Joy Juedes, Staff Writer
Posted: 01/26/2011 06:29:10 PM PST
REDLANDS – Fourteen former directors and officers of 1st Centennial Bank have been sued for negligence by the Federal Deposit Insurance Corporation.
The complaint, filed Jan. 14 in the U.S. District Court’s Central District of California, stated the former directors and officers “utterly failed to manage the Bank and its commercial real estate lending division in a prudent, safe and reasonable manner.”
Court documents alleged “negligence, gross negligence, recklessness and willful misconduct, and breach of fiduciary duties of due care, diligence, loyalty and good faith to the Bank.”
The California Department of Financial Institutions shut the bank down in January 2009 and the FDIC was named receiver. The bank reopened as a First California Bank branch a few days after the government takeover. The bank’s failure cost the Deposit Insurance Fund $163 million, according to the complaint.
The suit asked for a minimum of $26.8 million in damages and any other amounts to be determined at trial.
Defendants named in court documents were University of Redlands president James Appleton, former Redlands Mayor Carole Beswick, business owner Larry Jacinto, business owner Bill McCalmon, 2009 Man of the Year Stan Weisser, development consultant Pat Meyer, former 1st Centennial president and CEO Tom Vessey, former 1st Centennial vice president and CCO John Lang, Bruce Bartells, Ronald Jeffrey, Douglas Welebir and Clifford Schoonover. Several were contacted Wednesday afternoon and none returned calls requesting comment.
Dan Marmalefsky and Mark McDonald, partners in Morrison Foerster in Los Angeles, are representing them. They called the FDIC’s claims “unfounded, unfair and based solely on hindsight” in a statement.
“At the same time that the (residential construction) loans were made, 1st Centennial Bank’s bank examiners were ascribing the Bank their highest grades for asset quality and management practices,” the statement said.
“Just as the FDIC and numerous sophisticated market participants failed accurately to forecast the extent of the housing crash, so too were the directors and officers of 1st Centennial unable to predict the unprecedented plunge in housing prices in the Inland Empire that led to the Bank’s failure,” the statement said.
The complaint was filed by Mary Blasby, Walter Noss and Kristen Anderson of Scott + Scott LLP in Santa Monica and Judith Scholnick in New York, attorneys for the FDIC.
FDIC spokesman Greg Hernandez said the FDIC does not comment on individual suits.
“We normally let lawsuits speak for themselves,” he said.
The complaint stated bank officers and directors “recklessly implemented an unsustainable business model pursuing rapid asset growth concentrated in high-risk loans in commercial real estate without having adequate credit administration and loan underwriting policies and practices to manage risk.” They “routinely violated the policies that did exist, thereby negligently approving loans that had little chance of repayment and thus compounding the Bank’s risk exposure.”
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