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{{3-31-95 p.A-2490}}    [5218A] In the Matter of Phillip J. Wright, BayBank, Burlington, Massachusetts, Docket No. FDIC-93-91e (9-21-94).

   Motion to vacate an earlier stipulation and consent order of prohibition denied by the same officer who issued the original order. Respondent presented no evidence to refute FDIC's charges of unsafe or unsound banking practices, breach of fiduciary duty or violation of banking law and regulations. Nor did he establish that, in agreeing to the stipulation and order, he relied on any wrongdoing or unfairness by FDIC.

   [.1] Order of Prohibition—Stipulation—Motion to Vacate—Authority to Rule
   FDIC Associate Director, Division of Supervision, having issued order of prohibition pursuant to delegated authority, has authority to consider respondent's motion to vacate that order.
   [.2] Order of Prohibition—Stipulation—Motion to Vacate—Burden of Proof
   Respondent seeking to vacate order of prohibition must present persuasive evidence or argument to justify a decision to vacate his stipulation and terminate the order of prohibition.
   [.3] Prohibition, Removal or Suspension—Defenses—Aquittal of Criminal Charge
   Acquittal on related criminal charges does not mean that there is insufficient evidence to sustain FDIC charges of unsafe or unsound practices, breach of fiduciary duty, or violation of banking law.
   [.4] Order of Prohibition—Stipulation—Motion to Vacate—Standard
   FDIC must be able to rely on stipulations it enters with respondents and will not set one aside without convincing evidence of wrongdoing or unfairness on the part of FDIC.

{{3-31-95 p.A-2490.1}}
In the Matter of
Jeffrey Adams,Richard Crawford,
William A. Folkins,Beverly J.
Orlowski, Davis H. Rome,
Stephen G. Smith,Irwin I. Weitz,
and Phillip J. Wright, individually,
and as institution-affiliated
parties of
BAYBANK
BURLINGTON, MASSACHUSETTS
(Insured State Nonmember Bank)
DECISION AND ORDER
DENYING APPLICATION TO
VACATE STIPULATION
AND ORDER OF PROHIBITION
FROM FURTHER PARTICIPATION

FDIC-93-91e

STATEMENT OF THE CASE

Introduction
   On July 5, 1994, Phillip J. Wright, a former respondent in the above-captioned case (hereafter "Respondent"), submitted to Administrative Law Judge Arthur L. Shipe ("ALJ") a motion to vacate an Order of Prohibition from Further Participation ("Order of Prohibition") which was issued on January 28, 1994, and to vacate the Stipulation and Consent to the Issuance of an Order of Prohibition from Further Participation ("Stipulation") dated December 6, 1993 ("Motion to Vacate").1 In addition, Respondent sought reinstatement so as to participate in a hearing then scheduled to begin the week of July 25, 1994, as to the other respondents, and by separate motion, requested a stay of the proceedings for 90 days. Enforcement Counsel for the Federal Deposit Corporation (hereafter "Enforcement Counsel") submitted both procedural and substantive oppositions to the motion. On July 21, 1994, Respondent submitted an answer to the substantive opposition. On or about July 26, 1994, the FDIC responded to Respondent's answer.
   The ALJ issued a Prehearing Order dated July 18, 1994, which granted the stay, but denied the relief sought by the Motion to Vacate as the ALJ determined that he did not have jurisdiction to consider the Motion to Vacate. The ALJ referred the Motion to Vacate to the Office of the Executive Secretary of the FDIC for appropriate disposition. Since the Motion to Vacate seeks to vacate an order issued by the undersigned pursuant to delegated authority, the Executive Secretary referred the motion to the undersigned for appropriate consideration.
Background
   The above-captioned case involving Respondent and several other institutionaffiliated parties of BayBank, Burlington, Massachusetts ("BayBank"), was commenced on June 7, 1993, by the issuance of a Notice of Intent to Prohibit from Further Participation ("Notice") pursuant to section 8(e) of the Federal Deposit Insurance Act, 12 U.S.C. § 1818(e) ("section 8(e)"). In Respondent's case, the Notice was based upon allegations of violations of law, unsafe or unsound banking practices and/or breaches of fiduciary duty relating to Respondent's activities as a loan officer at BayBank. On December 6, 1993, Respondent stipulated to the entry of an Order of Prohibition against him pursuant to section 8(e) of the Act, waiving his right to a hearing on the matter.
   In the Motion to Vacate, Respondent asserts that he signed the Stipulation without the benefit of counsel because of financial hardship. (Motion to Vacate at 2) At the time the Stipulation was signed, Respondent was not represented by counsel, although the record reflects that Enforcement Counsel advised Respondent on more than one occasion that Respondent should obtain an attorney, and that Enforcement Counsel could not provide Respondent legal advice. (Affidavit of Linda M. Hamel dated July 26, 1994, at 4; Affidavit of Linda M. Hamel dated July 20, 1994, at 6; Memorandum to Files from Examiner Janice L. Ristow dated August 11, 1994; Memorandum to Linda Hamel from Jerry Kelley dated August 11, 1994) Criminal charges were also pending against Respondent at the time for bank fraud, based upon many of the same matters as those alleged by the FDIC in its Notice,2 and Respondent did have the benefit of counsel in


