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[¶5224A] Allan Hutensky, First Central Bank, Hartford, Conn., FDIC Docket No. 92-300e (7-3-95)
FDIC denies motion for a stay pending judicial review of an order of prohibition. (See ¶5243 for action by the Court of Appeals.)
[.1] Practice and Procedure—Stay
Four conditions must be met before the board will enter a stay of an order pending judicial review: (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.
[.2] Practice and Procedure—Stay
Respondent's assertion that the board erred by failing to follow 2nd Circuit precedent, and intends to file a petition for judicial review with the 2nd Circuit, does not persuade the board that respondent will prevail on the merits before the appeals court.
[.3] Practice and Procedure—Stay
Respondent's assertion that an order of prohibition "is one of the most severe penalties that can be imposed upon an institution-affiliated party, and carries a heavy stigma" does not meet respondent's burden of showing an irreparable injury to obtain a stay pending judicial review.
[.4] Practice and Procedure—Stay
Respondent is not entitled to a stay pending judicial review of an order because Respondent's request is silent as to how a stay could serve any public interest.
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In the Matter of
ALLAN HUTENSKY,
individually, and as an
institution-affiliated party of
FRIST CENTRAL BANK,
HARTFORD,CONNECTICUT
(Former Insured State Nonmember Bank)
Docket No.FDIC-92-300e
On June 1, 1995, Respondent Allan Hutensky ("Respondent") filed with the Board of Directors ("Board") of the Federal Deposit Insurance Corporation ("FDIC") a Request for Stay of the Board's Order of Prohibition ("Request") pending a final determination on Respondent's petition for judicial review of the Board's Decision and Order ("Order") prohibiting Respondent from further participation in any manner in the conduct of the affairs of any insured depository institution.
The Order was issued on May 3, 1995, pursuant to the Board's authority under section 8(e) of the Federal Deposit Insurance Act ("FDI Act"), 12 U.S.C. § 1818(e), after a full hearing on the merits of the case. The Board found that Respondent had engaged in violations of Regulation O of the Board of Governors of the Federal Reserve System, breaches of fiduciary duty, and unsafe and unsound practices which caused significant loss of two insured depository institutions and which manifested Respondent's willful disregard for the safety and soundness of those institutions as well as his personal dishonesty.
Section 8(h)(3) of the FDI 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. See 12 C.F.R. § 308.41 (Board may exercise its discretion to grant a stay).
[.1] The Board has previously held that petitions for a stay pending judicial review must demonstrate that four conditions are met before a stay will be entered: (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. In the Matter of Ronald J. Grubb, Bank of Hydro, Hydro, Oklahoma, Docket No. FDIC-88-282k and FDIC-89-111e, 2 P-H FDIC Enf. Dec. ¶8021 (1992); In the Matter of Harold A. Hoffman, Joseph L. Hayes and Alaska Continental Bank, Anchorage, Alaska, Docket No. FDIC-88-156c&b, 2 P-H FDIC Enf. Dec. ¶5141 (1989); 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. Respondent does not meet any of these conditions.
[.2] The primary bases for Respondent's Request is his intention to file a petition for judicial review with the Second Circuit of the United States Court of Appeals, pursuant to 12 U.S.C. § 1818(h)(2). He asserts that the petition will seek review of "whether the Board erred in declining to follow the Second Circuit case law concerning `straw loans'" (citations omitted). The Board has previously considered, and rejected in its Order, Respondent's argument regarding the applicability of the decisions of the Second Circuit. Other than the Respondent's obvious disagreement with the Board's decision, the Request presents neither fact nor legal argument that would persuade the FDIC that Respondent is likely to prevail on the merits before the Second Circuit.
[.3] The Request contains no assertion of irreparable injury to Respondent. It states only that "an Order of Prohibition is one of the most severe penalties that can be imposed upon an institution-affiliated party, and carries a heavy stigma" and that Hutensky has a "legitimate interest in suspending the finality of the Order pending final determination ... [of] his petition for judicial review." Respondent has not met his burden to show irreparable injury.
[.4] The interests of the FDIC and the public interest are considered together. Respondent's Request is also silent as to how such a stay could serve any public purpose. The public generally and the FDIC, as the insurer of bank depositor, have a strong interest in eliminating unsafe or unsound banking practices and in maintaining the highest professional and ethical standards for bank officers and directors. Congress has charged the Board with preventing institution-affiliated parties who have engaged in violations of law or regulation, breaches of fiduciary duty, or unsafe or unsound banking practices which evidence willful or continuing disregard for the safety and soundness of an insured institution and which result in
{{2-28-03 p.A-2570.1}}loss to such institution from serving in other insured institutions. The Board's Order represents its best judgment regarding the appropriate remedy for Respondent's actions. In the absence of any assertion to the contrary by Respondent, it is concluded that the public interest is served by enforcement of the Board's Order.
A thorough review of Respondent's submission reveals that Respondent has presented no factual or legal basis upon which the Request could be granted. Accordingly, it is hereby ORDERED that Respondent's Request for Stay of the Board's Order of Prohibition is DENTED.
Pursuant to delegated authority, upon the advice and recommendation of the General Counsel.
Dated at Washington, D.C. this 3rd day of July, 1995.
/s/ Jerry L. Langley
Executive Secretary
