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   [5211] In the Matter of Richard M. Roberson, First Citizens Bank, Hardin County, Inc., Elizabethtown, Kentucky, Docket No. FDIC-92-122e (2-22-94).

   Board adopts ALJ's recommendation and issues order of prohibition against former bank officer found to have engaged in unsafe and unsound practices that exhibit personal dishonesty: making accommodation loans to others from which he derived benefit, and concentrating disproportionate levels of credit with a small group of interrelated borrowers.

   [.1] Prohibition—Personal Dishonesty
   Circuitous transactions, purposefully concealed from others, from which respondent used proceeds, exhibit personal dishonesty for which respondent is prohibited from further involvement in insured institutions.

   [.2] Prohibition—Unsafe or Unsound Practices—Loan Concentrations
   Respondent as loan officer knew or should have known that borrowers were acting in concert—as evidenced by their financial statements, partnership and incorporation documents, and cross-collateral mortgages—and that loans to them constituted an unsafe concentration of credit.

In the Matter of
RICHARD M. ROBERSON,
individually,
and as an officer, director, a
person participating in the conduct
of the affairs of, and an
institution-affiliated party of
FIRST CITIZENS BANK HARDIN COUNTY, INC.
ELIZABETHTOWN, KENTUCKY
(Insured State Nonmember Bank)
DECISION AND ORDER
FDIC-92-122e

{{4-30-94 p.A-2396}}

INTRODUCTION

   This is a proceeding initiated by the Federal Deposit Insurance Corporation ("FDIC") on August 10, 1992, seeking to prohibit from further participation in federally insured financial institutions Richard M. Roberson ("Respondent"), former director and executive vice-president of First Citizens Bank, Hardin County, Inc., Elizabethtown, Kentucky ("Bank"). Following Respondent's failure to file a timely Answer, this matter was submitted to the Board of Directors of the FDIC ("Board") upon a Recommended Decision of Default issued by Administrative Law Judge Arthur L. Shipe ("ALJ"). On February 25, 1993, pursuant to delegated authority, upon the advice and recommendation of the General Counsel, the Executive Secretary ordered the record reopened and remanded for further proceedings. Such action was necessary in this case because the record raised questions as to whether a default was appropriate, there were factual similarities to Amberg, et al. v. FDIC, 934 F.2d 681 (5th Cir. 1991)1 and because of the gravity of the sanctions imposed by a removal and prohibition proceeding. Further, the record previously considered did not indicate that the Respondent acquiesced in the default.
   This proceeding involves two types of alleged misconduct. First, in connection with five separate accommodation loans,2 Respondent allegedly received kickbacks totaling $300,000. Recommended Decision at 5.3 In each instance, monies were disbursed to a designated borrower, then passed through a series of cashier's checks, certificates of deposit, and demand accounts before a portion of the proceeds ultimately arrived in one of Respondent's accounts. R.D. at 5. Respondent utilized these funds to service his various debts. None of the five loans were adequately secured, if at all, and in combination they resulted in a loss to the Bank of $850,000, which was ultimately charged against the Loan Loss Reserve. R.D. at 6.
   Second, Respondent allegedly extended credit to a series of individuals, corporations, and partnerships known as the "Blanton entities." The Blanton entities, which had overlapping and interrelated interests,4 were involved in a construction project known as the Hartland Planned Community located in Bowling Green, Kentucky. Respondent, who served as a loan officer on each and every extension of credit to the Blanton entities, allowed these entities to collectively borrow a total of $8,166,840, representing 222 percent of the Bank's paid-in capital and surplus.5 As a result of this improper concentration of credit, the Bank suffered losses in the amount of $5,009,175. R.D. at 8. Respondent resigned from the Bank in August 1990, when an examination uncovered these improper practices. R.D. at 4.
   After a hearing at which Respondent appeared with counsel, but neither testified nor presented evidence, the ALJ issued a Recommended Decision that Respondent be prohibited from further participation in the conduct of the affairs of any federally insured depository institution under section 8(e)(7) of the Federal Deposit Insurance Act ("FDI Act"), 12 U.S.C. § 1818(e)(7). Neither party filed Exceptions.

DISCUSSION

   [.1,.2] After a thorough review of the record in this proceeding, the Board agrees with the ALJ's findings and conclusions regarding the alleged conduct6 and discussion


1 In Amberg, et al. v. FDIC, 934 F.2d 681 (5th Cir. 1991), an untimely Answer was filed and the Board issued a default decision, which was not sustained on appeal.

2 Accommodation loans are loans taken out by one person to benefit or accommodate another, whose name does not appear in the bank's records. In the matter of Anonymous, FDIC-87-5g, Bound Vol. I P-H FDIC Enf. Dec. ¶5121 at A-1381 (1988).

3 Citations to the record of this proceeding shall be as follows: Recommended Decision ____ "R.D. at ____."

4 The Blanton entities had common directors, officers, and shareholders. Further, the loan proceeds of the various borrowers were deposited in a common bank account at the Bank.

5 Section 287.280(1) of the Kentucky Revised Statutes sets forth the maximum allowable indebtedness (expressed as a percentage of paid-in capital and surplus) for individuals and interrelated entities. Individuals may not be obligated in excess of 20 percent of a bank's paid-in capital and surplus, unless fully secured. Debt of interrelated entities shall not exceed 30 percent of the bank's paid-in capital and surplus. In the case of the Bank, the individual Blanton loans all exceeded the individual lending limitation, and when aggregated the total (222 percent) far exceeded the permissible limit (30 percent). R.D. at 8.

6 Concerning the accommodation loans, the ALJ finds, and the Board agrees, that Respondent "through a series of calculated and circuitous transactions, purposefully and deceptively concealed from others, his misappropriation of loan proceeds for personal gain." R.D. at 12. (Continued)

{{4-30-94 p.A-2397}}of the statutory criteria.7 Accordingly, the Board adopts and incorporates herein by reference the ALJ's Recommended Decision.

CONCLUSION

   The Board concludes that Respondent's conduct constituted unsafe or unsound practices and breaches of fiduciary duty to the Bank, is evidence of personal dishonesty, and demonstrates a willful and continuing disregard for the safety or soundness of the Bank, and that the record fully supports issuance of an order to permanently prohibit Respondent from further participation in the affairs of the banking industry under the provisions of section 8(e) of the FDI Act, 12 U.S.C. § 1818(e).