1 The motion was titled "Motion of Phillip J. Wright to Vacate the `Order of Prohibition From Further Prohibition' Issued January 28, 1994 and the `Stipulation and Consent to the Issuance of an Order of Prohibition', Dated 12/6/93 and to Remain Phillip J. Wright as a Respondent." Subsequently, counsel for Respondent Jeffrey Adams jointed in the motion.


2 The criminal case involved some of the same transactions, but notably contained allegations of bribery, not a part of the FDIC's section 8(e) case. (FDIC's Substantive Opposition at 14–15, n. 13)

{{3-31-95 p.A-2490.2}}the criminal proceedings. (Affidavit of Linda M. Hamel dated July 20, 1994, at 13)
   Respondent also asserts that the Stipulation was signed under duress, that he was coerced to sign the stipulation by Enforcement Counsel, and that Enforcement Counsel also sought to suppress any testimony he might give on behalf of himself or other respondents. (Motion to Vacate at 1–3) To support the allegations of duress and coercion, Respondent alleges in his Motion to Vacate that Enforcement Counsel had obtained information regarding his employment at two other banks after he left BayBank which, had it been publicized, would have "devastated" his "reputation, family, and ability to earn a living." (Motion to Vacate at 2) In addition, Respondent asserts that Enforcement Counsel threatened to introduce this information as public evidence if he did not sign the Stipulation, and to use his Fifth Amendment privilege against self-incrimination. (Motion to Vacate at 3) As his primary evidence, Respondent quotes from a letter dated November 19, 1993, sent to him by Enforcement Counsel, which indicates that if Respondent were to sign the Stipulation, the documents pertaining to Respondent from two other banks might not be sent, and that the documents would no longer be needed at trial if Respondent were no longer a respondent in the case and did not appear as a witness. (Motion to Vacate at 3)
   The information was obtained by Enforcement Counsel pursuant to subpoenas issued in November 1993 to the two other banks. The subpoenas each stated that the information sought would show that Respondent had falsified his employment application and that the documents could be used at the hearing solely for impeachment purposes. (FDIC's Substantive Opposition at 10) Enforcement Counsel advised Respondent of the information and evidence that had been gathered against him, and advised him of the purpose for which such information could be used. (FDIC's Substantive Opposition at 8–9, 11–12) Although there apparently was also information contained in those documents relating to allegations of improper personal behavior by Respondent at the two banks, Enforcement Counsel never indicated to Respondent that these matters would be introduced at a hearing, for any purpose. (Affidavit of Linda M. Hamel dated July 26, 1994, at 7) At the time of the Stipulation Respondent was facing criminal charges from the Department of Justice. Because of the pendency of these charges, Respondent indicated, if called to testify, he would assert his Fifth Amendment privilege against self-incrimination.3 (Affidavit of Linda M. Hamel dated July 20, 1994, at 13–14)

DECISION AND ORDER

   [.1] The Order against Respondent was issued pursuant to the Stipulation entered by Respondent and Enforcement Counsel on December 6, 1993, and became a final order on February 7, 1994. Insofar as the order was issued pursuant to authority delegated to the Associate Director by 12 C.F.R. § 303.9(d)(1), the Associate Director has the delegated authority to act upon any request to modify or terminate the Order. 12 C.F.R. § 303.9(m)(5). As part of the Stipulation, Respondent waived his right to participate in a hearing in this case.4
   While Respondent was not represented by counsel at the meeting at which he signed the Stipulation, he was represented by counsel in the pending criminal case. On more than one occasion, Enforcement Counsel advised Respondent that he should obtain legal representation, but he chose not to do so.

