FDIC reports busy February, with 15 orders (including five removals, four restorations)

A busy February featured 15 orders issued by the federal deposit insurance agency, it said Friday – including five removals and prohibitions, one civil money penalty (CMP), one consent order, one restitution order (including a prohibition/removal), and one termination of insurance.

Additionally, the Federal Deposit Insurance Corp. (FDIC) reported, it terminated two consent orders and approved four “section 19” orders, which typically restore an individual’s ability to work again in a financial institution.

The agency said it assessed a $35,000 CMP against Donald C. Lancaster, who, while a vice president and chief banking officer for Union Bank and Trust Co. of Oxford, N.C., “recklessly engaged or participated in unsafe or unsound banking practices and breaches of fiduciary duty.” The FDIC said Lancaster allegedly made a loan of more than $105,000 and, “without authority, released the nominee from liability for the loan, resulting in a loss to the bank of $105,087.”

In addition to the CMP, Lancaster is prohibited from participating in the affairs of any federally insured financial institution.

Other removals and prohibitions ordered in February, FDIC said, included those against:

  • Anna B. Holt of Branch Banking and Trust Co., Winston-Salem, N.C., for alleged embezzlement of funds from accounts of account holders.
  • Melissa D. Huffman, also of Branch Banking and Trust Co., Winston-Salem, N.C., for allegedly stealing cash from the vaults of bank branches she visited as regional branch operations manager.
  • Jonathan A. Witte of Prosperity Bank, El Campo, Texas, for allegedly converting between $100,000 and $200,000 from the bank over a four-year period. Witte pleaded guilty to state charges of second degree felony for theft of property, ordered to serve five years of deferred adjudication and pay restitution of $128,393.34 (plus court costs).
  • Keith A. Simpson of West View Savings Bank, Pittsburgh, Pa., for allegedly crediting his personal checking account with bank funds without approval or authorization, resulting in a loss for the bank.
  • Shantia Lashae of Henderson of Bank of the Ozarks, Little Rock, Ark., for allegedly engaging in “violations, practices, and/or breaches of fiduciary duty” resulting in “the bank having suffered or will probably suffer financial loss or other damage, the interests of the bank’s depositors have been or could be prejudiced, and/or the Respondent received financial gain or other benefit.”

All five have been prohibited in participating in the affairs of any federally insured financial institution.

Also in February, the FDIC said it:

  • Issued a restitution order of $2,500 against Timothy K. Reinhardt of State Bank of Nauvoo in Nauvoo, Ill., who the agency alleges was “unjustly enriched” in connection with unsafe and unsound banking practices (he was also prohibited from work or participation at a federally insured financial institution).
  • Issued a consent order against The Citizens State Bank of Okemah, Okla., focusing on the bank’s capital, asset quality, management, earnings, liquidity,sensitivity to market risk, mortgage banking policies and practices, and mortgage banking internal controls.
  • Terminated the insurance of Merchants Bank of California, N.A., of Carson, Calif., which FDIC pointed out “is not engaged in the business of receiving deposits, other than trust funds”; the termination is effective June 30.

Finally, the federal insurance deposit agency announced it had terminated two consent orders: against State Bank of Nauvoo, originally issued in 2015; and against First Bank and Trust Company of Illinois, Palantine, Ill., originally issued in 2011.

The “section 19” orders approved (allowing persons to again be engaged in the affairs of a federally insured institution) included those for: Jeffrey A. Mendenhall of Washington state (after 23 years of prohibition); Lindsey Landrum Maxwell of Texas (11 years); Louis A. Le Merle of California (four years); and Andrea J. Bencomo of Arizona (10 years).

FDIC Makes Public February Enforcement Actions