The former board chairman of an Illinois bank was prohibited from further participation with federally insured financial institutions, and fined $105,000, for “recklessly” participating in unsafe or unsound practices and breaching fiduciary duties related to a series of complicated transactions with another bank and borrowers from both banks.
In reporting on enforcement actions in May, the Federal Deposit Insurance Corp. (FDIC) said it had issued a notice of intention to prohibit Frank William Bonan II, former board chairman of Grand Rivers Community Bank in Grand Chain, Ill., and ordered him to pay $105,000 the civil money penalty (CMP).
“Respondent, directly or indirectly, recklessly participated or engaged in unsafe or unsound practices in connection with the bank and breached fiduciary duties owed to the bank,” the FDIC said in its filings, dated May 5. “Respondent’s practices and breaches were part of a pattern of misconduct and caused the bank to suffer or probably suffer financial loss or other damage. Respondent’s reckless practices and breaches involved personal dishonesty and demonstrate Respondent’s willful and continuing disregard for the safety or soundness of the bank.”
The allegations against Bonan revolve around a merger with another bank, transactions with various customers of both banks (and impairment of those transactions), financing to uncreditworthy borrowers, and allegedly causing a financial loss of about $1 million to the Grand Rivers.
In addition to ordering Bonan to pay the CMP, the FDIC set a hearing on whether to prohibit Bonan from further participation with a federally insured financial institution.