seek approval before taking out a loan or applying for new lines of credit.

— The Review

Contract Publishing

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