Regulator fines, prohibits former bank exec for illegal bonuses, waiver of fines for relatives

A civil money penalty (CMP) of $20,000 and a removal and prohibition for a former Texas banker was one of nine enforcement and termination actions reported Friday for December by the federal regulator of national banks and thrifts.

The Office of the Comptroller of the Currency (OCC) said it assessed the CMP against Dacey Malone, a former executive vice president for Titan Bank, N.A., of Mineral Wells, Texas. Malone was also prohibited from serving in the future at any federally insured bank or credit union without the prior written consent of both the OCC and the institution’s “appropriate federal financial institutions regulatory agency.”

According to the consent order published by the OCC, Malone illegally bypassed the bank’s payroll system to pay herself annual bonuses, resulting in her W-2 earnings statements being understated by $108,000; waived $6,375 in fees related to 255 overdrafts incurred in her own and a family member’s accounts; and transferred at least $21,300 from the bank’s payroll and general ledger accounts to a family member’s accounts without a legitimate business purpose.

Other actions listed by the agency included:

  • Two “formal agreements” with Patriot Bank, N.A., of Stamford, Conn., and with Quontic Bank of Astoria, N.Y. The OCC said, in its agreement, that it had uncovered at Patriot Bank “unsafe and unsound banking practices relating to corporate governance, strategic planning, capital planning, internal audit, credit administration, the allowance of loan and lease losses (ALLL) methodology, administration of the leveraged loan portfolio, asset liability management, and interest rate risk (IRR) modeling at the bank.” For Quontic, the agency said in the agreement it determined that the bank has engaged in unsafe or unsound banking practices relating to its board and management oversight and funds management practices. In both cases, the OCC and the banks agreed to several governance and planning requirements to be pursued by the banks.
  • Two additional prohibition orders, against James A. Vincek of Newfirst National Bank in El Campo, Texas, and Karen Contreras of Capital One, N.A., in Mclean, Va. In the former case, according to the consent order filed by the agency, the OCC said Vincek allegedly misappropriated $13,500 from a bank customer and then processed “sham transactions and made false entries into bank records to disguise his misconduct.” Vincek reimbursed the bank for the misappropriated funds, and the bank reimbursed the customer. In the latter case, Contreras, the OCC said in its consent order, generated memo credits without authorization to her personal checking account at the bank. The memo credits, the OCC said, inflated Contreras’ account balance, which permitted her to further overdraw her account by approximately $4,900 by making ATM withdrawals and allowing other transactions to process. In both cases, the two are prohibited from serving in the future at any federally insured bank or credit union without the prior written consent of both the OCC and the institution’s “appropriate federal financial institutions regulatory agency.”
  • Three terminations of enforcement actions, all cease and desist orders, against:
    • S. Bank N.A. of Cincinnati, Ohio (dating back to 2015);
    • Citibank, N.A., Sioux Falls, S.D. (also dating back to 2015);
    • Department Stores National Bank, Sioux Falls, S.D. (dating to 2015).

OCC Enforcement Actions and Terminations for December 2018

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