One of the St. Louis' biggest downtown developers of the past decade was indicted this morning on federal fraud charges.
The United States Attorney's Office charges John R. Steffen
with a scheme to defraud The Business Bank of St. Louis by pledging Brownfield Remediation Tax Credits as collateral on a loan, and selling them to use the proceeds for other projects.
The indictment alleges that in May 2007, Steffen used the tax credits as collateral to obtain a loan from The Business Bank of St. Louis to one of his subsidiaries, MB Lofts, in the amount of $1,115,633. The purpose of the loan was for environmental cleanup and remediation of the Metropolitan Building. On December 21, 2007, Steffen fraudulently sold $827,415 of tax credits without the knowledge of The Business Bank, and used the proceeds for other projects.
Steffen, 52, St. Louis, was indicted by a federal grand jury on one felony count of bank fraud. If convicted, bank fraud carries a maximum penalty of 30 years in prison and/or fines up to $1,000,000.
In 2008, a financially overextended Steffen was forced to transfer ownership of a dozen projects
valued at more than $600 million.