   [.2] Upon review of the record as a whole, the FDIC finds that Respondent has failed to present any evidence or persuasive argument which would necessitate or justify a decision to vacate the Stipulation, and terminate or modify the Order of Prohibition. Cf. In the Matter of Charles E. Floyd, 1 FDIC ENFORCEMENT DECISIONS AND ORDERS, ¶5177, A-1976 (1992); In the Matter of Frederick M. Pfeiffer, 1 FDIC ENFORCEMENT DECISIONS AND ORDERS, ¶5193A, A-1656 (1991); and In the Matter of * *, FDIC-83-153e, 1 FDIC ENFORCEMENT DECISIONS AND ORDERS, ¶5117, A-1303 (1988).
   [.3] With the exception of his acquittal on criminal charges, none of the facts that Respondent now presents as reasons to vacate the Order are new. The facts asserted were all in existence and known to the Respondent prior to the time he signed the Stipu-


3 On June 27, 1994, Respondent was acquitted of criminal charges. While part of the criminal case, bribery was not alleged in the administrative action. (FDIC's Substantive Opposition at 14–15, n. 3)


4 To date, three of the other respondents have already signed stipulations consenting to the issuance against them of Orders of Prohibition.

{{3-31-95 p.A-2490.3}}lation. Neither financial hardship nor lack of counsel alone suffice as a reason to vacate an Order, nor to show duress. Respondent's allegation that he signed the Stipulation because of a fear that Enforcement Counsel would introduce evidence that would devastate him is undercut by the fact that Enforcement Counsel only indicated that information regarding his falsification of records would be used for impeachment purposes. Such information was obtained by Enforcement Counsel by subpoena on the record. It is pure conjecture on Respondent's part that any other or additional, embarrassing information might be obtained or introduced. Furthermore, it appears from the record that Enforcement Counsel's statements regarding introduction of the information at a hearing were made in direct response to questions from Respondent in an effort to clarify what information would be used, for what purpose, and under what circumstances. There is nothing to indicate that Respondent was provided any false, incorrect or misleading information, or given anything more than a correct statement of the law on the availability of information for impeachment.
   In accepting the Stipulation and issuing the Order of Prohibition, the FDIC made a prima facie finding that Respondent engaged in violations, unsafe or unsound banking practices and/or breaches of his fiduciary duty to BayBank; that as a result of Respondent's acts, BayBank suffered or will probably suffer financial loss or other damage, the interests of its depositors have been or could be prejudiced and/or Respondent received financial gain; and that such acts involved personal dishonesty or demonstrated Respondent's willful or continuing disregard for the safety and soundness of BayBank. Respondent has offered no evidence that refutes these allegations. See In the Matter of Charles E. Floyd, supra; In the Matter of Frederick M. Pfeiffer, supra; and In the Matter of * * *, supra.
   [.4] The Order was not based on a finding of criminal conduct. The fact that Respondent was acquitted of criminal charges does not alter the findings in this case. The mere fact that a respondent is acquitted of a related crime does not mean that there is insufficient evidence to sustain a charge of unsafe or unsound banking practices, breach of fiduciary duty or violation of banking law.
   Respondent was provided the same due process as all other Respondents who stipulate to Orders of Prohibition. Respondent could have appeared at the hearing but chose not to do so for financial reasons, and to avoid the presentation of potentially embarrassing evidence against him. In negotiating a Stipulation with Respondent, the record reveals that Enforcement Counsel communicated no more to Respondent than the information that could be introduced at a hearing. We do not find that to be inappropriate.
   The hearing as to the other respondents in this case was initially scheduled to begin during the week of July 25, 1994. Respondent was acquitted on June 27, 1994, and it was not until after that date that he sought to vacate the Order. Respondent waited almost seven months from the date of the Stipulation to do so, until just a short time before the scheduled hearing in the case. The addition of former Respondent Weight as a Respondent at the hearing at this late time would require additional preparation of witnesses and evidence, and necessitate a postponement of the hearing for several more weeks, to the detriment of other respondents.
   The FDIC must be able to rely on the Stipulations it enters with respondents, and should not set a Stipulation aside absent convincing evidence of any wrongdoing or unfairness, especially where to do so could unduly delay the hearing due other respondents. Such evidence has not been presented in this case.
   Accordingly, the Motion to Vacate dated July 5, 1994 is hereby denied.
   Dated at Washington, D.C., this 21st day of September, 1994.
   Pursuant to delegated authority.
/s/ A. David Meadows
Associate Director
Division of Supervision

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