Red flags at U.S. Bank.

Byline: Brent Hunsberger

Oct. 15--In his day job, David Shelofsky hunted bank fraud.

The onetime small-town cop chased bad-check writers and credit-card thieves to recover money stolen from U.S. Bank, ex-colleagues say.

On the side, the West Linn resident developed real estate. He and partners sank more than $20 million into prime commercial and resort properties, mostly in and around Bend, land records show. Earlier this year, they sold land in Redmond to Wal-Mart Stores Inc. for $10 million.

On Friday, federal officials alleged what several co-workers had long suspected: He was actually defrauding the bank by pocketing some of the recovered assets while building a development empire on his modest bank salary.

The U.S. attorney's office said Shelofsky, 38, intends to plead guilty in coming weeks to embezzling money from the bank, according to a filing in U.S. District Court in Portland on Friday. Federal attorneys believe Shelofsky, an investigative recovery manager, took the money between 2002 and 2005.

Federal authorities declined to describe the case against Shelofsky or say whether his alleged embezzlement and property development were connected. They also declined to reveal the amount of his alleged fraud.