A wave of civil lawsuits targeting dozens of former executives and directors of failed banks has already begun. In all, the government hopes to recover $2 billion.
Professional liability lawsuits against 80 former directors and officers of failed banks have been approved by the Federal Deposit Insurance Corp.’s board of directors, spokesman Greg Hernandez reported to Mortgage Daily.
Around $2 billion in recoveries are sought.
Two directors-and-officers lawsuits have been filed so far.
The first complaint was filed in a federal court in California during July against former IndyMac executives Scott Van Dellen, Richard Koon, Kenneth Shellem and William Rothman. The FDIC seeks $300 million in that case, which alleges that the four executives approved loans to developers and home builders who were unlikely to repay.
The second directors-and-officers complaint was filed on Nov. 1 in an Illinois federal court. The 11 defendants in that case were executives and directors at Heritage Community Bank — which was closed by the Illinois Department of Financial Professional Regulation, Division of Banking, in February 2009.
The former Heritage executives worked in the commercial mortgage division. The FDIC claims that they “failed to properly manage and supervise Heritage and its commercial real estate lending program.”
At the time of Heritage’s failure, the FDIC estimated associated losses at $42 million. The FDIC’s lawsuit seeks to recover $20 million.
The FDIC also has 191 mortgage malpractice or fraud cases pending, according to Hernandez. Most of the subjects in these cases are mortgage service providers such as attorneys, appraisers and brokers.
In response to a reporter’s inquiry at a briefing Tuesday about 50 criminal cases pending with the FDIC Inspector General’s Office, FDIC Chairman Sheila Bair referred the reporter to the IG’s office, noting, “I think it is important to distinguish, thank you, between the civil litigation that the FDIC corporate initiates and our IG, which obviously part of the FDIC but completely autonomous, as it should be.”
Federal Deposit Insurance Corp., as Receiver for IndyMac Bank, F.S.B., Plaintiff, v. Scott Van Dellen, Richard Koon, Kenneth Shellem and William Rothman, Defendants.
Case No. CV10 4915-RSWL, July 2, 2010 (U.S. District Court for the Central District of California).
Federal Deposit Insurance Corp., as Receiver of Heritage Community Bank, Plaintiff, v. John M. Saphir; Patrick G. Fanning; Stephen L. Faydash; William E. Hetler; Thomas Jelinek; Lori A. Moseley; Stephen Anthony; Jerry C. Brucer; James K. Champion; Andrew B. Nathan; and Mary C. Mills.
Nov. 1, 2010 (U.S. District Court for the Northern District of Illinois, Eastern Division).
