Stephen B. Pence, United States Attorney for the Western District of Kentucky, announced Friday that 50 year-old Charles Frederick Watts of Rineyville was found guilty by a federal jury in United States District Court in Louisville.

Watts was the executive vice president of Leitchfield Deposit Bank from 1985 until 1992.

Watts was found guilty of one count of making a false statement in a bank record and four counts of misapplication of bank funds by a bank officer.

The evidence introduced during the trial showed that the offenses occurred during a time when Watts was the president and chief executive officer of Farmer's Bank of Vine Grove. Farmer's Bank is now Wilson & Muir Bank.

Without the knowledge of the board of directors of Farmer's Bank, Watts, between 1992 and 1998, executed five fraudulent "nominee loans" by soliciting customers of Farmer's Bank to sign promissory notes with the bank, in amounts ranging from $70,000 to $160,000, by assuring the customers that he, Watts, would repay the loans personally.

Watts used the proceeds from these loans to fund business ventures with which he was associated.

The jury's verdict of guilty was returned following a three day trial before Judge Thomas B. Russell, United States District Court.

The maximum potential penalties are 150 years imprisonment, a $5,000,000 fine, and supervised release for a period of 5 years.

Watts is scheduled to be sentenced before Judge Russell on March 25, 2003 at 1 pm eastern time in Louisville.