A former local banker has been arrested on a federal indictment charging him with bank fraud in Putnam County.
The charges against Kelly Wayne Gassaway, who was employee of Progressive Savings Bank in Cookeville at the time of the alleged misdeeds, was taken by federal agents on March 13.
Federal agents allege that Gassaway   diverted money from customers' accounts and used the funds to pay his own bills.
Although he is no longer employed by the Progressive Savings Bank, officials say the fraudulent transactions took place between between April and November  2009 when Gassaway was a bank officer there.
The case, investigated by Federal Bureau of Investigation Agent Derrel Martin of the Cookeville FBI office, resulted in a nine-count federal grand jury indictment against Gassaway last week.
Authorities allege that Gassaway made false entries in bank books, statements and reports, using the accounts of at least seven different bank customers to pay his own bills.
According to the indictment, Gassaway schemed to “defraud and to obtain money” by “fraudulently causing and causing to be created and issuing unauthorized Progressive Savings Bank loan checks representing advances and draws against PSB loans (and lines of credit) issued in the names of PSB customers without the customers' knowledge and consent.”
Gassaway allegedly paid creditors including Master Card, Visa, Wells Fargo, AT&T, Ford and Member Service with the purloined funds.
The indictment claims that several checks were written, some for over $1,000.
After appearing in federal court on March 13, Gassaway was released on his own recognizance pending trial.