President of Bank Sentenced in Scheme : Fraud: Steven Smith of the now-defunct Westlake Thrift & Loan joined an elaborate scam that eventually closed his institution.

The former president of the defunct Westlake Thrift & Loan was sentenced Monday to two years in federal prison and fined $20,000 for his role in a phony-loan scheme that drained the Westlake Village institution of more than $4 million and ultimately forced it to close, authorities said.

Steven Smith, 44, of Thousand Oaks, is scheduled to begin his prison sentence May 15. He pleaded guilty in December to charges of conspiracy, bank fraud, and misapplication of bank funds.

Smith’s attorney, I. Mark Bledstein of Encino, called the sentence fair even though he had sought a maximum one-year prison term. Bledstein said Smith expressed remorse when he appeared Monday before U.S. Dist. Court Judge Richard A. Gadbois Jr. in Los Angeles.

“He said he was sorry for himself, for his family, and most importantly, for the stockholders in the bank,” said Bledstein. “We’re hoping he’ll be paroled after doing one-third of the time.”

According to U.S. Atty. David C. Scheper, Smith became involved in an existing conspiracy in early 1987 when he discovered the thrift had already approved more than $2 million in bogus loans to Walter Vladovich, a Riverside businessman bent on establishing the country’s largest chain of video-rental stores.

Instead of “blowing the whistle” on the scheme, Scheper said, Smith went along with Vladovich’s plan and approved another $2 million in phony loans, apparently in the hope that a successful Vladovich would eventually repay the bank.

“He chose a criminal course rather than one that might have minimized the damage,” said Scheper. “A bank failure is a disaster for so many people.”

The thrift went out of business in July, 1988, but the true nature of its troubles was not made public until last December, when a 26-count federal bank fraud indictment was returned naming Smith and Vladovich, among other defendants.

Vladovich--described by Scheper as the “big fish” in the scheme--pleaded guilty last month to charges of conspiracy, unlawful payment of bribes, and bank fraud. He faces up to 45 years in prison and $2.25 million in fines when he is sentenced July 23.

According to Scheper, Vladovich and members of his sales staff processed more than 800 phony loans that were eventually funneled into his would-be video empire. The loan packages were submitted to Westlake Thrift on behalf of people who supposedly were trying to open video rental businesses.

One source has told The Times that initially, Vladovich tried to recruit people to apply for the loans, including California Highway Patrol officers. But the patrol officers asked too many questions, the source said, and many of the loans were eventually written to fictitious persons.

Henry Schneider, the bank official with whom Vladovich began his phony-loan scheme in 1984, has pleaded guilty to three counts of conspiracy and fraud. He is scheduled to be sentenced May 7.

The Times recently learned that the FBI’s two-year investigation into the Vladovich case and the demise of Westlake Thrift has turned to the thrift’s defunct parent company, United Community Bank of Thousand Oaks, which the state closed in December for lack of funds.

Targets of the FBI’s probe into possible bank fraud include United Community’s former chairman, Phil Chase of Thousand Oaks, and board member Olen B. Phillips of Westlake Village.

Phillips, an airline pilot who was also a board member at Westlake Thrift, is also being investigated by state and Ventura County officials for alleged fraud in real-estate transactions.