‘Inside Man’ Gets 8 Years for Valley State Gold Theft

A man authorities said was the mastermind of a gold theft that helped topple Valley State Bank in Encino last year was sentenced to eight years in federal prison Tuesday.

Don K. Gray II was sentenced by U.S. District Judge Edward Rafeedie in the theft of $600,000 in gold bars and coins from the small bank in late 1986. He pleaded guilty to three counts of wire and mail fraud.

Rafeedie said the theft was a “significant factor” in the bank’s failure. He said the scheme “could not have been committed” without Gray’s direct participation.

“He was the inside man,” the judge said of Gray. “I felt a significant sentence was appropriate.”

Gray, 29, was said by authorities to have carried out an elaborate scheme in which he used his position as a data processing clerk to order that 41 gold bars and 2,000 Gold Eagle coins be sent to a phony corporation in New York.

Although the bars were sent, only 250 of the 1-ounce coins were transferred before an internal investigation at the bank uncovered the theft, authorities said.

Gray disappeared Dec. 29, 1986. The gold has not been found, nor have Gray’s two associates, Andres M. Salazar and Ignacio M. Salazar, both of Colombia.

Authorities thought Gray had fled to Colombia. He may have been returning from there when he was arrested Feb. 14 as he tried to re-enter the United States by car at San Ysidro, authorities said.

“We had information he was planning to return to do a bigger and better crime,” said Assistant U.S. Atty. Leon Weidman.

Gray was on probation for an Alaska check-kiting scheme when he committed the crimes in California, authorities said. Rafeedie said Gray was ordered to pay $56,000 in restitution in the Alaska case.

Valley State Bank has reopened as part of Capital Bank of California.