ORDER OF PROHIBITION

   Accordingly, the Board, having considered the entire record in this proceeding, HEREBY ORDERS that, without the prior written approval of the FDIC and the appropriate Federal financial institutions regulatory agency, as that term is defined in section 8(e)(7)(D) of the FDI Act, 12 U.S.C. § 1818(e)(7)(D), Richard M. Roberson is hereby prohibited from:
   a. participating in any manner in the conduct of the affairs of any financial institution or organization enumerated in section 8(e)(7)(A) of the FDI Act, 12 U.S.C. § 1818(e)(7)(A);
   b. soliciting, procuring, transferring, attempting to transfer, voting or attempting to vote any proxy, consent or authorization with respect to any voting rights in any financial institution enumerated in section 8(e)(7)(A) of the FDI Act, 12 U.S.C. § 1818(e)(7)(A);
   c. violating any voting agreement previously approved by the appropriate Federal banking agency; or,
   d. voting for a director, or serving as an institution-affiliated party.
   IT IS FURTHER ORDERED, that this ORDER shall become effective upon the expiration of thirty (30) days after its service. The provisions of this ORDER will 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 action of the FDIC.
   By direction of the Board of Directors.
   Dated at Washington, D.C., this 22nd day of February, 1994.
   /s/ Robert E. Feldman
   Acting Executive Secretary

______________________________________

RECOMMENDED DECISION

In the Matter of
Richard M. Roberson,
individually and as a director,
officer, and institution-
affiliated party of
First Citizens Bank Hardin County, Inc.
Elizabethtown, Kentucky
(Insured State Nonmember Bank)
FDIC 92-122e
Arthur L. Shipe, Administrative Law Judge:

Procedural Background

   This action arises from a Notice of Intention to Prohibit Further Participation, issued pursuant to Section 8(e) of the Federal Deposit Insurance Act, 12 U.S.C. § 1818(e). (Hereinafter the "Act.") The Notice alleges in its most basic form that Respondent Richard M. Roberson engaged or participated in unsafe and unsound banking practices, violations of applicable law and regulation, and breaches of fiduciary duty, while affiliated with the First Citizens Bank of Hardin County, Inc., Elizabethtown, Kentucky.
   The Notice institutes this proceeding for the purpose of determining whether an appropriate order should be issued prohibiting the Respondent from further participation in the conduct of the affairs of any federally insured depository institution enumerated in Section 8(e)(7) of the Act.
   The proceeding was initially the subject of a Motion for Default, filed by counsel for the Federal Deposit Insurance Corporation ("FDIC") on September 24, 1992. After the Respondent failed to properly file an An-


6 Continued: The Board also agrees with the ALJ's findings regarding the Blanton loans, that Respondent, as loan officer knew, or certainly should have known, that the borrowers were acting in concert, as evidenced by their Financial Statements, Articles of Incorporation, Partnership Agreements, and cross-collateral mortgages, all of which evidenced the common interests of these borrowers. R.D. at 8.

7 See R.D. at 8–11.
{{4-30-94 p.A-2398}}swer in this proceeding, failed to reply to the FDIC Motion for Default, and failed to respond to my Order to Show Cause why default should not be entered, the FDIC Motion was granted on November 24, 1992, and a Recommended Decision was issued containing the findings and relief sought in the Notice.
   Neither party filed any exceptions to the Recommended Decision, which was then transmitted to the FDIC Board of Directors on December 9, 1992.
   On February 25, 1993, the FDIC Executive Secretary, without elaboration, remanded the matter for further proceedings. The remanding order directed that the record be reopened, and that hearings be conducted as set forth in the Notice.
   Accordingly, a telephonic Scheduling Conference was convened on March 23, 1993. Counsel for the Respondent reluctantly participated in the conference, conceding the Respondent's acquiescence to the recommended disposition by default. Nevertheless, an Oral Hearing was scheduled and subsequently conducted on June 14, 1993, in Louisville, Kentucky.
   Though Respondent did, surprisingly, appear at the hearing, with counsel, he offered no documentary evidence in his defense, presented no witnesses, declined to testify, and filed no post-hearing brief.
   Our judicial resources have now been expended in this matter, the transcript and exhibits have been filed, and the Post-Hearing Brief of the FDIC has been considered. Based upon the record thus constituted, I recommend the following.

Discussion of Fact

   Before his resignation in August of 1990, Respondent Richard M. Roberson served as Director, Executive Vice President, and Loan Administrator, of the First Citizens Bank, Hardin County, Inc. In these various capacities, the Respondent exercised broad authority over the bank's lending function, which authority was freely conferred by the Bank's president and Board of Directors, largely due to the Respondent's trust and reputation, developed over his 18 years with the institution.
   The Bank underwent a concurrent examination by FDIC and Kentucky state bank examiners as of July 27, 1990. Some two weeks after commencement of the examination, Respondent, when confronted with certain of the examiners' preliminary findings, immediately resigned from the Bank. The examination nonetheless proceeded, and uncovered a series of self-dealing practices and violations on the part of the Respondent, which included several accommodation loans, from which the Respondent received personal benefit, as well as numerous violations of state lending restrictions, which resulted in illegal concentrations of credit and substantial financial loss to the bank.
   Accommodation loans are loans taken by one person for the benefit or "accommodation" of another. The names of those for whom these loans are extended do not appear on the bank's records, usually to conceal the identity of the true borrower, for whatever reason. In the Matter of Anonymous, FDIC 87-5g, FDIC Enf. Dec. ¶5121 at A-1381 (1988).
   In this instance bank examiners discovered five different extensions of credit by the First Citizen Bank, made or caused by the Respondent as lending officer, the proceeds of which ultimately, in part, inured to the Respondent's personal benefit.
   These loans were initially disbursed to a designated borrower. The funds were then passed through a series of cashier's checks, certificates of deposit, demand accounts, etcetera, before ultimately being deposited into one of several accounts to which Respondent had personal access.
   By tracing these funds, examiners were able to determine that during the two year period 1988 to 1990, the Respondent, without ever identifying himself as an intended beneficiary, and for that matter, attempting through overt means to conceal this fact, appropriated loan proceeds in excess of $300,000 for his personal use. The payments which the Respondent ultimately received from these loan transactions were described by the FDIC expert as "kickbacks," given in exchange for the extension of credit to the involved borrower.
   These kickback funds were then used by the Respondent to make payment on his personal debts, as well as the debt of certain of his related interests.
   None of the five accommodation loans which are the subject of this proceeding were adequately secured, if secured at all. Of these loans which were initially collateralized, the property securing the credit was either released by the Respondent subsequent to the extension, was encumbered by a prior lien,
{{4-30-94 p.A-2399}}or was of sufficient value to fully secure the amount of credit extended.
   In combination, the five accommodation loans resulted in loss to the Bank, which ultimately charged $850,000 against the Loan Loss Reserve.
   In addition to the above accommodation loans, Respondent Roberson extended or permitted the extension of credit to a series of individuals, corporations, and partnerships, collectively referred to as the "Blanton-related entities."
   These seven individual and corporate borrowers were involved in a joint construction development project known as the Hartland Planned Community, in Bowling Green, Kentucky. A review of the loan files revealed that most of the Blanton-related entities shared a common business address, had common directors, officers, and shareholders, and were otherwise known as business associates. The record reflects that the loan proceeds of the various borrowers were all deposited into a common bank account at the First Citizens Bank, and that in virtually all respects the borrowers had other interrelated and overlapping interests.
   The FDIC expert testified that prudent and sound banking practices would require that all loans to these interrelated business affiliates be aggregated, for purposes of analyzing the bank's concentration of credit.
   Despite extensive documentation within the loan file, however, Respondent Roberson exposed this bank to significant risk, by concentrating disproportionate levels of credit with this small group of inter-dependent borrowers.
   During the examination, the FDIC determined that Respondent caused or allowed these related interests to borrow in the aggregate some $8,166,840, which amount represents 222 percent of the bank's paid-in capital and surplus.
   For this reason the examiner cited the bank for an excessive concentration of credit, which violated the lending limit restrictions contained in Section 287.280(1) of the Kentucky Revised Statutes. This section limits such indebtedness or obligation to an amount not in excess of 30 percent of the bank's paid-in capital and surplus.
   This same statute prohibits any person from being obligated as a guarantor or surety to a bank, in excess of 20 percent of the bank's paid-in capital and surplus, unless the indebtedness is fully secured by good collateral.
   In this instance the balance of each individual loan exceeded this lending limitation, and when aggregated, the total far exceeded the permissible limit.
   As a direct and proximate result of the above concentrations of credit, the First Citizens Bank suffered losses in the amount of $5,009,175. Respondent Roberson served as loan officer on each and every extension of credit to the Blanton-related entities, and knew, or certainly should have known, that the borrowers were acting in concert, as evidenced by their financial statements, Articles of Incorporation, Partnership Agreements, cross-collateral mortgages, and other documents, all of which evidenced the commonality of these various borrowers.
   As a result of the above losses, FDIC examiners determined that the capital ratios of the First Citizens Bank fell below the minimum regulatory requirements set forth in Part 325 of the FDIC's Rules and Regulations. As a result, the institution's holding company recapitalized the bank with an injection of $3.3 million.

