Guilty Plea in La Habra Bank Loan Fraud : Courts: A former executive of Landmark Bank admitted giving away $2.5 million to small businesses.

A former vice president of Landmark Bank in La Habra pleaded guilty Monday to making at least $219,000 worth of unauthorized small-business loans.

Cynthia A. Drennan, 39, admitted giving away about $2.5 million to small businesses outside of the bank’s normal lending procedures, but was allowed to plead guilty to just three charges in a plea agreement with prosecutors, Asst. U.S. Atty. Stefan Stein said.

Drennan, of Laguna Niguel, made the unauthorized payments while she was in charge of Small Business Administration loans at Landmark Bank, Stein said.

“Our position was these (payments) were completely unauthorized,” Stein said. “We’re not even calling them loans.”

Drennan approved more than $2.5 million in payments to at least six businesses over a four-year period before she was caught in late 1991, Stein said.

Prosecutors had no evidence Drennan profited in any way from the money she gave the businesses, Stein said.

Landmark Bank fired Drennan in 1991 after discovering that she had made unauthorized loans.

Drennan’s attorney, Leonard Sharenow, said she bypassed Landmark Bank’s Small Business Administration loan process to speed up the process for businesses she feared losing as customers.

According to court records, Drennan transferred $50,000 from the bank into the account of Midway Auto Wholesale. Later, she wrote two cashier’s checks for $169,326.50 to Copper Sands Corp., a camp for disadvantaged children. Small Business Administration loans bring a lot of money into a bank, Sharenow said, so Drennan was under pressure from superiors to make many loans.

“She was very busy and under a lot of pressure,” Sharenow said. “She didn’t have time to do all of the paperwork, so she advanced the money improperly with the intent of converting them into fully documented loans.” None of the $2.5 million was repaid, Stein said.

She succeeded in later turning some of payments into legitimate loans, but was caught before being able to process the rest, Sharenow said.

Landmark Bank President Craig Collette could not be reached Monday for comment.

Drennan is scheduled to be sentenced June 28 before Judge Terry J. Hatter Jr. She faces up to 15 years in prison and up to $750,000 in fines. She could also be ordered to repay the bank’s losses.

Drennan has agreed not to work in a bank again and is working for an Orange County church, Sharenow said.