Terry Lee Church, former vice-president of First National Bank of Keystone, was recently found guilty on one count of conspiracy and two counts of obstruction.

Though facing the same charges, co-defendant Michael H. Graham was convicted on just one count of obstruction, and acquitted on the conspiracy charge.

"What was remarkable about this sentencing is they wouldn't convict Graham on one of these charges," said a source following the trial. "They wouldn't convict him on conspiracy but they would convict her. So apparently it was a conspiracy of one."

Keystone Bank was closed on Sept. 1, 1999 by the Office of the Comptroller of the Currency. After investigating the loan servicing operations, the OCC found that $500 million in loans that had been securitized still appeared on Keystone's books. Current tallies show the Federal Deposit Insurance Corp. could suffer up to $800 million in losses associated with Keystone.

"That's just the first trial, that's just a very narrow set of issues," said a source. "They're going to go after them, and just grind them, and grind them, and grind them until they find the $500 million."

The missing money was not an issue at the recent trial. Among other charges, the government will likely go after Church on tax evasion next, the source said.

Church and Graham were both arrested in October after federal regulators discovered, on Church's ranch estate, a 10-foot deep, 100-foot long ditch, filled with more than 300 boxes of bank documents. The ditch was filled and seeded for grass.

U.S. Judge David A. Faber of the Southern District of West Virginia, presided over the trial in a federal court in Beckley, W. Va.

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