Discussion of Law

   Prohibition proceedings brought pursuant to Section 8(e) of the Act must be predicated upon three separate and distinct elements, which provide a number of alternative grounds.1 The first category relates to the wrongful conduct that must be established, and requires a showing that an officer or director has:

    (1) violated-
         (i) Any law, rule or regulation;
         (ii) Any cease and desist order; or,
    (2) Engaged or participated in any unsafe or unsound practice in connection with the bank; or
    (3) Committed or engaged in any act,

1 Section 8(e) was amended on August 9, 1989, by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). The enactment of FIRREA created a slightly different standard by which pre-FIRREA and post-FIRREA conduct is to be measured when determining the financial effect of the alleged wrongful conduct. The other elements remain, for the most part, substantively unchanged.
{{4-30-94 p.A-2400}}
    omission, or practice, which constitutes a breach of fiduciary duty.
   The second category relates to the effect of the wrongful conduct. It requires a showing that by reason of the violation, practice, or breach:
    (1) The bank has suffered or will probably suffer [substantial]2 financial loss or other damage; [or]
    (2) The interests of the bank's depositors could be seriously prejudiced; or
    (3) The director or officer has received financial gain by reason of the violation, practice, or breach of duty.
   The third category involves the mental state of the officer or director. It requires a showing that such violation, practice, or breach of fiduciary duty:
    (1) Involves personal dishonesty; or
    (2) Demonstrates willful or continuing disregard by the officer or director for the safety or soundness of the bank.
   Within each of these three categories, one of the alternative grounds must be established, in order to legally and properly support the issuance of a removal and prohibition order.
   As to the first category, conduct, the question is whether Respondent Roberson, by causing and or permitting the accommodation loans and credit concentrations discussed herein, has engaged in the requisite wrongful conduct for which he may be prohibited from the industry.
   By accepting for his personal use and benefit the proceeds of these certain loans, this respondent has obviously engaged in the act of self-dealing. He has misappropriated the funds of this bank for his own interest, in a manner clearly unsafe and unsound for the institution, and in flagrant breach of his fiduciary duty. See Generally In the Matter of Anonymous, Docket No. FDIC-84-58e, FDIC Enf. Dec. and Orders ¶5042 at A-375 (1985); In the Matter of Anonymous, Docket No. FDIC-87-5g, FDIC Enf. Dec. and Orders ¶5121 at A-1381 (1988).
   Furthermore by causing or permitting the bank to exceed the lending limitations imposed by Kentucky state law, this Respondent has likewise violated applicable law. On this record, I conclude that each of the alternative bases are established, to properly substantiate this first element of the prohibition and removal statute.
   As to the second category, or effect, the question becomes whether Respondent Roberson, by his actions, incurred financial gain or other benefit, or caused financial harm or other damage to the institution.
   The evidence which constitutes proof of this element is unrefuted, and establishes that this Respondent did mulct from the institution some $300,000, which he then used for his own personal interests. His actions induced calamitous loss to the bank to excess of $6,000,000, which loss seriously threatened the safety and soundness of this institution. In my opinion, the evidence adequately establishes each of the alternative grounds for this, the second element of prohibition.
   Finally, there is the category involving mental state, where the question becomes whether this Respondent has demonstrated the requisite degree of culpability to sustain his prohibition from the banking industry.
   In this regard the record reflects that Respondent Roberson, through a series of calculated and circuitous transactions, purposefully and deceptively concealed from others, his misappropriation of loan proceeds for personal gain. His use of various passthrough accounts, certificates of deposit, and cashier's checks, all evidence the artifice with which he pilfered hundreds of thousands of dollars from this bank over a period of approximately two years.
   The Respondent offered little, if anything, in his defense. On very limited cross examination, his counsel inferred that some liability for this ordeal must rest with the board of directors of the institution, who allegedly exercised insufficient control over the Respondent and his operations.
   While this might be true, it is difficult to understand how the board might be expected to ever know of these hidden machinations which this Respondent so artfully disguised. On at least one occasion the Respondent opened a checking account in the name of one of his various organizations, which account remained open for only fourteen days. The sole purpose of this account was to dissipate the proceeds of one of the

