Two Cape God golf course developers have been indicted on charges of bank fraud in connection with $38 million in real estate loans from the former Bank of New England and Sentry Federal Savings Bank.

Patricia C. Harrison, 48, and Stephen G. Harrison, 57, now living in Hollywood, Fla., face up to 500 years in prison and up to $25 million in fines if found guilty on all 100 counts of bank fraud tied to the development of Falmouth Woods, a luxury project in Falmouth, Mass.

American Banker reported last July that an investigation into the biggest bad loan on the failed Bank of New England's books was focusing in part on the alleged use of Wite-Out correction fluid to alter invoices submitted to the bank.

Costs Allegedly Inflated

The indictment was handed up Dec. 17 in Boston. It charged that the invoices were altered to inflate costs and draw more money from the banks that the developers were entitled to. Sentry loaned the Harrisons $10 million for the project, which eventually went bankrupt, and Bank of New England loaned $28 million, according to the U.S. attorney for Massachusetts.

In addition, the indictment said, the developers diverted money from Bank of New England and from membership fees at the development's country club to their own use and to other projects.

Concealment of a Porsche

The grand jury also indicted Ms. Harrison on one count of bankruptcy fraud for allegedly concealing a Porsche owned by the bankrupt development company. That charge carris a potential penalty, on conviction, of five years in prison and a $250,000 fine. Ms. Harrison was arrested in Florida and released on $300,000 bail. Mr. Harrison did not appear in court because of a medical problem.

The case was investigated by the FBI and the Large Bank Investigations Department of the Federal Deposit Insurance Corp. It is being prosecuted by U.S. attorney Wayne A. Budd's economic crimes division.

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