A consent prohibition against a former institution-affiliated party who allegedly used a forged loan agreement to support his bid to acquire control of Golden Pacific Bankcorp, Inc., a former bank holding company in Sacramento, Calif., was announced Friday by the Federal Reserve.
The Fed said it has prohibited Karl K. Klessig from future participation in the banking industry for fraud in his application to acquire control of the firm and “thereby indirectly control Golden Pacific Bank, National Association,” both of Sacramento.
“Applicants seeking approval to acquire control of Board-regulated institutions must accurately disclose the source of funding for the acquisition,” the Fed said in Friday’s announcement. “In his application, Klessig falsely represented that he had obtained a loan to finance his purchase of a controlling interest in Golden Pacific Bancorp. Following the Board’s discovery of the false representations, Klessig withdrew his application.”
The Fed order notes that Klessig’s change-in-control notice was required to contain a description of the funds to be used in making the acquisition and, if any part of these funds was to be borrowed, a description of the transaction, the names of the parties, and any agreements with such parties.
Klessig, the Fed said, represented that the transaction would be financed through the proceeds of a private municipal bond issuance. It said to support that, Klessig provided a fraudulent loan agreement in which the signature of the representative of the public entity issuing the bonds and extending the loan was forged. Klessig’s conduct “constituted violations of law or regulation or unsafe or unsound banking practices, involved personal dishonesty or demonstrated a willful or continuing disregard for the safety and soundness of the Bank” and “exposed the institution to probable financial loss or could have prejudiced the interests of the Bank’s depositors.”