2 As discussed in the preceding footnote, FIRREA had the effect of removing the requirement that loss incurred by a bank be "substantial." Thus, post-FIRREA conduct requires a showing of some loss, whereas pre-FIRREA conduct requires the additional showing of substantial loss.
{{4-30-94 p.A-2401}}accommodation loans, after which the account was promptly closed.
   This chicanery can obviously be the responsibility of none other than Respondent Roberson. Even assuming, however, some complicity by the other members of the Bank's board, particularly with respect to the Blanton loans, this Respondent, as the responsible lending officer, had some if not more duty to avoid these repeated extensions of credit, in light of the known circumstances.
   In my opinion, the Respondent's conduct demonstrates his personal dishonesty and his willful and continuing disregard for the safety and soundness of this depository institution, for which he should be permanently prohibited from the industry.
   I must admit that I am at somewhat of a loss to understand what may have motivated Respondent Roberson to engage in these actions after his many years with this bank. It strongly appears as though his personal financial situation became seriously distressed, such that he turned to the bank for needed capital. Without any explanation from the Respondent, I can only conclude that his actions were for these improper reasons.
   Accordingly, I make the following Findings of Fact, Conclusions of Law, and recommend entry of the Proposed Order accompanying this decision.

FINDINGS OF FACT

   1. First Citizens Bank, Hardin County, Inc., ("Bank") was, at all times relevant hereto, an insured state nonmember banking corporation, chartered and doing business under the laws of the Commonwealth of Kentucky. (Tr. 28, 30; Ans. ¶1).
   2. At all times relevant hereto, the Bank had its principal place of business in Elizabethtown, Kentucky. (Tr. 30; Ans. ¶1).
   3. At all times relevant hereto, Richard M. Roberson ("Respondent") served as director, Executive Vice President, and Senior Lending Officer of the Bank. (Tr. 31–33; Ex. 1, pp. B, B-1; Ex. 3; Ans. ¶[1]).
   4. At all times relevant hereto, Respondent was a person participating in the conduct of the affairs and "institution-affiliated" party of the Bank as defined in 12 U.S.C. § 1813(u). (Ans. ¶1).
   5. The FDIC and the Kentucky Department of Financial Institutions conducted a concurrent examination of the Bank as of July 27, 1990. (Tr. 27; Ex. 1).
   6. Respondent resigned as a director and executive vice president of the Bank on August 13, 1990, when confronted by bank examiners during the examination discussed immediately above. (Tr. 33; Ex. 3).
   7. FDIC Examiner-in-Charge Teresa W. Riney prepared a Report of the Examination as of July 27, 1990, which set forth the findings of the FDIC as of the examination date. (Tr. 27; Ex. 1).
   8. The FDIC and the Kentucky Department of Financial Institutions conducted a concurrent examination of the Bank as of July 12, 1991. (Tr. 31–32; Ex. 2).
   9. FDIC Examiner-in-Charge Teresa W. Riney prepared a Report of Examination of the Bank as of July 12, 1991, which set forth the findings of the FDIC as of this examination date. (Tr. 31; Ex. 2).
   10. At all times relevant hereto, R.J.S. Investments, Inc. ("R.J.S."), was a related interest of Respondent. (Tr. 34–36; Ex. 4; Ex. 29).
   11. At all times relevant hereto, Respondent owned and/or controlled more than 25 percent of the voting stock of R.J.S. and was in incorporator, director, and officer of the corporation. (Tr. 34–35, 47–48; Ex. 4).
   12. At all times relevant hereto, James L. Pate was an incorporator, director, and/or officer of R.J.S. (Tr. 34–35; Ex. 4).
   13. At all times relevant hereto, James L. Pate was a business associate of the Respondent. (Tr. 35).
   14. At all times relevant hereto, S.R. Blanton Development, Inc. was a corporation duly organized under the laws of the Commonwealth of Kentucky, having its principal place of business in Bowling Green, Kentucky. (Tr. 36; Ex. 5; Ans. ¶1).
   15. At all times relevant hereto, Darrell R. Goode, J.C. Traylor and Steven R. Blanton were the sole stockholders, officers, and directors of D.R.G. Investments, Inc. and S.R. Blanton Lands, Inc. (Tr. 38, 42; Ex. 6, 9).
   16. At all times relevant hereto, D.R.G. Investments, Inc. was a corporation duly organized under the laws of the Commonwealth of Kentucky, having its principal place of business in Bowling Green, Kentucky. (Tr. 37–38; Ex. 6; Ans. ¶1).
{{4-30-94 p.A-2402}}    17. At all times relevant hereto, Darrell R. Goode, J.C. Traylor and Steven R. Blanton were the sole stockholders, officers and directors of S.R. Blanton Development, Inc. (Ex. 6, 87; Tr. 121).
   18. At all times relevant hereto, BGT Development Co., Inc. was a corporation duly organized under the laws of the Commonwealth of Kentucky, having its principal place of business in Bowling Green. Its officers and directors were Darrell R. Goode, Steven R. Blanton, and Jerry C. Traylor. (Tr. 38–39; Ex. 7; Ans. ¶1).
   19. At all times relevant hereto, Hartland Planned Community was a partnership composed of Blanton Development, Inc. and BGT Development Co., Inc. (Tr. 122, 129–130; Ex. 88; Ans. ¶1).
   20. At all times relevant hereto, Hartland Planned Community was a partnership duly organized under the laws of the Commonwealth of Kentucky, having its principal place of business in Bowling Green. (Tr. 41; Ex. 8, 73, 74, 75, 88, 89, 100; Ans. ¶1).
   21. At all times relevant hereto, S.R. Blanton Lands, Inc. was a corporation duly organized under the laws of the Commonwealth of Kentucky having its principal place of business at 3251 Spring Hollow Avenue, Bowling Green, Kentucky. (Tr. 42; Ex. 9; Ans. ¶1).
   22. At all times relevant hereto, Property Specialists, Inc. was a corporation duly organized under the laws of the Commonwealth of Kentucky, having its principal place of business in Bowling Green. (Tr. 43–44; Ex. 10).
   23. At all times relevant hereto, David Weaver and J.C. Traylor were the sole stockholders, officers, and directors of Property Specialists, Inc. (Tr. 44; Ex. 10).

