2 Ex-Bankers Plead Guilty in Continental Case

A former Continental Illinois National Bank & Trust Co. officer and an ex-banker from Oklahoma accused of contributing to Continental’s near-collapse pleaded guilty Thursday to criminal charges.

John R. Lytle pleaded guilty to misapplication of bank funds and William G. Patterson pleaded guilty to aiding and abetting Lytle during an appearance before U.S. District Judge Milton I. Shadur.

Shadur had been scheduled to preside over a retrial of the men in September on charges of wire fraud and misapplication of bank funds, after the defendants’ initial trial ended with a deadlocked jury two months ago.

Lytle, 53, a former vice president who once headed Continental’s oil and gas lending operation in Oklahoma, was accused of taking on millions of dollars in poor-quality loans from customers of Penn Square Bank of Oklahoma City in return for alleged kickbacks.

Patterson, 38, former head of energy lending at Penn Square, was accused of arranging the kickbacks in the form of $585,000 worth of unsecured personal loans to Lytle between 1980 and 1982.

Each faces a maximum penalty of five years’ imprisonment and a $5,000 fine, Shadur said.

The plea agreement reached by prosecutors and defense attorneys will avert another long trial like the 6 1/2-week proceeding that ended May 3 when a jury announced that it was hopelessly deadlocked after deliberating five days.

However, the panel did clear a third defendant in the case--Oklahoma drilling contractor Jere Sturgis, who was charged with wire fraud for allegedly participating in a purported scheme to defraud Continental.

“As far as we’re concerned, this is it. This puts to rest the Continental Bank chapter, book, encyclopedia, whatever you want to call it,” assistant U.S. Atty. Joseph Duffy said after Shadur accepted the plea agreement.

“The object was justice, and we think there’s justice in the guilty plea,” he said, adding that prosecutors felt it would not be in the public’s interest to go through another long trial.

Shadur last month approved a retrial of Lytle and Patterson at the request of prosecutors, who cited that fact that 11 jurors had voted to convict the pair and only one had held out for acquittal.

“I feel we’ve come to an agreement that’s fair to everyone,” Lytle said.

Penn Square failed in 1982, and Continental came close to collapse two years later after the largest run on deposits in banking history. The government kept Continental’s doors open with a $4.5-billion bailout.

Prosecutors charged that Patterson manipulated Lytle and Sturgis in schemes to save his own failing bank.

The government accused Lytle, caught in spiraling personal debt to finance a luxurious life style, of accepting kickbacks from Patterson in exchange for buying risky energy loans from Penn Square for Continental.

Sentencing was set for Aug. 30.