CHICAGO (CN) - The FDIC sued six directors of the failed New Century Bank for $33 million, claiming they were grossly negligent and ignored repeated warnings before the bank collapsed in 2010.
The Federal Deposit Insurance Corporation sued the six former officers in Federal Court, as receiver for New Century Bank.
It's part of a recent trend in which the FDIC is trying to recover money from officers of banks that failed during the economic crisis. Generally, as in this case, the FDIC claims the directors ignored the bank's own lending policies before the housing collapse.
The Illinois Department of Financial and Professional Regulation closed the bank on April 23, 2010, and the FDIC was named receiver.
The complaint states: "The FDIC seeks to recover more than $33 million in losses suffered because the Defendants - six of the Bank's former directors and/or officers - acted negligently and grossly negligently and breached their fiduciary duties by disregarding the Bank's loan policy, prudent lending practices, and regulatory warnings in connection with numerous commercial real estate ('CRE') and other loans during the period April 2005 to July 2008 (collectively, the 'Target Loans').
"The acts and omissions that give rise to the Defendants' liability include, but are not limited to: (i) failing to establish adequate debt repayment programs; (ii) extending credit in excess of permitted loan-to-value ('LTV') ratio limits; (iii) failing to adhere to required debt-to income ratios; (iv) permitting debt service coverage ratios below minimum requirements; (v) relying on outdated, unverified, and inadequate financial information for borrowers and guarantors; and (vi) extending credit outside the Bank's normal trade area.
"In this lawsuit, the FDIC seeks to collect damages flowing from the Defendants' negligence, gross negligence, and breaches of fiduciary duty, including, but not limited to, the Bank's lost operating capital."
Here are the defendants:
Faye T. Pantazelos, of Chicago, the bank's founder, president and CEO from 1999 until it died;
John R. Brinkman, of Homewood, a senior vice president from 2004 to 2008;
George Metzger, of Northbrook, executive vice president of commercial lending;
Robert C. Gremley, of Lincolnshire, a director;
Richard J. Wholey, of Crest Hill, a director;
and Thomas J. Romano, of Park City Utah, a senior vice president.
The FDIC seeks damages for negligence, gross negligence, and breach of fiduciary duties.
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