Four indicted in Sonoma Valley Bank collapse

After a three-year investigation into the collapse of Sonoma Valley Bank, federal prosecutors announced fraud charges Thursday against two former bank executives, a Santa Rosa attorney and a Marin County developer who became one of the bank's largest borrowers before its implosion.

The bank's former CEO, Sean Cutting, 44, of Sonoma, and its chief loan officer, Brian Melland, 45, of Santa Rosa, were arrested Wednesday with developer Bijan Madjlessi, 58, of Mill Valley and attorney David Lonich, 59, of Santa Rosa.

They appeared in federal court in San Francisco, where prosecutors unsealed a 29-count indictment accusing them of conspiracy, bank and wire fraud, money laundering, making false statements to a bank, false bank entries and obstruction of justice.

A Look Back At Sonoma Valley Bank's Collapse


If convicted of all charges, they face fines of more than $17 million and decades in prison. Each has been released on $250,000 bond and ordered to return to court April 18.

Investors in the failed bank and others impacted by the alleged scam were pleased to learn of the arrests. Madjlessi left a wake of financial ruin while treating himself to a lavish lifestyle that included a multimillion-dollar home, a yacht and personal jet, said Chad Empey, a Petaluma glass contractor who claims Madjlessi duped him into taking out loans for him.

"It's unfathomable what he did," said Empey. "A lot of people lost money, their retirements, their homes. He destroyed hundreds of people."

Sonoma Valley Bank investor Erland Stenberg, a retired Santa Rosa accountant who lost shares worth up to $700,000 when the institution folded, said the four men should receive the maximum punishment.

"I hope they lock them up and throw away the key," Stenberg said. "I'm very happy to hear they were indicted. I wonder if we'll get our money back."

Cutting did not return calls Thursday and Melland referred questions to his attorney. Neither Madjlessi nor Lonich could be reached for comment.

The indictment focused on a relatively small portion of the loans made by Sonoma Valley Bank to Madjlessi and his associates. The borrowers, who received nearly $55 million from the bank, defaulted on at least $45 million in loans, according to a 2011 lawsuit filed by investors.

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