Property Specialists, Inc. Loan No. 3057
3/14/88

   24. On or about March 14, 1988, Respondent caused the Bank to extend credit in the amount of $250,000 to Property Specialists, Inc. in the form of a note signed by David Weaver, both individually and as president of Property Specialists, Inc., and Vickie Weaver, individually. (Tr. 45–46; Ex. 11; Ex. 1, p. 2-a-6).
   25. On March 15, 1988, a draw from the Property Specialists, Inc. credit in the amount of $90,000 was made and disbursed by a cashier's check signed by Respondent and made payable to James L. and Georgiana Pate. (Tr. 46–47; Ex. 15).
   26. On March 15, 1988, James L. Pate issued a check on his joint checking account in the amount of $87,500 payable to "TLSC". (Tr. 49; Ex. 16, 17).
   27. On March 15, 1988, the check from James L. Pate for $87,500 was deposited in an account at the Bank entitled ("T.L. Sports Club") ("TLSC"). (Tr. 49–50; Ex. 17, 18).
   28. Respondent was the sole authorized signatory for the "TLSC" account. (Tr. 51; Ex. 19).
   29. Subsequent to March 15, 1988, Respondent made several withdrawals from the TLSC account for his own personal use and benefit. (Tr. 52–55; Ex. 18, 20, 21).
   30. Respondent failed to disclose to the Bank that he was to personally receive the use and benefit of a portion of the proceeds from the extension of credit to Property Specialists, Inc. (Tr. 182–185).
   31. The payment of funds from Property Specialists, Inc. to James L. Pate and from James L. Pate to TLSC constituted a "kickback" in exchange for the extension of credit to Property Specialists, Inc. (Tr. 65).
   32. The extension of credit to Property Specialists, Inc. was secured by a mortgage on real property located in Warren County, Kentucky. (Tr. 56; Ex. 12; Ex. 1, p. 2-a-6).
   33. The title to the real property securing the extension of credit to Property Specialists, Inc. was vested in J.C. and Sharon Traylor. (Tr. 56; Ex. 12, 13).
   34. The title opinion pertaining to the above real property was prepared by Lela E. Shepherd, Attorney at Law, an associate of J.C. Traylor, who was a 49 percent shareholder of Property Specialists, Inc. (Tr. 56–57; 44; Ex. 13).
   35. The title opinion failed to disclose a prior lien upon the property in the amount of $198,000. (Tr. 57; Ex. 13).
   36. The appraisal pertaining to the above real property was prepared by David Weaver, a 51 percent shareholder of Property Specialists, Inc. (Tr. 58, 44; Ex. 14).
   37. The appraisal pertaining to the above real property was prepared for J.C. Traylor, and not for the Bank. (Tr. 58–59; Ex. 14).
   38. The appraisal reflected a purported value of the property of $395,000. (Tr. 59; Ex. 14).
   39. As of November 7, 1988, the balance
{{4-30-94 p.A-2403}}of the credit that Property Specialists, Inc. owed to the Bank was $250,000. (Tr. 60; Ex. 1, p. 2-a-6).
   40. On November 7, 1988, Respondent released the Bank's mortgage upon the real property securing this extension of credit. (Tr. 60–61; Ex. 22).
   41. Respondent accepted a Certificate of Deposit in the amount of $100,000 as substitute collateral for the above extension. (Tr. 61–62; Ex. 23, 24, 25).
   42. As a result of Respondent's releasing the mortgage upon the real property and accepting the substitution of the certificate of deposit as collateral, the loan to Property Specialists, Inc. was undercollateralized. (Tr. 65; Ex. 1, p. 2-a-6).
   43. As a result of the kickback scheme and the conduct of the Respondent, the Bank suffered a loss in the amount of $150,000 on the extension of credit to Property Specialists, Inc. (Tr. 65).
   44. As a result of Respondent's kickback scheme and conduct, the Respondent received financial gain in the amount of $87,500 from the extension of credit to Property Specialists, Inc. (Tr. 66).

J. Douglas Traylor Loan No. 644400
2/8/89

   45. On or about February 8, 1989, Respondent caused the Bank to extend a line of credit in the amount of $135,000 to J. Douglas Traylor. (Tr. 66–67).
   46. Respondent was the loan officer responsible for this credit. (Tr. 66).
   47. On February 24, 1989, a draw in the amount of $10,000 was disbursed by cashier's check signed by Respondent, and made payable to J. Douglas Traylor. (Tr. 69; Ex. 27).
   48. The $10,000 cashier's check to J. Douglas Traylor was endorsed by him and deposited into an account entitled "R.J.S. Investments, Inc." (Tr. 69–70; Ex 28).
   49. R.J.S. Investments, Inc. is a related interest of the Respondent. (Tr. 70–71; Ex. 4, 29).
   50. Between February 24, and February 28, 1989, Respondent issued and cashed various checks drawn on the R.J.S. Investments account for his personal use and benefit. (Tr. 71; Ex. 31, 32).
   51. On August 28, 1989, a further advance was disbursed on the J. Douglas Traylor line of credit, in the amount of $32,000. (Tr. 72; Ex. 33).
   52. The $32,000 draw was credited to the R.J.S. Investments account the same date. (Tr. 73; Ex. 34, 35).
   53. The proceeds from the August 28, 1989, draw were then used to pay off two notes of R.J.S. Investments, dated November 29, 1984, and August 8, 1984. (Tr. 73–74).
   54. The payoff of the two R.J.S. Investments notes dated November 29, 1984, and August 8, 1984, totalled $30,746.98. (Tr. 74).
   55. The proceeds from the February 24, 1989, and August 28, 1989, draws upon the J. Douglas Traylor line of credit were used for the direct tangible economic benefit of the Respondent and his related interest, R.J.S. Investments, Inc. (Tr. 75).
   56. Respondent received a financial gain in excess of $30,000 resulting from the extension of credit to J. Douglas Traylor dated February 8, 1989. (Tr. 74-74; Ex. 26–35).

