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FDIC Enforcement Decisions and Orders

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{{12-31-92 p.C-973}}
   [10,217] In the Matter of Gary A. Larson and Mary Ann Larson, Docket No. FDIC-91-105b (4-10-91).

   Institution-affiliated parties to cease and desist from permitting diversion of Bank income to themselves and their related interests. (This aorder was terminated by order of the FDIC dated 10-21-02; see15,541.)

   [.1] Institution-Affiliated Parties—Restitution Required
   [.2] Shareholders—Disclosure—Cease and Desist Order

In the Matter of
GARY A. LARSON AND
MARY ANN LARSON,
Individually, and as
Institution-Affiliated Parties of
STATE SAVINGS BANK
APLINGTON, IOWA
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST

   Gary A. Larson and Mary Ann Larson ("Respondents"), having been advised of their right to a Notice of Charges and of Hearing detailing the unsafe and unsound banking practices alleged to have been committed by the Respondents and of their right to a hearing on such alleged charges under section 8(b) of the Federal Deposit Insurance Act, 12 U.S.C. § 1818(b), and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE AND DESIST ("CONSENT AGREEMENT"), dated April 4, 1991, whereby solely for the purpose of this proceeding and without admitting or denying any alleged unsafe or unsound banking practices, the Respondents consented to the issuance of an ORDER TO CEASE AND DESIST ("ORDER") by the FDIC.
   The FDIC considered the matter and determined that it had reason to believe that the Respondents had engaged in unsafe or unsound banking practices which resulted in their unjust enrichment. The FDIC, therefore, accepted the CONSENT AGREEMENT and issued the following:

ORDER TO CEASE AND DESIST

   IT IS HEREBY ORDERED, that the Respondents, as institution-affiliated parties of the Bank, as defined in section 3(u) of the Act, 12 U.S.C. § 1813(u), their successors and assigns, cease and desist from engaging in the unsafe and unsound banking practice of diverting, or causing or permitting the diversion of, Bank income, in the form of commissions, fees, or any other kind of income whatsoever, directly or indirectly, (i) to any affiliate of the Bank and/or (ii) to the Respondents or any of their related interests. For purposes of this ORDER, "affiliate" is defined as provided in section 23A(b)(1) of the Federal Reserve Act, 12 U.S.C. § 371c(b)(1), and "related interest" is defined as provided in section 215.2(k) of Regulation O of the Board of Governors of the Federal Reserve System ("Regulation O"), 12 C.F.R. § 215.2(k).
   IT IS FURTHER ORDERED, that the Respondents, their successors and assigns, take affirmative action as follows:

   [.1] 1. (a) (i) Immediately upon the sale of any of Respondents' ownership interest in the Bank, the Respondents, jointly and severally, shall make, or cause to be made, from the proceeds of any such sale restitution or provide, or cause to be provided, reimbursement to the Bank in the amount of the proceeds {{12-31-92 p.C-974}} of such sale up to $381,000, less the outstanding unpaid principal and accrued interest of GL & ML, Ltd.'s Bank stock loan from the The Merchants National Bank of Cedar Rapids, Cedar Rapids, Iowa, and necessary and reasonable transaction expenses.
   (ii) For purposes of this ORDER:

       (A) "Respondents' ownership interest in the Bank" means Respondents' property rights in the Bank resulting from their 50 percent ownership of GL & ML, Ltd., which owns 93.8 percent of the bank's stock. (Respondents do not own directly any stock of the Bank.)
       (B) "Sale" means the transfer, assignment, or other disposition for valuable consideration of any voting stock or assets of the Bank or GL & ML, Ltd., which, directly or indirectly, affects Respondents' ownership interest in the Bank.
   (b) Such restitution or reimbursement shall not be paid for or funded, directly or indirectly, from or by the use of the bank's assets in any manner whatsoever, including by means of any extension of credit from said Bank. As used in this ORDER, "extension of credit" means the same as defined in section 215.3 of Regulation O, 12 C.F.R. § 215.3.
   (c) Immediately after consummation of any agreement resulting in the sale of Respondents' ownership interest in the Bank, Respondents shall provide, or cause to be provided, to the Regional Director of the FDIC's Kansas City Regional Office a copy of all final documents evidencing such transaction and a written report of the distribution of all proceeds, including payments of all transaction expenses, made or to be made pursuant thereto.
   (d) If, after 120 days from the effective date of this ORDER, Respondents' ownership interest in the Bank has not been sold pursuant to written agreement which provides for restitution or reimbursement to the Bank in conformance with paragraph 1(a)(i) of this ORDER, the FDIC reserves the right to initiate additional enforcement action against the Respondents, pursuant to section 8(b)(6)(A) of the Act, 12 U.S.C. § 1818(b)(6)(A), to obtain restitution or reimbursement to the Bank.

   [.2] 2. Following the effective date of this ORDER, the Respondents, individually and jointly, shall cause the Bank to send to its shareholders a description of this ORDER, (1) in conjunction with the Bank's next shareholder communication, and also (2) in conjunction with its notice of proxy statement preceding the Bank's next shareholder meeting. The description shall fully describe the ORDER in all material respects. The description and any accompanying communication, statement, or notice shall be sent to the FDIC, Registration and Disclosure Unit, Washington, D.C. 20429, for review at least 20 days prior to dissemination to shareholders. Any changes requested to be made by the FDIC shall be made prior to dissemination of the description, communication, notice, or statement.
   This ORDER shall become effective 10 days from the date of its issuance.
   The provisions of this ORDER shall be binding upon the Respondents, their successors and assigns.
   The provisions of this ORDER shall remain effective and enforceable except to the extent that, and until such time as, any provisions of this ORDER shall have been modified, terminated, suspended, or set aside by the FDIC.
   Pursuant to delegated authority.
   Dated this 10th day of April, 1991.

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