A former bank officer and employee who committed numerous lending violations that cost his bank more than $400,000 will pay a $1,000 civil money penalty (CMP) and may no longer engage in the affairs of any federally insured financial institution, according to a consent order executed Aug. 20 with the Office of the Comptroller of the Currency (OCC).
The CMP and prohibition order involves Eric T. Guler, a former officer and employee of Minnesota National Bank, Sauk Centre, Minn. The order cites Guler for numerous violations of bank lending policy, and for concealment of those actions, during the years from 2013 to 2016:
- The order says that in late February 2016, Guler committed to make a $2.6 million hotel construction loan without loan committee approval and in excess of his $150,000 individual lending authority. It says he authorized and delivered a $327,779.16 money order payable to the hotel general contractor but for which there were no funds in the remitter’s account to cover it. He concealed his actions from bank staff and management, and the bank lost approximately $327,779 from the unfunded money order.
- In June 2015, he signed a mortgage satisfaction document regarding a 2013 home equity line of credit loan and, the order says, caused the bank to release its security interest in the collateral property knowing that the borrower had not repaid the bank’s $99,264 outstanding loan balance. It says he also misled another employee to secure her signature on the mortgage satisfaction document and continued to list the released collateral property on the bank’s problem loan report for months after the release. The bank’s loss approximately equaled the outstanding loan balance.
- Between 2013 and 2015, the order says, Guler made a number of loans to persons and entities in violation of the bank’s lending policies. According to the order, violations included (a) exceeding the bank’s 85% loan-to-value limits for loans secured by non-owner occupied, one-to-four-family residential property; (b) splitting a single transaction into multiple loans to keep the individual loans within his individual lending authority; (c) splitting a single transaction into multiple loans to avoid appraisal requirements for real estate transactions over $100,000; and (d) failing to include mandatory documentation in loan files, including collateral valuations.
The order concludes that Guler “engaged in violations of law, regulation, or order, engaged in reckless unsafe or unsound practices, and breached his fiduciary duty to the Bank,” misconduct which “resulted in loss or risk of loss to the bank, demonstrated his personal dishonesty, and willful or continuing disregard for the law and any applicable regulations.”
It also says he’s to pay the $1,000 CMP in four installments, beginning this Sept. 30 and ending June 30, 2019.
The order with Guler was announced by the OCC Thursday in its September release regarding enforcement actions. In addition to the above, the release says the agency in August terminated two existing enforcement actions: a cease-and-desist consent order dated March 26, 2015, with Santander Bank, National Association, Wilmington, Del.; and a formal agreement dated Jan. 17, 2017, with Rockland Savings Bank, FSB, Rockland, Maine.