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FDIC Enforcement Decisions and Orders

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   [5269] In the Matter of Roque De La Fuente II, and First International Bank, Chula Vista, California, Docket No. 97-31e (4-18-03).

   The denied Roque De La Fuente II's request for a stay pending review of the Board of Director's decision and Order, issued pursuant to section 8(e) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e), removing him from First International Bank, Chula Vista, California and prohibiting him from participating in the affairs of any insured depository institution.

   [.1] Stay—Judicial proceeding—Commencement

   The commencement of proceedings for judicial review shall not, unless specifically ordered by the court, operate as a stay of any order issued by the appropriate federal banking agency.
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   [.2] Stay—Requirements

   Petitions for a stay pending judicial review must satisfy four criteria: (1) a likelihood that the petitioner will prevail on the merits of the appeal; (2) that the petitioner will suffer irreparable injury in the absence of a stay; (3) that other interested persons will suffer no harm if a stay is granted; and (4) that a stay will not harm the public interest.

   [.3] Stay—Success on the Merits

   FDIC finds Success on the merits of the appeal unlikely.

   [.4] Stay—Irreparable Harm

   The FDIC found that implementation of the order will not cause injury to the respondent, other than economic loss.

   [.5] Stay—Harm to Others and Public Interest

   FDIC found respondent already caused significant harm to the bank and would, if permitted to remain in the industry, serve as a continuing threat to the bank, its depositors, and the FDIC's bank insurance fund.

In the Matter of
ROQUE DE LA FUENTE II,
Individually and as anInstitution-affiliated party of
FIRST INTERNATIONAL BANK
CHULA VISTA, CALIFORNIA
(Insured State Nonmember Bank)
DECISION AND ORDER DENYING REQUEST FOR STAY

FDIC-97-31e

   This matter is before the Executive Secretary of the Federal Deposit Insurance Corporation ("FDIC"), upon the advice and recommendation of the Assistant General Counsel (Trial Litigation), in the absence of the Deputy General Counsel for Litigation, acting pursuant to authority delegated by the Board of Directors ("Board") of the FDIC. Roque De La Fuente II ("Respondent") has asked for a stay pending review of the Board's Decision and Order ("Order") dated November 21, 2000, issued pursuant to section 8(e) of the Federal Deposit Insurance Act ("FDI Act"), 12 U.S.C. §1818(e), removing him from First International Bank, Chula Vista, California ("Bank") and prohibiting him from participating in the conduct of the affairs of any insured depository institution. On November 24, 2000, Respondent filed an appeal with the United States Court of Appeals for the Ninth Circuit, and oral argument was heard on December 4, 2002. The Ninth Circuit has not yet issued a decision.

   On March 26, 2003, Respondent, in correspondence to the FDIC's San Francisco Regional Office, requested that the FDIC grant a full or partial stay of the Order pending his appeal. On April 1, 2003, Respondent's request was forwarded to the FDIC's Executive Secretary, See 12 C.F.R. §308.23(c).1 On April 8, 2003, the Executive Secretary received FDIC Enforcement Counsel's Response to Respondent's Request for a Stay Pending Judicial Review. Enforcement Counsel objected to Respondent's request for a stay because he failed to establish any of the four factors necessary for a stay to be granted. We agree and, as more fully set forth below, deny Respondent's request.

   [.1] A stay pending judicial review is an extraordinary action committed to the discretion of the FDIC. Section 8(h)(3) of the FDI Act, 12 U.S.C. §1818(h)(3), provides that the commencement of proceedings for judicial review shall not, unless specifically ordered by the court, operate as a stay of any order issued by the appropriate federal banking agency. See 12 C.F.R. §308.41; In the Matter of Stanley R. Hendreckson, FDIC Enforcement Decisions and Orders ¶5238,


1 The cited regulation provides that "[m]otions must be filed with the Administrative Law Judge, except that following the finding of the recommended decision, motions must be filed with the Executive Secretary for disposition by the Board of Directors." It should be noted that on April 4, 2003, the Chairman of the FDIC received from Respondent a letter seeking a stay of the Board's Order in substantially the same terms as Respondent's March 26, 2003 letter to the FDIC's San Francisco Regional Office. All such correspondence from Respondent is considered to be responded to by mean of the present Decision and Order.
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   A-2797-2998 (1996), 1996 WL 627770, at *1.

