NATCHEZ — The former owner of Dunleith Bed and Breakfast, The Castle Restaurant and Bowies Tavern pleaded guilty in federal court Monday to bank fraud and wire fraud, United States Attorney Brandon J. Fremin announced Monday.

Michael Allen Worley, age 57, of Baton Rouge, Louisiana, pled guilty before U.S. District Judge John W. deGravelles, said a press release from the Department of Justice U.S. Attorney’s Office of the Middle District of Louisiana. “As a result of his conviction, Worley faces a significant term of imprisonment, a fine and a period of supervised release.”

According to admissions made as part of his guilty plea, Worley executed schemes to defraud banks and private equity firms by submitting multiple false and fraudulent loan applications on behalf of himself and of businesses he owned or operated, the press release states.

“Between 2014 and 2018, Worley obtained more than $18 million in new loans from federally insured banks in Baton Rouge and around the country through materially false and fraudulent statements and representations,” the press release states. “Through a similar scheme, Worley obtained at least an additional $11 million from private equity firms in Louisiana and Texas, also through materially false and fraudulent statements and representations.”

The U.S. Attorney’s office said Worley inflated his assets, “understated and omitted his liabilities, misrepresented his income, and often misrepresented other things including the intended use(s) of millions in loan proceeds.”

“In some instances, Worley and the businesses he owned, operated or controlled, defaulted on the loans, causing the financial institutions and private equity funds to suffer financial losses,” the press release states.

Worley filed for Chapter 11 bankruptcy in January 2018, and at the time among Worley’s assets were three Natchez businesses and associated properties including: Dunleith Historic Inn and The Castle restaurant, Bowie’s Outfitters and Bowie’s Tavern.

At the time of his Chapter 11 filing on Jan. 8, 2018, Worley cited more than $107 million in debt, with just more than $80 million in assets.

Bowie’s Outfitters was sold in September 2018 to Roberts and Knost Investments, and an LLC formed in August. The LLC shares a Baton Rouge address with the Excel Group, an industrial construction firm, owned by David Roberts.

Bankruptcy documents indicate Worley owed Roberts $352,729.31.

As part of the bankruptcy, United Mississippi Bank foreclosed on Dunleith Historic Inn after Worley defaulted on a loan he had taken with the bank.

The bankruptcy trustee had been working to sell Dunleith and Bowie’s Tavern.

Bowie’s Tavern was posted as collateral against loans Worley took out at United Mississippi Bank.

In September 2018 the bank petitioned the court to remove an automatic stay that stopped the creditor’s ability to pursue recouping the more than $7.3 million Worley owed the bank.

Worley had refinanced several notes into a single large note at UMB on Aug. 31, 2017, just five months before he filed bankruptcy.

In December 2018, U.S. Bankruptcy Judge Douglas Dodd ruled in favor of UMB, clearing the way for the bank to foreclose on the property and attempted to auction the property to the highest bidder on Feb. 1, 2019, but no one purchased it at that time.

Dunleith was built in 1856 and had been operated as a commercial bed and breakfast facility since 1976. Dunleith had 22 luxury rooms available for overnight guests and has been the venue for many weddings and large parties throughout the years. The house, located on Homochitto Street, is among Natchez’s most recognized antebellum structures.

Louisiana movie producer Jake Seal eventually made an offer to purchase Dunleith. The list price was $5.95 million but Seal’s deal later fell through, and Dunleith is still for sale.

Fremin said people who seek to defraud institutions will be held accountable.

“This investigation and conviction demonstrates that those who seek to deceive and defraud banks and other lenders for their own personal benefit will be held accountable,” Fremin said. “Mr. Worley executed schemes to fraudulently induce banks and private lenders into giving him millions of dollars, and used unwitting associates of his to assist him. Individuals like Mr. Worley who obtain loans through fraudulent means can expect to be prosecuted, and victims of such schemes should know we will do everything within our power to make these lenders whole. I would like to recognize the efforts of our prosecutor and the FBI for their exemplary work on such an important matter.”

Bryan A. Vorndran, FBI New Orleans Special Agent in Charge stated, “Today’s guilty plea holds Michael Worley accountable for orchestrating a multi-year scheme to defraud private lenders and federally insured financial institutions of tens of millions of dollars.  The FBI New Orleans Field Office is dedicated to investigating crimes of greed and deceit and bringing to justice those, such as Worley, who exploit the finances of their victims.”

This matter is being investigated by the Baton Rouge Resident Agency of the Federal Bureau of Investigations and is being prosecuted by Assistant United States Attorney Peter J. Smyczek.