A former Maryland banker would be banned for life by the Federal Reserve from participating “in any manner in the conduct of the affairs of any institution” due to his self-dealing, ultimately causing the bank he led to fail, under a “Notice of Intent to Prohibit” published Thursday.
In a release, the Fed said that it had filed the notice against Jacob H. Goldstein, former president and chief executive officer of NBRS Financial Bank in in Rising Sun, Md. – an institution founded in 1880 – for engaging in unsafe or unsound practices, violations of law, and breaches of fiduciary duty.
”The practices, violations, and breaches of fiduciary duty relate to Goldstein using his position as president and CEO to engage in self-dealing by improperly obtaining loans for his personal benefit and withholding material information from the bank’s board of directors,” the Fed stated. The central bank added that, in connection with that misconduct, Goldstein received a financial gain or other benefit and NBRS suffered financial loss or other damage.
“The misconduct described herein involves personal dishonesty or a willful or continuing disregard for the safety and soundness of NBRS on the part of Goldstein,” the Fed said.
Goldstein was hired as CEO in 2001; by 2012, he resigned, the Fed said. In 2014, the state regulator (Maryland Office of the Commissioner of Financial Information) closed the bank “due to its poor financial condition,” the Fed stated.
The agency said that the bank failed, in part, NBRS’ ability to overcome its deteriorating financial condition and “Goldstein’s engaging in improper business practices for his own benefit.“ The Fed said that Goldstein, while an institution-affiliated party of the bank, also undermined the effectiveness of key control functions at the institution, which led to significant weaknesses in corporate governance.
“From at least 2008 through his resignation in 2012, Goldstein leveraged his position as bank president, CEO, and chairman of the board to engage in unsafe or unsound practices, violations of law or regulations, and breaches of his fiduciary duty by engaging in improper business practices for his own benefit,” the Fed said.