After a grueling six-week trial, testimony wrapped up Tuesday in the criminal conspiracy case against the former top two executives at the Bank of Oswego.

It is now up to a jury to decide whether former CEO Dan Heine and CFO Diana Yates conspired to hide bad loans from the bank's board of directors and bank regulators.

Diana Yates

Ironically, the case against Heine and Yates may hinge on the testimony of Geoff Walsh, a former bank employee who pleaded guilty for his role in a separate fraud case in 2015.

Walsh's insider's knowledge about the bank's questionable loans was central to the government's case. He spent six days on the witness stand in U.S. District Court in Portland.

If jurors deem him credible, it's potentially bad news for Heine and Yates. If they agree with other testimony – including from Walsh's brother – that Walsh is a con man and a practiced liar, the defendants could walk.

Walsh is an admitted felon – he bilked a widow out of more than $2 million in 2011 and 2013, court records show. Walsh confirmed in court that he hopes to get a reduced sentence for his cooperation with prosecutors in this case.

The trial was an expensive marathon. At six weeks, it is one of the longest federal criminal trials in Oregon in recent memory, lasting a week longer than the first Bundy trial last fall. Heine and Yates quickly exhausted the $3 million they got from the bank's insurance coverage, said sources close to Heine.

The case began in June 2015, when a federal grand jury indicted Heine and Yates on accusations of orchestrating a sweeping, five-year conspiracy to conceal the bank's shaky financial condition from bank regulators. It is believed to be the first time in Oregon history that a bank's two senior managers were hit with criminal charges.

The 27-count indictments alleged Heine, former bank president and CEO, and Yates, the bank's former chief financial officer, authorized a series of complex, secret deals in an effort to bamboozle their own board of directors and the Federal Deposit Insurance Corp. into believing the bad loans lurking in its portfolio didn't exist.

Dan Heine

Both were charged with one count of conspiracy to commit bank fraud and 26 counts of making false bank entries. It's a federal crime for bank officers to mislead bank regulators.

The tiny, one-branch bank struggled unsuccessfully to survive the scandal. Its remaining assets and its one branch were acquired by another bank.

Assistant U.S. Attorney Michelle Kerin said Heine and Yates kept more than $3 million in non-performing loans off of the financial reports it filed with regulators. Both executives were financially strapped and desperately needed the bank to survive, Kerin said.

When the bank began to falter in the recession-wracked economy in 2010, Heine and Yates took extraordinary and illegal steps to keep it afloat, prosecutors said.

Defense attorneys said Heine and Yates were themselves victimized by Walsh, the go-go loan officer they hired in 2009. Jeffrey Alberts, Heine's attorney, reminded the jury Monday that it was Heine who called in the FBI shortly after he fired Walsh in 2013.

Geoff Walsh

Janet Hoffman, the attorney for Yates, said Walsh was secretive, often keeping key client financial records in his car. For Yates, overloaded with responsibilities serving as the bank's chief financial officer, chief credit officer and chief operating officer, it was impossible to track all of Walsh's deals.

"The only criminal in this courtroom is Geoff Walsh," she told the jury Tuesday.

Heine hired Walsh hoping to grow the sleepy institution. And the strategy worked. Walsh, a Lake Oswego native who had come up through the mortgage lending business, had countless connections. The bank's total loans tripled to more than $180 million in the years Walsh was with the team.

Alberts said that was part of the problem. He claimed that Walsh extended a number of loans to his Lake Oswego buddies. "These are a group of wealthy playboys, the kind of people that party together, traveled together, they do handshake deals for hundreds of thousands of dollars," Alberts said during the trial.

Walsh's relationship with Portland developer Marty Kehoe emerged as a key point. Walsh arranged a $1.7 million loan to Kehoe, who then allowed Walsh to take control of the proceeds and fund a number of smaller loans.

What Kehoe says he didn't know was that Walsh loaned money to friends and pocketed some of the money himself.

Kehoe objects to the characterization of him as part of a Walsh clique. His role with the bank is complicated. In addition to borrowing from the bank, he confirms he made a run at purchasing the institution. He was expected to testify in the case. But neither prosecutors nor defense attorneys called him to the stand.

Walsh also helped land former Oregon gubernatorial candidate Chris Dudley as a client. Heine tried hard to gain the wealthy ex-Trail Blazer's business. But it wasn't until Walsh came on board that Dudley agreed.

In 2011, Dudley was 79 days late on a personal loan from the bank, according to testimony. When Dudley didn't pay, the bank unilaterally took $23,026 from the Friends of Chris Dudley campaign account and used it to make the payment on Dudley's personal loan, prosecutors said.

The transaction was so unusual, a teller at the bank refused to be a part of it, said Kerin, the lead prosecutor. Dudley quickly paid what he owed claiming he was late on the payment only because no one from the bank told him the payment was overdue, according to testimony.

Kerin said Heine and Yates "turned a blind eye" to Walsh's unorthodox deals because they profited. Though they criticize him now, Kerin said, bank executives at the time referred to Walsh as their "rock star."

-- Jeff Manning

jmanning@oregonian.com, 503-294-7606