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   [5154] In the Mater of Paul J. Pluhacek, Docket No. FDIC-89-6e(5-3-90).

   Officer prohibited from acting as an institution-affiliated party of Bank and from participation in the conduct of the affairs of any insured institution.
   [.1] Prohibition, Removal, or Suspension—Notice of Intention to Prohibit—Failure to Answer
   When Respondent fails to answer a Notice of Intention to Prohibit from Further Participation he waives right to contest allegations and facts alleged in the Notice are deemed admitted.

   [.2] Prohibition, Removal, or Suspension—Prohibition—Service as an Institution-Affiliated Party of Bank

   [.3] Prohibition, Removal, or Suspension—Prohibition—Service as an Institution-Affiliated Party of Any Insured Institution

   [.4] Prohibition, Removal, or Suspension—Prohibition—Exercise of Voting Rights

In the Matter of
PAUL J. PLUHACEK, individually and
as a officer and as a person
participating
in the conduct of the affairs of
MANCOS VALLEY BANK
MANCOS, COLORADO
(Insured State Nonmember Bank)
DEFAULT DECISION AND ORDER

I. DECISION

   This proceeding, brought by the Federal Deposit Insurance Corporation ("FDIC"), seeks removal of Paul J. Pluhacek ("Re- {{8-31-91 p.A-1540.17}}spondent"), individually and as an officer and as a person participating in the conduct of the affairs of Mancos Valley Bank, Mancos, Colorado (the "Bank"), for allegedly misappropriated bank funds for his personal use.
   On February 10, 1989, the FDIC issued a Notice of Intention to Prohibit From Further Participation ("Notice"), pursuant to Section 8(e) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. § 1818(e), and the FDIC Rules and Regulations, 12 C.F.R. Part 308. The Notice alleges two instances in which Respondent misappropriated funds totaling $13,514.99 for his personal use. Notice at 4–7. The Notice directs Respondent to file an Answer to the Notice within 20 days from the date of service. Notice at 9.A return receipt indicates that Respondent acknowledged receipt of the Notice on February 19, 1989. However, he has failed to answer the Notice or otherwise respond. On November 13, 1989, FDIC enforcement counsel filed a Motion for Issuance of an Order Prohibiting Further Participation by Default. Respondent did not respond to this Motion. At no time has Respondent sought leave to file a late Answer or made any effort to excuse his failure to file an Answer.

II. Regulatory Provisions

   [.1] Section 308.21(a)(1) of the FDIC Rules and Regulations provides: "Every Respondent shall file an answer with the Executive Secretary within twenty days after service of the Notice . . ."
   The directive of this rule could not be more clear. An Answer to the charges in the Notice must be filed by Respondent. Furthermore, consistent with this provision the Notice specifically put Respondent on notice of the obligation to file an Answer. The Notice states: "Respondent is hereby directed, pursuant to the provisions of section 308.21(a) of the FDIC Rules of Practice and Procedures, 12 C.F.R. § 308.21(a), to file an Answer to this Notice within 20 days from the date of service of this Notice." Notice at 9.
   Section 308.21(d) states as follows:

    "Default. Failure of a Respondent to file an answer within twenty days shall be deemed a waiver of the right to appear and contest the allegations of fact and the requested relief contained in the Notice and a consent by that Respondent to entry of an order granting any proper relief that is sought by the Notice."
   Decisions of the FDIC Board of Directors have applied this default and waiver provision in similar removal actions when a party fails to file an Answer. FDIC-86-35e, 2 P-H FDIC Enf. Dec. ¶5067 (1986) (Default decision in which bank director was deemed to have consented to removal for improperly approving a loan in excess of the lending limit); FDIC-85-343e, 2 P-H FDIC Enf. Dec. ¶5085 (1987) (Default decision concerning bank officer removed for unsafe and unsound practices); FDIC-87-144e, 2 P-H FDIC Enf. Dec. ¶5094 (1987) (Default decision concerning bank president removed for engaging in certain unsafe and unsound activities). Similarly, in this proceeding Respondent's failure to file an Answer is a waiver of his right to contest the allegations in the Notice and results in an uncontested proceeding under Section 308.21(d)(2). Accordingly, the Executive Secretary is empowered to grant the relief sought in the Notice and issue an appropriate Order. 12 C.F.R. § 308.21(d)(2).

III. Conclusion

   For the reasons set forth above, the Executive Secretary hereby adopts and incorporates by reference the allegations contained in the Notice and enters the following Order of Prohibition From Further Participation.

ORDER OF PROHIBITION FROM
FURTHER PARTICIPATION

   The Executive Secretary has reviewed the record in this proceeding and finds that Respondent has failed to file an Answer as required by section 308.21(a). Pursuant to section 308.21(d), Respondent has waived the right to contest the allegations of the Notice of Intention to Prohibit From Further Participation and those allegations are

(Next page is A-1541.)

{{5-31-91 p.A-1541}}deemed admitted. Therefore, Respondent has admitted that he has engaged in acts which constituted unsafe and unsound banking practices, breached his fiduciary duty, demonstrated a willful or continuing disregard for the safety and soundness of the Bank, evidenced personal dishonesty, and caused a loss to the Bank. This conduct evidences Respondent's unfitness to participate in the affairs of the Bank or any other depository institution insured by the FDIC. Accordingly, it is hereby ORDERED that:

   [.2] 1. Paul J. Pluhacek is prohibited from serving or acting as an institution-affiliated party of Mancos Valley Bank, Mancos, Colorado, without the prior written approval of the FDIC.

   [.3] 2. Paul J. Pluhacek is prohibited from serving or acting as an institution-affiliated party and/or from participating in any manner in the conduct of the affairs of any of the institutions or agencies, listed herein, without the prior written consent of the FDIC and of the appropriate Federal financial institutions regulatory agency pursuant to the provisions of section 8(e)(7) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(7):

       (i) Any insured depository institution;
       (ii) Any institution treated as an insured bank under sections 8(b)(3)-(4) of the Act including: (1) any bank holding company, (2) any subsidiary of a bank holding company, (3) any foreign bank that maintains a branch or agency in a State, (4) any foreign bank or foreign company controlling a foreign bank that controls a commercial lending company organized under State law, and any company of which any foreign bank or company referred to in (3) and (4), above, is a subsidiary, or as a savings association under section 8(b)(8) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(b)(8), including any savings and loan holding company, any subsidiary of a savings and loan holding company, any service corporation of a savings association, and any subsidiary of any service corporation of a savings association;
       (iii) Any insured credit union under the Federal Credit Union Act;
       (iv) Any institution chartered under the Farm Credit Act of 1971;
       (v) Any appropriate Federal depository institution regulatory agency;
       (vi) The Federal Housing Finance Board and any Federal home loan bank; and
       (vii) The resolution Trust Corporation.

   [.4] 3. Paul J. Pluhacek is prohibited from soliciting, procuring, transferring, attempting to transfer, voting, or attempting to vote any proxy, consent, or authorization with respect to any voting rights in any institutions described in paragraph 2 hereof.
   4. Paul J. Pluhacek is prohibited from voting for a director of any insured depository institution.
   The provisions of this ORDER shall remain effective and enforceable except to the extent that, and until such time as, any provision of this ORDER shall have been modified, terminated, suspended, or set aside by the FDIC.
   This Decision and Order issued pursuant to delegated authority.
   Dated at Washington, D.C. this 3rd day of May, 1990.

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