Fred A. Davis returned from a short vacation in 1998 to learn that he may be going away for a long, long time.

The former president of Malta (Ohio) National Bank has been charged with fraud for allegedly collecting $375,000 from false loans in the names of six unknowing bank customers. His alleged scheme was discovered while he was on a vacation two years ago, when a customer complained about a late notice on a loan he never took out.

Mr. Davis allegedly diverted the money into two personal accounts, one at Malta and another at the Malta branch of Zanesville-based Century Nat-ional Bank, according to an affidavit filed last week in U.S. District Court in Columbus. If convicted, he could face up to 30 years in prison and a $1 million fine.

The alleged scheme began in 1995 when Mr. Davis began instructing employees at the $8.7 million-asset bank to bend company rules, according to court documents. The employees had no knowledge of the alleged fraud at the time, the affidavit said.

First, Mr. Davis told a former bank cashier to process the loan paperwork without the customers present, saying he would obtain the signatures himself, the former employee told investigators. Though it was bank policy to keep certificates of deposit used for collateral at the bank, Mr. Davis told the cashier that he was suspending this rule for the three loans that used CDs.

In addition, Mr. Davis instructed Rebecca McDaniel, the bank's head teller, not to mail late-payment notices to the customers whose names were used on the false loans, according to the affidavit filed by FBI agent Charles P. Seymour.

But while Mr. Davis was on vacation in February 1998, Ms. McDaniel inadvertently mailed out a delinquency notice, prompting the customer inquiry.

In March 1998, after an audit by the Office of the Comptroller of the Currency and an internal bank inquiry that both showed evidence of consumer loan fraud, Mr. Davis resigned, Malta's former chief executive Barry Alvin Parmiter stated in the affidavit. A two-year FBI investigation backed up evidence found by the bank and OCC officials.

Mr. Davis could not be reached for comment.

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