Jerry C. Traylor Loan No. 65720 4/19/90

   57. On April 19, 1989, Respondent caused the Bank to extend credit to Jerry C. Traylor in the amount of $200,000. (Tr. 76; Ex. 1, p. 2-a-10; Ex. 36).
   58. Respondent was the Bank's loan officer for the April 19, 1989, extension of credit to Jerry C. Traylor. (Tr. 77; Ex. 1, p. 2-a-10).
   59. On April 20, 1989, the loan proceeds of $200,000 were disbursed by a cashier's check in the amount of $200,000 signed by Respondent and made payable to J.C. Traylor. (Tr. 78; Ex. 37).
   60. The $200,000 cashier's check was then deposited into the checking account of J. C. Traylor. (Tr. 78–79; Ex. 38).
   61. The same date, April 20, 1989, J. C. Traylor issued a check from his account in the amount of $75,000 to Jimmy Pate. (Tr. 79–80; Ex. 39).
   62. The check in the amount of $75,000 from J.C. Traylor to Jimmy Pate was then deposited into the joint checking account of James L. Pate or Georgiana Pate. (Tr. 80; Ex. 39).
   63. The joint-checking account of James L. Pate and Georgiana Pate is the same account into which the proceeds of the loan to
{{4-30-94 p.A-2404}}Property Specialists, Inc. were deposited. (Ex. 15, 16, 39, 41).
   64. The following day, April 21, 1989, Respondent opened an account at the Bank entitled "B.G.R.E." (Ex. 40).
   65. The Respondent was the sole authorized signatory on the B.G.R.E. account. (Tr. 81; Ex. 40).
   66. On April 21, 1989, James L. Pate issued a check in the amount of $73,500 payable to "B.G.R.E." (Tr. 80–82; Ex. 41).
   67. Also in April 21, 1989, the check from James L. Pate to B.G.R.E. in the amount of $73,500 was deposited into the B.G.R.E. account. (Tr. 83; Ex. 39).
   68. The $73,500 deposit was the sole deposit made in the B.G.R.E. account between April 21, 1989 and May 25, 1989, the date the account was closed. (Tr. 83; Ex. 42, 44).
   69. Between April 21, 1989, and the date the account was closed, May 25, 1989, Respondent withdrew funds from the B.G.R.E. account for his personal use and benefit. (Tr. 83–85, 88; Ex. 42, 43, 44).
   70. Respondent received the personal use and benefit of at least $73,500 of the $200,000 loan proceeds from the Bank's extension of credit to Jerry C. Traylor dated April 19, 1989. (Tr. 88).
   71. As of July 12, 1991, the entire outstanding principal loan balance of $200,000 to Jerry C. Traylor, dated April 19, 1989, was charged off as loss by the Bank. (Tr. 86–88; Ex. 45, Ex. 1, p. 2-a-10).

J. Douglas Traylor Loans No. 7041-0 and
7042-2 11/7/89

   72. On November 7, 1989, Respondent caused the Bank to extend two lines of credit in the amount of $150,000 each to J. Douglas Traylor. (Tr. 88–90, 91; Ex. 46, 47).
   73. Respondent was the Bank's loan officer for each of the credit lines. (Tr. 89; Ex. 1, pp. 2-a-9, 2-a-10).
   74. The lines of credit to J. Douglas Traylor dated November 7, 1989, were made in the form of two draw notes, signed by J. C. Traylor as agent-in-fact for J. Douglas Traylor. (Tr. 89–91; Ex. 46, 47).
   75. On November 8, 1989, $150,000 of the line of credit was disbursed. (Tr. 92; Ex. 48, 49).
   76. Collateral for the lines of credit consisted of a mortgage dated November 7, 1989, on four parcels of land in Warren County, Kentucky. (Tr. 90, 93–94; Ex. 50).
   77. The property mortgaged to serve as collateral for the lines of credit to J. Douglas Traylor was the same property which originally secured the loan to Property Specialists, Inc. and was released by Respondent on November 7, 1989. (Tr. 93–94; Ex. 50, 12).
   78. Part of the proceeds from these credits was used to purchase a cashier's check dated November 8, 1989, in the amount of $41,784.45, made payable to J. C. Traylor. (Tr. 92; Ex. 49).
   79. The cashier's check in the amount of $41,784.45 was used, in part, as the opening deposit of $41,500 for a checking account entitled "B.G. Investments". (Tr. 95; Ex. 52).
   80. Respondent was the sole authorized signatory of the B.G. Investments account. (Tr. 96–97; Ex. 51).
   81. The $41,500 deposit was the only deposit made in the B.G. Investments account between the date it was opened, November 8, 1989, and the date it was closed, November 24, 1989. (Tr. 96; Ex. 51, 53).
   82. Between November 11, and November 24, 1989, Respondent made various withdrawals from the account for his own personal use and benefit. (Tr. 97–100; Ex. 53, 54).
   83. At least $41,500 of the proceeds from these lines of credit went to the personal use and benefit of the Respondent. (Tr. 102).
   84. As of July 12, 1991, the outstanding principal balance of $300,000, was charged as loss by the Bank on the J. Douglas Traylor lines of credit (Tr. 103; Ex. 55, 56).

J. Douglas Traylor Loan No. 72010
1/31/90

   85. On January 31, 1990, Respondent caused the Bank to extend another line of credit to J. Douglas Traylor, in the form of a draw note in the amount of $250,000. (Tr. 103–105; Ex. 57).
   86. Respondent was the responsible loan officer for this credit extension. (Tr. 105; Ex. 1, pp. 2-a-9, 2-a-10).
   87. On January 31, 1990, the entire $250,000 was disbursed under the line of credit to J. Douglas Traylor. (Tr. 107; Ex. 60).
   88. Part of the proceeds disbursed on January 31, 1900, were used to purchase a cash-
{{4-30-94 p.A-2405}}ier's check in the amount of $71,445.65, payable to J. C. Traylor. (Tr. 105; Ex. 58).
   89. The cashier's check dated January 31, 1990, was then used to purchase a second cashier's check dated February 1, 1990, payable to the Bank in the amount of $71,400. (Tr. 108; Ex. 62).
   90. The second cashier's check in the amount of $71,400 was used to purchase a certificate of deposit in the name of R.J.S. Investments, Inc. (Tr. 108–109; Ex. 63).
   91. R.J.S. Investments, Inc. is a related interest of Respondent. (Tr. 34–36; Ex. 4, 29).
   92. The certificate of deposit in the name of R.J.S. Investments, Inc. matured on March 1, 1990. (Tr. 109; Ex. 63).
   93. The proceeds from the certificate of deposit in the name of R.J.S. Investments, Inc. were applied to a loan dated March 1, 1989, in the name of R.J.S. Investments, Inc. (Tr. 110; Ex. 64).
   94. As of September 10, 1990, the principal balance in the amount of $200,000 of the January 31, 1990, line of credit to J. Douglas Traylor was charged off as loss by the Bank. (Tr. 110; Ex. 65).
   95. Respondent received the personal use and benefit of $71,400 of the proceeds from the January 31, 1990, extension of credit to J. Douglas Traylor. (Tr. 112).
   96. Respondent received personal use and benefit of at least $300,000 in the aggregate from the extensions of credit which he caused the Bank to make to Property Specialists, Inc., J. Douglas Traylor, and Jerry C. Traylor. (Tr. 65, 75, 87–88, 101, 112).
   97. The Bank sustained losses totalling $850,000 as a result of Respondent's extending credit to Property Specialists, Inc., J. Douglas Traylor, and Jerry C. Traylor. (Tr. 65, 87, 103, 110).
   98. Respondent failed to disclose to the Bank his personal receipt, use, and benefit of the above proceeds. (Tr. 182–185).

