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[5141] In the Matter of Harold A. Hoffman, Joseph L. Hayes and Alaska Continental Bank, Anchorage, Alaska, Docket No. FDIC-88-156c&b(11-17-89).

   FDIC found that Petitioner failed to set forth any factual or legal basis upon which the stay could be granted. Motion for Stay Pending Judicial Appeal was denied. (Related proceedings in this docket appear at [¶5140]).

   [.1] FDIC Act—Stay of FDIC Order
   The commencement of a judicial proceeding will not, unless ordered by a court, operate to stay an FDIC order.

   [.2] Practice and Procedure—Judicial Review—Stay of FDIC Action
   A petition for stay pending judicial review must show: (1) a likelihood that petitioner will prevail on the merits of the appeal; (2) irreparable injury if the stay is not granted; (3) no substantial harm to other interested persons; and (4) no harm to the public interest.

In the Matter of
HAROLD A. HOFFMAN, individually,
and as president, director, and participant
in the conduct of the affairs of Alaska
Continental Bank, Anchorage, Alaska,
JOSEPH L. HAYES, individually, and as
chairman of the board of directors and a
participant in the conduct of the affairs of
Alaska Continental Bank, Anchorage,
(Insured State Nonmember Bank—In

   On October 16, 1989, and October 24, 1989, respectively, Harold A. Hoffman and Joseph L. Hayes (the "Petitioners") filed motions with the Board of Directors of the Federal Deposit Insurance Corporation (the "Board") seeking a stay of the Board's Decision and Order to Cease and Desist (the "Order") dated September 12, 1989 ("Motions for Stay"), pending review of the Board's Order by enforcement in the United States Court of Appeals for the Ninth Circuit.1 Opposition to the Motions for Stay was filed by enforcement counsel for the FDIC on October 24, 1989.
   The September 12, 1989, Order was issued pursuant to the Board's authority under sections 8(b) and 8(c) of the Federal Deposit Insurance Act (the "Act"), 12 U.S.C. §§1818(b) and (c). The Order was entered following a full hearing on the merits. The Board found that Petitioners had engaged in unsafe and unsound banking practices and ordered the Petitioners to repay to the receiver for the Alaska Continental Bank, Anchorage, Alaska (the "Bank"), $61,796.48 and $25,000.00. These are the amounts by which Hoffman and Hayes, respectively, were found to have been unjustly enriched as a result of the unsafe and unsound banking practices.

1 Petitioner Hayes filed a one sentence motion incorporating the arguments and citations set forth in Petitioner Hoffman's more detailed motion.
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   The primary basis for Petitioners' Motions for Stay is their intention to file a petition in the Ninth Circuit to have the Board's Decision and Order modified, terminated, or set aside pursuant to 12 U.S.C. §1818. Petitioners assert that such motion will be based on the absence of authority of the Board to assess personal liability against Petitioners, and that the findings of fact made by the administrative law judge and confirmed by the Board were inappropriate. Additionally, Petitioners raise as grounds for granting the Motions for Stay the fact that a lawsuit has already been filed in the U.S. District Court for the District of Alaska which "obviat[es] the jurisdiction of FDIC to proceed administratively".

   [.1] In response to Petitioners' first assertion, the Board notes that section 8(h)(3) of the Act specifically 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. Thus, the grant of a stay is an extraordinary exercise of the Board's discretion.

   [.2] In deciding whether to stay an agency order, however, administrative agencies and the courts of appeal apply basically the same standards. Petitioners for a stay pending judicial review must demonstrate that four conditions are met before a stay will be entered, to wit: (1) a likelihood that the petitioner will prevail on the merits of the appeal; (2) irreparable injury to the petitioner unless the stay is granted; (3) no substantial harm to other interested persons; and (4) no harm to the public interest. 7 (pt. 2) J. Moore, J. Lucas & K. Sinclair, Jr., Moore's Federal Practice ¶65.04[1] at 39–40 (2d ed. 1989) and the cases cited therein; Associated Securities Corp. v. S.E.C., 283 F.2d 773, 774-75 (10th Cir. 1960); Virginia Petroleum Jobbers Assn. v. F.P.C., 259 F.2d 921, 925 (D.C. Cir. 1958). Petitioners do not meet any of these conditions.
   First, other than Petitioners' obvious disagreement with the Board's decision, the Motions for Stay present no factual or legal basis that persuades the Board that Petitioners are likely to prevail on the merits before the Ninth Circuit. Petitioners have failed to distinguish between the imposition of personal liability and the Board's Order requiring reimbursement for unjust enrichment—a matter specifically not decided in Larimore v. Comptroller, 789 F.2d 1244, 1254 (7th Cir., 1986). The three additional cases cited by Petitioners are not pertinent to this action since none involved the Board's cease and desist powers under section 8(b) of the Act. Accordingly, the Board cannot find that Petitioners have carried their burden of showing a likelihood of success on the merits of the appeal. Conclusory allegations that the "facts giving rise to the administrative action did not constitute unsafe or unsound banking practice" simply do not meet this burden.
   Second, the Motions to Stay contain no assertion of irreparable injury to Petitioners. Therefore, for the purpose of deciding these Motions, the Board can only assume that implementation of the Order will not cause injury to the Petitioners other than economic loss, which is not sufficient basis to grant a stay. Virginia Petroleum Jobbers Assn., 259 F.2d at 925; Los Angeles Memorial Coliseum Commission v. National Football League, 634 F.2d 1197 (9th Cir., 1981).
   Third, we consider together the interests of the FDIC and the public interest. Petitioners' submissions are also silent as to how such a stay could serve any public purpose. The public generally and the FDIC, as the insurer of bank depositors, have a strong interest in eliminating unsafe or unsound banking practices. Congress has charged the Board with preventing and correcting unsafe and unsound banking practices which pose risks to insured banks. The public interest requires a financially sound, stable banking system. Where, as in this case, a bank subsequently fails, an order to reimburse the bank's receiver for funds illegally expended which unjustly enriched bank management and other insiders protects both the bank's creditors and the insurance fund.
   Finally, the Board finds no basis for Petitioners' assertion that the filing of a lawsuit by the comptroller eliminates its jurisdiction to proceed administratively. The case cited by Petitioners has nothing at all to do with this issue. Without further information the Board can not identify the alleged proceeding by the "comptroller" to which Petitioners refer.
   After a thorough review, the Board finds that Petitioners have presented no factual
{{4-1-90 p.A-1508}}or legal basis upon which the Motions for Stay could be granted.
   Accordingly, it is hereby ORDERED that Petitioners' Motions for Stay of Decision and Order to Cease and Desist is DENIED. By direction of the Board of Directors.
   Dated at Washington, D.C., this 7th day of November 1989.

(Next page is A-1509.)

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