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FDIC Enforcement Decisions and Orders |
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FDIC issued an order continuing the suspension and prohibition from further participation in the affairs of the bank against a chairman of the board of directors and the managing director/chief executive officer of the bank who were both charged with crimes involving dishonesty and breach of trust.
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[.2] Prohibition, Removal, or SuspensionRight to Hearing
[.3] Suspension and ProhibitionDeceitful Activity
[.4] Suspension and ProhibitionImpairment of Public Confidence in a Bank
IN THE MATTER OF * * *
IT IS ORDERED, that the Notice and Order of Suspension and Prohibition issued by the Board of Directors of the Federal Deposit Insurance Corporation against * * *, pursuant to section 8(g) of the Federal Deposit Insurance Act (12 U.S.C. § 1818(g)), on December 13, 1984, be, and hereby is, continued in effect.
BEFORE THE FEDERAL DEPOSIT INSURANCE CORPORATION
RECOMMENDED DECISION
Procedural History
On * * * the U.S. Attorney for the U.S. District Court for the Southern District of * * * filed indictments against * * *, Chairman of the Board of Directors, and against * * *, Managing Director and Chief Executive Officer, of the * * * Bank, * * *. Both were charged with crimes involving dishonesty and breach of trust.
Indictments
* * * was indicted for aiding and abetting in the commission of Federal crimes in violation of 18 U.S.C. § 2, interstate and foreign travel in aid of racketeering in violation of 18 U.S.C. § 1952(a)(1), the use of U.S. mail for fraud in violation of 18 U.S.C. § 1341, racketeering in violation of §§ 1962(c) and (d), the importation of controlled substances in violation of 21 U.S.C. § 952(a), and conspiracy in violation of 21 U.S.C. § 963.
Position and Proposal of the * * *
Counsel for * * *, as stated, announced at the hearing on March 11, 1985, that * * * was not pursuing any remedies as to the Corporation's Notice and Order of Suspension and Prohibition issued to him in consequence of the foregoing indictment. Counsel stated (Tr. 12):
Statutory Criteria
[.1] Section 8(g)(1) of the FDI Act states that whenever any officer or director, or other person participating in the conduct of the affairs of a bank, is charged with the commission of or participation in a crime involving dishonesty or breach of trust punishable by imprisonment for a term exceeding one year under state or federal law, the appropriate federal banking agency may suspend such individual from office or prohibit him from further participation in any manner in the conduct of the affairs of the bank if continued service or participation by such individual may pose a threat to the interests of the bank's depositors or may threaten to impair public confidence in the bank.
[.2] Under Section 8(g)(3) an individual served with a Notice and Order of Suspension and Prohibition has a right to a hearing to show "that the continued service to or participation in the conduct of the affairs of the bank by such individual does not, or is not likely to, pose a threat to the interests of the bank's depositors or threaten to impair public confidence in the bank".
Evidence Introduced by * * *
* * *, Assistant Director of the Division of Banking, * * * State Comptroller's Office, testified that he had had more to do with the * * * Bank than most other employees of the Division of Banking and that he was involved in negotiations concerning the Consent Order signed by directors of the * * * Bank and the Comptroller of * * * subsequent to the Indictment of * * * on December 11, 1984.
Arguments of * * *
* * * maintains that the evidence which he introduced, legal authority, policy considerations, and the record in this proceeding, establish that he is entitled to the modification he proposes to the Order of Suspension and Prohibition issued by the Corporation. * * * states that (Brief, p. 1):
* * *, Assistant Director for the FDIC's * * * Region, stated that the * * * Bank fell within his personal scope of responsibility as assistant regional director. When he learned of the indictments brought by the federal grand jury against * * * and * * * he was concerned for the bank's liquidity. He was afraid that adverse publicity could result in a run on the bank and suggested to the bank that a line of credit be sought through the Federal Reserve (Tr. 383). On receiving the indictment, Mr. * * * determined that a felony involving dishonesty and a breach of trust was charged.
Opinion
The indictment has been described by sections of the U.S. Code allegedly violated earlier in this recommended decision. It is essential, however, to a resolution of the contentions in this matter that the crimes alleged against * * * be understood in detail. Describing these charges is not a matter of parading inflammatory material. Rather, the nature and gravity of the charges against * * * are highly relevant to the issues in this proceeding.
[.3] In sum, charges have been made that * * * and * * * have used fraud, false statements, deceit, misrepresentation, false entries in books and records, false applications, lying and concealment of material facts in connection with the * * * Bank and in dealings with state and federal authorities seeking to carry out their official functions.
[.4] The federal banking agency having jurisdiction is not required to wait until public confidence in a bank is actually impaired, but may suspend and prohibit an individual from further participation in a bank's affairs where there is a likelihood of such impairment. Senator Proxmire introduced legislation permitting suspension or prohibition of a bank official charged with a crime involving dishonesty or breach of trust and stated:
Conclusions and Recommendation
Based on a consideration of all the evidence and the record as a whole, and all the circumstances, including the charges of conspiracy, racketeering, submitting false information to banking authorities, charges of causing and maintaining false entries in the books and records of the * * * Bank, and charges of concealing the true ownership of certain other defendants named in the indictment, the undersigned concludes that participation of * * * and * * *, in any manner, in the aftairs of the * * * Bank, may pose a threat to the interests of the bank's depositors and may threaten to impair public confidence in the bank. |
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Last Updated 6/6/2003 | legal@fdic.gov |