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Target of U.S. Treasury Action Fires Back

(CN) - Fraud and blackmail charges that the U.S. Treasury has lobbed against the CEO of American Bank are unconstitutional, the executive says in a federal action.

James Plack's Nov. 7 federal lawsuit in Manhattan comes just over a year after the U.S. Office of the Comptroller of the Currency announced that it was bringing an administrative proceeding against him as CEO of American Bank, a community savings back headquartered in Rockville, Md.

The charges stem from American Bank's 2010 sale of 22 properties to CRC Mortgage Resolution for $3 million and purchase of a $35 million pool of home-equity lines of credit.

Regulators contend that these transactions constituted unsafe banking practices structured to improperly avoid recognizing losses to American Bank, which had already been ordered by government regulators to reduce its credit risk.

In addition, the OCC found Plack had engaged in blackmail by demanding two individuals pay money or sign loan documents giving the bank interest in their property under the threat of informing the government of fraud by said individuals.

A hearing on these allegations is scheduled for Dec. 15, but Plack says the administrative proceeding against him is unconstitutional.

Plack's complaint details the many differences between a trial and an administrative proceeding. Discovery is more limited in an administrative proceeding, as is the availability of appellate review.

The administrative law judge presiding over the proceedings against Plack has struck the CEO's affirmative defenses, and has precluded him from calling a series of defense witnesses, according to the complaint.

"If the OCC were to prevail at the upcoming hearing, Mr. Plack would suffer severe and irreparable reputational and other harm," the complaint states. "The result of the enforcement action would be public, thus further damaging his reputation, and he would be required to comply with the ruling while he seeks judicial review."

If the ALJ rules against him, Plack will be banned from ever working for a bank again.

He says that the limitations of the administrative proceeding deny him his due-process rights, and he objects to the prohibition "from asserting constitutional challenges to the existence of the administrative proceeding during the administrative hearing."

Plack is represented by Barry Cobern with Coburn & Greenbaum in Washington, D.C.

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