Fed, after filing ‘notice of intent’ in 2018, sets prohibitions against two former WY bank execs

Two former Wyoming bank employees who were ordered in 2018 to pay a collective $2.2 million in damages to the bank were barred from future involvement in the affairs of any federally insured depository institution in an order issued last week by the Federal Reserve.

The Fed issued its notice of intent to prohibit Frank E. Smith and Mark A. Kiolbasa in December 2018. In that notice, the Fed said that Smith and Kiolbasa, institution-affiliated parties of Farmers State Bank of Pine Bluffs, Wyo., conspired while they were working for Central Bank & Trust of Lander, Wyo., to misappropriate Central’s proprietary business information in a plan to acquire an ownership interest in Farmers’ holding company, Commercial Bancorp (also in Pine Bluffs), and to take management positions at Farmers.

According to that notice, the two engaged in unsafe or unsound banking practices by, among other things, conspiring to acquire and misappropriating confidential and proprietary information of Central, including trade secrets; secretly performing services for and acting on behalf of Farmers; and seeking to misappropriate a business opportunity of Central. Aiding and abetting each others’ actions were included in the list of activities charged.

Smith and Kiolbasa began planning their move from Central to Farmers as far back as late 2013, according to documentation, with the aim of taking loan customers with them to Farmers. Central sued in 2016 and a global settlement was reached during an appeals phase.

An administrative law judge issued a recommendation in favor of the prohibition orders last April, the Fed said in its final decision dated March 24. An overview of the case is provided in that document.

Final decision

RR: Fed wants to bar 2 who deceived their bank in plot to win control of another (Dec. 13, 2018)