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FDIC Enforcement Decisions and Orders |
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A former bank director was assessed a civil money penalty of $15,000 for extending credit in violation of the legal lending limit and for violating a cease and desist order.
[.1] Cease and Desist OrderCivil Money Penalties for Violation
In the Matter of * * * individually and as
BACKGROUND
This civil money penalty proceeding was initiated by the Board of Review of the Federal Deposit Insurance Corporation ("FDIC") on November 13, 1985. The Notice of Assessment of Civil Money Penalties, Findings of Fact and Conclusions of Law, Order to Pay and Notice of Hearing ("Notice of Assessment") assessed a civil money penalty of $15,000 against * * * ("Respondent") pursuant to the provisions of sections 8(i)(2) and 18(j)(3) of the Federal Deposit Insurance Act (12 U.S.C. §§ 1818(i)(2), 1828(j)(3)).
DECISION
Based on the entire record of the proceeding, the Board of Directors ("Board") of the Federal Deposit Insurance Corporation finds that ALJ Maloney's Recommended Decision correctly summarizes the relevant facts and is in accordance with applicable law. Consequently, the Board adopts ALJ Maloney's Recommended Decision in its entirety, including his Findings of Fact and Conclusions of Law, and incorporates that Recommended Decision herein by this reference.
The Violations
The 1983 Order was issued against the Bank, on consent, as a result of a November 12, 1982 Report of Examination which concluded, among other things, that the Bank had made extensions of credit to Respondent in violation of Regulation O. At the time of the 1982 examination, Respondent * * * was vice-chairman of the board of directors of the Bank. Respondent * * * resigned that position in February 1983, but the Bank is controlled by the * * * family, and during the relevant period Respondent remained a principal shareholder in the Bank. Additionally, Respondent * * * was active in the Bank's management both during and after his tenure as vice-chairman. Thus, during the relevant period, the Respondent remained covered by the provision of Regulation O.
The Penalty
[.1] The Board finds three independent bases for imposing the $15,000 civil money penalty. First, there were six Regulation O violations. Respondent's direct pecuniary gain from those violations was almost $15,000, and his theoretical exposure to civil money penalties based on those violations is in excess of $1.5 million. Second, the six violations of Regulation O were also violations of the 1983 Order. Respondent's participation in, and profit from, those violations of the 1983 Order provides a separate legal basis for imposing civil money penalties. Third, there was a failure to maintain adequate capital in the Bank as required by the 1983 Order. The record includes a prima facie case for imposing civil money penalties on Respondent based upon this violation of the 1983 Order. While imposing the penalty on all three of these bases, the Board notes that even if Respondent had not been chargeable with any violations of the 1983 Order the Board would still have imposed the full $15,000 civil money penalty based solely on Respondent's violations of Regulation O.
ORDER
Accordingly, IT IS HEREBY ORDERED that a civil money penalty of $15,000 is assessed against * * *
/s/ Hoyle L. Robinson
RECOMMENDED DECISION
FDIC-85-322k
This matter came before the undersigned Administrative Law Judge on a request for hearing made by the Respondent in an ANSWER dated December 30, 1985. A hearing was held in * * * August 25, 1987.
STATEMENT OF THE CASE
This case involves the question of whether the FDIC is entitled to assess civil money penalities against * * * ("Respondent") pursuant to sections 8(i)(2) and 18(j)(3) of the Act [12 U.S.C. §§ 1818(i)(2), 1828(j)(3)].
FINDINGS OF FACT
1. At all times pertinent to this proceeding, the Bank was a corporation existing and doing business under the laws of the State of * * * having its principal place of business in * * *.
CONCLUSIONS OF LAW
1. The FDIC has jurisdiction over the Bank, the Respondent, and the subject matter of this proceeding.
RECOMMENDED DECISION
Therefore, it is the recommended decision of the Administrative Law Judge that by reason of the violations set forth above, a penalty of $15,000 be assessed against * * * pursuant to sections 18(j)(3) and 8(i)(2) of the Act [12 U.S.C. §§ 1828(j)(3) and 1818(i)(2)].
/s/ Patrick R. Maloney |
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Last Updated 6/6/2003 | legal@fdic.gov |