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FDIC Enforcement Decisions and Orders

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   [5,280] In the Matter of Leann Bennett, Soy Capital Bank and Trust Company, Decatur, Illinois, Docket No. 02-206e (8-16-04).

   On November 13, 2003, the FDIC issued a Notice of Intention to Prohibit from Further Participation, Findings of Fact and Conclusions of Law, and Notice of Hearing. Respondent failed to enter an appearance, file an answer to charges, request a hearing, respond to an Order to Show Cause or file exceptions to the Recommended Decision. On May 12, 2004, the ALJ recommended Respondent be subject to an order of prohibition. The FDIC adopted the ALJ's Recommended Decision.

   [.1] Prohibition, Removal, or Suspension—Bank affairs, conduct of denied

   [.2] Prohibition, Removal, or Suspension—Voting rights, exercise denied

In the Matter of
LEANN BENNETT
Individually and as an institution-affiliated party of
SOY CAPITAL BANK AND TRUST COMPANY
DECATUR, ILLINOIS
(Insured State Nonmember Bank)
DECISION AND ORDER TO PROHIBIT FROM FURTHER PARTICIPATION

FDIC-02-206e

I. STATEMENT OF THE CASE

   This matter is before the Board of Directors (Board) of the Federal Deposit Insurance Corporation (FDIC) following the issuance on May 12, 2004, of a Recommended Decision on Default (Recommended Decision or R.D.) by Administrative Law Judge Ann Z. Cook (ALJ). The ALJ recommended that Leann Bennett (Respondent) be subject to an order of prohibition pursuant to section 8(e) of the Federal Deposit Insurance Act (FDI Act), 12 U.S.C. §1818(e).

   This is an uncontested proceeding. The record shows that Respondent received actual notice by personal service of the charges against her as set forth in the FDIC's Notice of Intention to Prohibit from Further Participation, Findings of Fact and Conclusions of Law, and Notice of Hearing (Notice). Respondent failed to enter an appearance, file an answer to charges, request a hearing, respond to an Order to Show Cause or file exceptions to the Recommended Decision. For the reasons discussed below, the Board adopts the Recommended Decision and issues an Order of Prohibition against Respondent.

 

II. BACKGROUND

   On November 13, 2003, the FDIC issued the Notice against Respondent pursuant to section 8(e), 12 U.S.C. §1818(e). Respondent, beginning in 1992, served in a variety of positions at Soy Capital Bank and Trust Company, Decatur, Illinois (Bank). In September 2000, she was assigned as an accounting clerk at the Bank's branch in Eldorado, Illinois and remained in that position until May 21, 2001, when her employment was terminated. Notice ¶   3.

   The Notice charged Respondent with engaging in violations of 18 U.S.C. Section 656—Theft, Embezzlement, and Misapplication of Funds, 18 U.S.C. Section 1005—False Entries; and unsafe and unsound banking practices. Notice ¶   9. In addition, the Notice charged that by engaging in the violations of law and unsafe and unsound banking practices described therein, Respondent demonstrated personal dishonesty and willful or continuing disregard for the safety and soundness of the Bank. Notice ¶   11.

   Specifically, the Notice charged that during the period November 7, 2000, through May 16, 2001, Respondent embezzled Bank funds on 172 occasions. According to the Notice, Respondent withdrew cash 172 times in amounts between $160 and $600 by submitting a general ledger ticket for a cash-out transaction and received cash in return. She then charged the transactions to an ATM Settlement account purportedly for the purpose of reimbursing customers who had not received funds due to an automated teller machine (ATM) malfunction. The Bank's ATM accounts, however, were in balance, the ATM proof tapes had no transactions which corresponded to the general ledger cash-out tickets, and Respondent did not give the cash received from the tellers to Bank
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   customers. Notice ¶¶   6–8. As a result of Respondent's misconduct, the Bank suffered losses of $71,300; Respondent received financial gain in the same amount and prejudiced the interests of the Bank's depositors. Notice ¶   10.

   After the Notice was issued, FDIC Enforcement Counsel (Enforcement Counsel) made several unsuccessful attempts to serve Respondent by mail at her last known address, 205 N. Maple Street in Stonington, Illinois. Subsequently, Respondent was indicted, and Enforcement Counsel discovered that Respondent's address listed on the bond was different than the address where they had attempted to serve her. Thereafter, Enforcement Counsel retained a process-server, Ward L. Davis (Davis), to serve her personally at 1797 E. Locust Street, Decatur, Illinois, the address that was listed on the indictment documents. On February 17, 2004, Davis served Respondent personally at her residence. FDIC's Motion for Default Judgment, Exh. A. The Notice directed Respondent to file an answer and request for a hearing within twenty days from the date of service, as required by section 308.19 of the FDIC's Rules of Practice and Procedure ("FDIC Rules"), 12 C.F.R. §308.19. Respondent never responded in any manner to the Notice. R.D. at 1.

   On April 9, 2004, Enforcement Counsel moved, pursuant to section 308.19 of the FDIC's Rules, for Entry of Default Judgment (Enforcement Counsel's Motion).1 Respondent again failed to respond. On April 12, 2004, the ALJ issued an Order to Show Cause ("Show Cause Order") directing that Respondent respond to the Notice by May 3, 2004, and to show good cause for having failed to do so previously. The Show Cause Order also provided that unless Respondent submitted a response by the May 3, 2004 deadline, a default order would be entered against her granting the permanent bar from the banking industry requested in the Notice. R.D. at 2. In accordance with section 308.11(b) of the FDIC's Rules, 12 C.F.R. §308.11(b), Enforcement Counsel's Motion was served on Respondent by first class mail and the ALJ's Show Cause Order was served on Respondent by Federal Express, both at the E. Locust Street address where she had been effectively served by the process-server. In the absence of a response to any of these documents, the ALJ, on May 12, 2004, granted Enforcement Counsel's Motion and issued the Recommended Decision which was served on Respondent at her E. Locust Street address by Federal Express.