Concentrations of Credit and Violations of
State Lending Limits

   99. The FDIC Report of Examination as of July 27, 1990, cited the Bank for an apparent concentration of credit. (Tr. 113; Ex. 1, p. 2-b).
   100. Respondent caused the Bank to extend credit to Steven R. Blanton. (Tr. 116, 119; Ex. 1, p. 6-a-3).
   101. Respondent caused the Bank to extend credit to Darrell R. Goode. (Tr. 116, 119; Ex. 1, p. 6-a-2).
   102. Respondent caused the Bank to extend credit to Jerry C. Traylor. (Tr. 116, 119; Ex. 1, p. 6-a-3; Ex. 37).
   103. Respondent caused the Bank to extend credit to S.R. Blanton Development, Inc. (Tr. 117, 119; Ex. 1, p. 6-a-2; 6-a-3; Ex. 70, 71).
   104. Respondent caused the Bank to extend credit to Hartland Planned Community. (Tr. 117, 119; Ex. 1, p. 6-a-4, 73, 74, 75).
   105. Respondent caused the Bank to extend credit to B.G.T. Development, Inc. (Tr. 117; Ex. 76).
   106. Steven R. Blanton, Darrell R. Goode, Jerry C. Traylor, S.R. Blanton Development, Inc., D.R.G. Investments, Inc., Hartland Planned Community, and BGT Development Co., Inc. (the "Blanton-related entities") were operating in concert and had common business interests. (Tr. 121; Ex. 1, pp. 6-a-1 through 6-a-4; Ex. 69 through 103, inclusive).
   107. In several instances, proceeds from loans to Blanton-related entities were deposited into the account S.R. Blanton Lands, Inc. (Tr. 143–144; Ex. 103).
   108. The Blanton-related entities shared common officers, directors, stockholders, partners, and business purposes. (Tr. 118; Ex. 5, 6, 7, 8, 9; Ans. ¶1).
   109. The Bank's own files contained financial statements, articles of incorporation, partnership agreements, guarantees and other documents, which clearly reflected the commonality of officers, directors, stockholders, partners and business purposes of the Blanton-related entities. (Tr. 121; Ex. 5, 6, 7, 8, 9, 87–100, inclusive).
   110. Respondent served as lending officer responsible for loans to the Blanton-related entities. (Tr. 119)
   111. At all times relevant hereto, the thirty (30) percent lending limit set by the Commonwealth of Kentucky, with respect to loans to any one person, equaled $1,103,069. (Tr. 137; Ex. 1, p. 6-a-1).
   112. At all times relevant hereto, the twenty (20) percent lending limit set by the Commonwealth of Kentucky, as to any guarantor or surety for loans not fully secured by appropriate collateral, equaled $735,379. (Tr. 137; Ex. 1, p. 6-a-1).
{{4-30-94 p.A-2406}}
   113. As of July 27, 1990, the outstanding aggregate balance of loans extended to the Blanton-related entities by the Respondent totalled $8,166,840. (Tr. 132, 145; Ex. q, p. 2-b).
   114. The Bank's extensions of credit to the Blanton-related entities exceeded 30 percent of the Bank's paid-in capital and surplus. (Tr. 114–118, 138–141; Ex. 1, p. 2-b, Ex. 101).
   115. As of July 27, 1990, the outstanding balance of the loans made to the Blanton-related entities represented 222 percent of the Bank's paid-in capital and surplus. (Ex. 1, pp. 2-b, 6-a-1).
   116. As of July 27, 1990, the Bank's total equity capital and reserves equaled $11,380,000. (ex. 1, p. 3).
   117. As of July 27, 1990, the loans made to the Blanton-related entities equaled 71 percent of the Bank's total equity capital and reserves. (Tr. 132–133; Ex. 1, p. 2-b).
   118. As of the July 12, 1991 FDIC examination of the Bank, the Bank had charged off as loss in excess of $5,000,000 of the $8,166,840 loaned to the Blanton-related entities. (Tr. 133; Ex. 2, p. 1).
   119. These losses adversely impacted the safety and soundness of the Bank. (Tr. 145–146).
   120. As a result of these losses, the Bank's holding company was required to inject capital of $3,343,000 into the Bank. (Tr. 146; Ex. 2, p. 1-a).
   121. Respondent failed to present any evidence to refute the above findings. (Tr. 191).
   To the extent that any of the above Findings of Fact may be deemed a Conclusion of Law, such Findings shall be so regarded.

