FDIC Sues Bank Directors for $10 Million
NEWNAN, Ga. (CN) - The FDIC sued nine directors of the failed Southern Community Bank, of Fayetteville, Ga., for $10.3 million, for "gross negligence" before the bank's June 2009 collapse.
It's the latest lawsuit in the Federal Deposit Insurance Corp.'s campaign to claw back money from directors of banks that failed during the financial crisis that began in late 2007.
The FDIC was appointed receiver for the Southern Community Bank on June 2009.
The complaint states: "In this action, the FDIC-R seeks to recover damages currently estimated at $10.3 million from former Bank officer and director Gary D. McGaha ('McGaha'), and former Bank directors James S. Cameron ('Cameron'), George R. Davis, Sr. ('Davis'), Robert B. Dixon, Jr. ('Dixon'), Richard J. Dumas ('Dumas'), William W. Leslie ('Leslie'), Jackie L. Mask ('Mask'), Thomas D. Reese ('Reese'), and William M. Strain ('Strain') (collectively, 'Defendants'). The FDIC-R reserves the right to amend this complaint to allege and claim additional damages.
"Defendants were negligent and grossly negligent by, among other things, approving certain loans ('Subject Loans') that violated the Bank's internal policies, regulations and/or prudent banking practices, all of which resulted in damages. Defendants are liable for the damages caused by their negligence and gross negligence.
"In this lawsuit, the FDIC-R does not seek to collect upon outstanding loans, but rather seeks to collect damages flowing from defendants' negligence and gross negligence, which include, among other things, lost operating capital, lost profits, and lost investment opportunities."
The FDIC is represented by Joyce Gist Lewis with Shingler Lewis, of Atlanta.
Most such FDIC claims spring from banks' loosey-goosey lending and occasional inside deals in the runup to the collapse of the housing boom, and the mortgage securities that helped fuel it.