III. DISCUSSION

   The Board concurs in and adopts the ALJ's Recommended Decision. The record reflects that Respondent received actual notice of the proceedings through personal service of the Notice. Although she was served personally, she failed to respond to the Notice. Respondent also failed to respond to both Enforcement Counsel's Motion and to the Show Cause Order even though she was served with copies of the pleadings at her E. Locust Street address in accordance with FDIC Rules. As described in the record, her conduct clearly indicates an intentional and willful disregard of the FDIC's procedural requirements. In addition, the serious nature of Respondent's misconduct which includes embezzlement from the Bank of more than $70,000 and evidences personal dishonesty and willful or continuing disregard for the safety and soundness of the Bank clearly warrants a permanent bar from the industry. As such, default judgment is warranted. In the Matter of Raymond M. Phillips, FDIC Enforcement Decisions and Orders, ¶   5232, A-2759 (1996), 1996 WL 281984, at *2; In the Matter of Hiram L. Fong, FDIC Enforcement Decisions and Orders, ¶   5230, at A-2749 (1995), 1995 WL 810685, at *2.

   Respondent's default constitutes consent to entry of an order of prohibition and a waiver of her right to contest the allegations in the Notice under section 308.19. In the Matter of Kevin L. Jensen, FDIC Enforcement Decisions and Orders, ¶   5240, A-2808 (1996), 1996 WL 768366, at *4.2 Moreover, Respondent's failure to file exceptions to the Recommended Decision pursuant to section 308.39 of the FDIC's Rules, 12 C.F.R.  308.39, must be deemed a waiver of any objections to the ALJ's Recommended Decision. In the Matter of Chul Song, FDIC Enforcement Decisions and Orders, ¶   5214, A-2445 (1994), 1994 WL 328058, at *2; In the Matter of Kevin L. Jensen, ¶   5240, A-2808 (1996), 1996 WL 768366, at *4; In the Matter of Raymond M. Phillips, ¶   5232, A-2759 (1996), 1996 WL 281984, at *2.


1 Section 308.19(c)(1) of the FDIC's Rules provides that when a respondent fails to timely answer a notice, Enforcement Counsel may move for entry of default judgment which shall be issued by the ALJ upon a finding that no good cause has been shown.

2 This case clearly is distinguishable from Amberg, et al. v. FDIC, 934 F. 2d 681 (5th Cir. 1991), and Oberstar v. FDIC, 987 F. 2d 494 (8th Cir. 1992), in which default judgments were overturned where the courts found that respondents' failures to comply with the FDIC's Rules was merely technical and that the respondents had taken steps indicating an intention to contest the charges against them. Here, no intention to contest or otherwise comply with the procedural requirements has been shown by Respondent and, as such, a default order is appropriate.
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IV. CONCLUSION

   After a thorough review of the record in this proceeding, the Board, for the reasons set forth above, adopts the Recommended Decision, incorporates herein the Findings of Fact and Conclusions of Law set forth in the Notice and issues the following order implementing its decision.

 

ORDER TO PROHIBIT

   The Board of the FDIC, having considered the entire record of this proceeding and finding that Respondent Leann Bennett, formerly employed as an accounting clerk by the Bank, engaged in violations of 18 U.S.C. §656, 18 U.S.C. §1005, and unsafe or unsound banking practices causing financial loss to the Bank, and that her actions involved personal dishonesty and willful and continuing disregard for the safety and soundness of the Bank, hereby ORDERS and DECREES that:

   [.1] 1. Leann Bennett shall not participate in any manner in any conduct of the affairs of any insured depository institution, agency or organization enumerated in section 8(e)(7)(A) of the FDI Act, 12 U.S.C. §1818(e)(7)(A), without the prior written consent 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).

   [.2] 2. Leann Bennett shall not solicit, procure, transfer, attempt to transfer, vote, or attempt to vote any proxy, consent or authorization with respect to any voting rights in any financial institution, agency, or organization enumerated in section 8(e)(7)(A) of the FDI Act, 12 U.S.C. §1818(e)(7)(A), without the prior written consent 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).

   3. Leann Bennett shall not violate any voting agreement with respect to any insured depository institution, agency, or organization enumerated in section 8(e)(7)(A) of the FDI Act, 12 U.S.C. §1818(e)(7)(A), without the prior written consent 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).

   4. Leann Bennett shall not vote for a director, or serve or act as an institution-affiliated party, as that term is defined in section 3(u) of the FDI Act, 12 U.S.C. §1813(u), of any insured depository institution, agency, or organization enumerated in section 8(e)(7)(A) of the FDI Act, 12 U.S.C. §1818(e)(7)(A), without the prior written consent of the FDIC and the appropriate federal financial institutions regulatory agency, as that term is defined in section 8(e)(D) of the FDI Act, 12 U.S.C. §1818(e)(7)(D).

   5. This ORDER shall be effective thirty (30) days from the date of its service upon Respondent.

   IT IS FURTHER ORDERED, that copies of this Decision and Order shall be served on Leann Bennett, Enforcement Counsel, the ALJ, and the Commissioner, Office of Banks and Real Estate for the State of Illinois.

   By direction of the Board of Directors.

   Dated at Washington, D.C., this 16th day of August, 2004.



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