   [.2] The FDIC has previously held that petitions for a stay pending judicial review must satisfy four criteria to be granted; (1) a likelihood that the petitioner will prevail on the merits of the appeal; (2) that the petitioner will suffer irreparable injury in the absence of a stay; (3) that other interested persons will suffer no harm if a stay is granted; and (4) that a stay will not harm the public interest. See, e.g., In the Matter of Ronald J. Grubb, FDIC Enforcement Decisions and Orders ¶8021, I-67, I-68 (1992), 1992 WL 813234, at *1.

   Respondent's submission does not address even in the slightest fashion any of the threshold requirements, alleging only that a stay should be granted to "provide at least temporary relief from this nightmare that First International Bank, its customers, my family and I have been facing." This failure on Respondent's part to allege any of the four criteria necessary to issue a stay, is sufficient basis alone to deny Respondent's request. See, In the Matter of Frank E. Jameson, FDIC Enforcement Decisions and Orders §5154, A-1542.26 (1990), 1990 WL 711220, at *2.

   [.3] Nevertheless, in considering Respondent's request, we have examined each of the four conditions that must be satisfied in order to grant a stay. First, in view of the administrative record in the enforcement proceeding, Respondent would be hard-pressed to demonstrate likely success on the merits. The Board, in its Order, conducted a thorough review of every aspect of the case,


1 The cited regulation provides that "[m]otions must be filed with the Administrative Law Judge, except that following the finding of the recommended decision, motions must be filed with the Executive Secretary for disposition by the Board of Directors." It should be noted that on April 4, 2003, the Chairman of the FDIC received from Respondent a letter seeking a stay of the Board's Order in substantially the same terms as Respondent's March 26, 2003 letter to the FDIC's San Francisco Regional Office. All such correspondence from Respondent is considered to be responded to by mean of the present Decision and Order.
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   including Respondent's many exceptions to the Administrative Law Judge's decision. The Board found that the record provided overwhelming justification for Respondent's removal from the banking industry and, in fact, concluded that several of the underlying violations were alone sufficient to justify his removal. Order at 28. Respondent has come forward now with nothing to suggest a contrary outcome on appeal.

   [.4] Second, in the absence of other information submitted with Respondent's request, we can only assume that implementation of the Order will not cause injury to Respondent other than economic loss. This, as the Board has previously noted, is not sufficient basis to grant a stay. See, In the Matter of Michael D. Landry and Alton B. Lewis, FDIC Enforcement Decisions and Orders §5259, A-3093 (1999), 1999 WL 639568, at *2 ("Had Congress meant for stays to be granted on the basis of such allegations, it would certainly not have enacted the provision in the statute providing that a petition for review does not automatically stay the Board's enforcement orders. Accordingly, whatever Respondent's alleged irreparable injury through loss of livelihood, the Board believes that Congress did not intend that showing alone to be adequate to justify a stay."). See also, Hendrickson, §5238, at A-2798, 1996 WL 627770, at *2; In the Matter of Harold Hoffman, FDIC Enforcement Decisions and Orders §5154C, A-1507 (1989), 1989 WL 609343, at *2.

   [.5] Finally, the last two factors—harm to other parties and to the public interest—are considered together because they are interrelated. The other parties affected are the Bank, its depositors and the FDIC. Respondent was removed from the banking industry based on his serious breaches of fiduciary duty and dishonest conduct as a banker. He has already caused significant harm to the Bank and would, if he were permitted to remain in the industry, serve as a continuing threat to the Bank, its depositors and, ultimately, to the FDIC's bank insurance fund. See Landry §5259, at A-3093; 1999 WL 639568, at *3.

   Protection of the public interest is at the core of section 8(e), the removal prohibition of the FDI Act, 12 U.S.C. §1818(e). A banker can only be removed and prohibited under that provision if the agency proves (1) misconduct, (2) a significant effect on the bank, and (3) culpability in the form of either dishonesty or willful or continuing disregard for the bank's safety and soundness. It is not a simple matter to prove these elements, but once proven, they demonstrate that an individual is unfit to hold a position in or participate in the conduct of the affairs of an insured institution. See Landry, id. In Respondent's case, the Board concluded, after an exhaustive review of the record, that overwhelming evidence supported a finding that all of these elements were present. Order at 28. Accordingly, the public interest required Respondent's removal and prohibition.

   After a thorough review, we find that Respondent has presented no factual or legal basis upon which a stay should be granted.

   Accordingly, it is hereby ORDERED and DECREED that Respondent's request for a stay pending judicial review is DENIED.

   Pursuant to delegated authority, upon the advice and recommendation of the Assistant General Counsel (Trial Litigation), in the absence of the Deputy General Counsel for Litigation.

   Dated at Washington, D.C. this 18th day of April, 2003.

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Last Updated 11/16/2003 legal@fdic.gov