CONCLUSIONS OF LAW

   1. The Bank is subject to the provisions of the Federal Deposit Insurance Act, 12 U.S.C. §§ 1811-1832t, the FDIC Rules and Regulations, 12 C.F.R. Chapter III, and the laws of the Commonwealth of Kentucky.
   2. At all times relevant hereto, Respondent was an "institution-affiliated party" of the Bank, as that term is defined in section 3(u) of the Act, 12 U.S.C. § 1813(u).
   3. The FDIC has jurisdiction over the Bank, the Respondent, and the subject matter of this proceeding.
   4. The Respondent's actions, by causing extensions of credit to Property Specialists, Inc., Jerry C. Traylor, and J. Douglas Traylor, from which the Respondent then personally received a portion of the loan proceeds, constituted the extension of accommodation loans, which are unsafe and unsound banking practices within the meaning of 12 U.S.C. § 1818(e).
   5. The Respondent's failure to disclose these accommodation loans to the Bank's President, Loan Committee, or Board of Directors, constituted a breach of the Respondent's fiduciary duty to the Bank.
   6. The Respondent's efforts to conceal these accommodation loans from others, by passing the proceeds of the loans through various accounts, certificates, and cashier's checks, in the attempt to hinder tracing of the funds, constitutes personal dishonesty on the part of the Respondent.
   7. As a result of the above acts, omissions, practices, and breaches, Respondent received financial gain in an amount exceeding $300,000.
   8. At all times relevant to this proceeding, R.J.S. Investments, Inc. was a "related interest" of the Respondent, as that term is defined in sections 215.2(m) and 215.2(b) of Regulation O of the Board of Governors of the Federal Reserve System, 12 C.F.R. §§ 215.2(m) and 215.2(b) (1993).
   9. At all times relevant hereto, S.R. Blanton Development, Inc., D.R.G. Investments, Inc., and B.G.T. Development Co., Inc., were corporations duly organized and in good standing under the laws of the Commonwealth of Kentucky.
   10. At all times relevant hereto, Hartland Planned Community was a partnership duly organized under the laws of the Commonwealth of Kentucky, and was owned by S.R. Blanton Development, Inc. (66 ⅔ percent interest), and D.R.G. Investments, Inc. (33 ⅓ percent interest).
   11. At all times relevant hereto, there was in full force and effect section 287.280(1) of the Kentucky Revised Statutes (1986) which prohibits the indebtedness or obligation by any person, to a bank in excess of 30 percent of the bank's paid-in capital and surplus. (The "30 percent lending limit") 11 Ky. Rev. Stat. Ann. § 287.280(1) (Michie-Bobbs Merrill 1992 Cumulative Supplement).
   12. At all times relevant hereto, section 287.280(1) of the Kentucky Revised Statutes (1986) further prohibited any person from becoming obligated as a guarantor or
{{6-30-94 p.A-2407}}surety to a bank in excess of 20 percent of the bank's paid-in capital and surplus, unless the indebtedness was fully secured by collateral. (The "20 percent lending limit") 11 Ky. Rev. Stat. Ann. § 287.280(1).
   13. Respondent caused the Bank to violate both the 30 percent lending limit and the 20 percent lending limit of section 287.280(1) of the Kentucky Revised Statues (1986) by extending credit to D.R.G. Investments, Inc. which totalled $2,601,063 in the aggregate as of July 27, 1990.
   14. Respondent caused the Bank to violate both the 30 percent lending limit and the 20 percent lending limit of section 287.280(1) of the Kentucky Revised Statutes (1986) by extending credit to Darrell R. Goode which totalled $1,174,917 in the aggregate as of July 27, 1990.
   15. Respondent caused the Bank to violate both the 30 percent lending limit and the 20 percent lending limit of section 287.280(1) of the Kentucky Revised Statutes (1986) by extending credit to S.R. Blanton Development, Inc. which totalled $6,510,042 in the aggregate as of July 27, 1990.
   16. Respondent caused the Bank to violate both the 30 percent lending limit and the 20 percent lending limit of section 287.280(1) of the Kentucky Revised Statutes (1986) by extending credit to Steven R. Blanton which totalled $1,539,359 in the aggregate as of July 27, 1990.
   17. Respondent caused the Bank to violate both the 30 percent lending limit and the 20 percent lending limit of section 287.280(1) of the Kentucky Revised Statutes (1986) by extending credit to Jerry C. Traylor which totalled $1,657,506 in the aggregate as of July 17, 1990.
   18. Respondent caused the Bank to violate both the 30 percent lending limit and the 20 percent lending limit of section 287.280(1) of the Kentucky Revised Statutes (1986) by extending credit to Hartland Planned Community, a partnership, which totalled $1,426, 146 in the aggregate as of July 27, 1990.
   19. Respondent engaged in unsafe and unsound banking practices by extending credit to the "Blanton-related entities" which constituted a concentration of credit totalling 71.77 percent of the Bank's total equity capital and reserves as of July 27, 1990.
   20. Respondent engaged in unsafe or unsound banking practices by extending credit to each of the Blanton-related entities which violated both the 30 percent lending limit and the 20 percent lending limit of Section 287.280(1) of the Kentucky Revised Statutes (1986).
   21. Respondent caused the Bank to engage in unsafe and unsound banking practices by executing a Deed of Release on the real property which served as collateral for the extension of credit to Property Specialists, Inc., notwithstanding the fact that the principal balance of the extension of credit had not been paid, and the extension of credit was left undercollateralized.
   22. The unsafe and unsound practices of the Respondent caused loss to the Bank in excess of $5,000,000.
   23. The Respondent's acts and omissions represent a willful or continuing disregard for the safety and soundness of the Bank.
   24. The Respondent failed to present any evidence rebutting the allegations contained in the Notice of Intention to Prohibit.
   25. Sufficient legal basis exists by which to prohibit the Respondent from future participation in the affairs of any federally-insured depository institution, pursuant to Section 8(e) of the Federal Deposit Insurance Act, 12 U.S.C. § 1818(e).
   I therefore recommend entry of the following Proposed Order.

PROPOSED ORDER

   The Board of Directors of the Federal Deposit Insurance Corporation having considered the entire record made at hearing, briefs, and arguments of counsel, and the Recommended Decision and Order of Administrative Law Judge Arthur L. Shipe, and exceptions thereto, finds that:
   Respondent Richard M. Roberson has violated applicable law and regulation, and has engaged and participated in unsafe and unsound banking practices, and has committed or engaged in acts or practices which constitute a breach of fiduciary duty, while a director, officer, and institution-affiliated party of the First Citizens Bank, Hardin County, Inc.;
   By reason of such violations, practices, and breaches of duty, the Bank has suffered substantial financial loss, and the Respondent has received financial gain;
   Such violations, practices, and breaches, have demonstrated the Respondent's personal {{6-30-94 p.A-2408}}dishonesty and willful and continuing disregard for the safety and soundness of the Bank.
   The Board of Directors further finds that such practices and breaches of fiduciary duty demonstrate the Respondent's unfitness to serve as a director, officer, or person participating in the conduct of the affairs, or as an institution-affiliated party of, any insured depository institution, or other agency or organization enumerated in Section 8(e)(7)(A) of the Federal Deposit Insurance Act, 12 U.S.C. § 1818(e)(7)(A).
   Accordingly, IT IS HEREBY ORDERED:
   Richard M. Roberson is hereby, without the prior written approval of the FDIC and the appropriate Federal financial institutions regulatory agency, as that term is defined in Section 8(e)(7)(D) of the Act, 12 U.S.C. § 1818(e)(7)(D), prohibited from:
   a. participating in any manner in the conduct of the affairs of any financial institution or organization enumerated in Section (e) (7)(A) of the act, 12 U.S.C. § 1818(e)(7) (A);
   b. Soliciting, procuring, transferring, attempting to transfer, voting or attempting to vote any proxy, consent or authorization with respect to any voting rights in any financial institution enumerated in Section 8(e)(7)(A) of the Act, 12 U.S.C. § 1818(e)(7)(A);
   c. violating any voting agreement previously approved by the appropriate federal banking agency; or,
   d. voting for a director, or serving as an institution-affiliated party.
   IT IS FURTHER ORDERED that this ORDER shall become effective upon the expiration of thirty (30) days after its service. The provisions of this Order will 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 action of the Federal Deposit Insurance Corporation or a reviewing court.
   So Ordered, this 22nd October, 1993.
/s/ Arthur L. Shipe
Administrative Law Judge
Date: October 22, 1993

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