Trusted Executive Fleeced Bank, Customer Accounts of $2.5 Million

Trusted by his co-workers and savvy in the ways of bank record-keeping, Fereidoon Mafi (Fred) Vassegh quietly fleeced American Pacific State Bank and its customers for more than three years.

But in August, 1983, after embezzling $2.5 million, he slipped up. Vassegh, then the bank’s No. 3 executive, was late in paying off a $99,000 loan that he put under someone else’s name but pocketed himself, triggering an audit that uncovered his activities.

Frank J. Ures Jr., American Pacific’s president and chief executive, said his bank has taken steps to ensure that no one again will operate with the unquestioned authority enjoyed by Vassegh. But American Pacific officials and federal authorities have said that Vassegh’s embezzlement would have been nearly impossible to prevent.

“That is something that could have happened anywhere,” said Yuichi Katoh, a member of American Pacific’s board who represents the bank’s controlling shareholder, Tokyo real estate developer Masashi Yamada.

3 Counts of Fraud

Vassegh pleaded guilty to three counts of federal bank fraud in November and is scheduled for sentencing on Feb. 3. He could face as much as 15 years in prison and a $15,000 fine, along with having to make restitution.

As financial fraud goes, Vassegh’s wasn’t very sophisticated. According to federal court documents, Vassegh, who had accumulated at least $384,500 in gambling debts, took money that customers thought was going into certificates of deposit. The court records say Vassegh also made unauthorized withdrawals from customers’ accounts and tricked bank officials into issuing loans that, unbeknown to them, were diverted to his own use.

Ures said Vassegh succeeded with his fraud by taking advantage of his employees’ trust. Although Vassegh had joined the bank only in 1980, he was well-known to the staff because, as an executive with Bank of America, he had handled American Pacific’s account for more than nine years.

Bank employees, Ures said, allowed Vassegh to cash customers’ checks without the customers being present. Under the bank’s new rules, checks cannot be cashed unless the customer is available.

Preyed on Countrymen

Ures said Vassegh, 49, a native of Iran, preyed on fellow Iranians who in some cases were unfamiliar with U.S. banking practices.

Vassegh expertly covered his tracks. For instance, federal authorities say, he deceived the depositors whose accounts he drained by intercepting bank statements and retyping them before they were mailed.

“He was a bank within a bank,” Ures said.

Vassegh took loans from the bank by listing existing customers as borrowers and then secretly repaying the loans himself through internal bank accounts. His embezzlement was discovered when he let payments fall behind on one such loan while he was away from the bank, Ures said.

Audit Launched

Instead of waiting for Vassegh to return to look into the matter, the bank went ahead without him and called the supposed borrower. When she denied having any such loan, an audit was launched that eventually implicated Vassegh, Ures said.

Although federal authorities have accused Vassegh of embezzling the funds at least partly to cover Las Vegas gambling debts, court documents state that Vassegh has claimed he took the money to pay Iranian extortionists who threatened the lives of his mother and relatives in Iran.

Neither Vassegh nor his lawyer could be reached for comment.