Federal regulators have filed a civil lawsuit against six former insiders of a failed Winder bank, claiming they were grossly negligent in their duties.
The Federal Deposit Insurance Corp. criticized the former First Piedmont Bank officials about nine loans that allegedly violated the bank's own polices, prudent banking standards or bank regulations.
The case, filed Friday in U.S. District Court in Gainesville, is the eighth FDIC civil suit against failed bank insiders in Georgia, which leads the nation with 80 bank failures since mid-2008.
Former First Piedmont CEO William Whitley was named along with directors Rodney H. Broach, Donnie C. Canup, Garey H. Huff, Jerry M. Maynard and W. Leeon Pruett.
Whitley said he had just received notice of the suit and declined to comment. Attempts to reach the other defendants were not immediately successful.
The suit claims the defendants failed to "inform themselves adequately" of risk associated with the loans, "failed to prevent" bank policy violations, and approved loans they knew or should have known would lead to large losses "without meaningful deliberation."
Each defendant either voted for all or most of the nine loans. The loans soured, costing the bank $8.1 million, according to the lawsuit, which seeks compensatory and other damages.
First Piedmont was shut down in July 2009. Its failure is now estimated to have cost the FDIC's insurance fund, the backstop that protects depositors, $41.8 million.
Regulators said the bank stepped up speculative real estate acquisition and development loans beginning in 2005. Real estate development, while potentially lucrative and an engine for growth for many Georgia banks that failed during the crisis, is also considered to be risky.
Regulators contend the insiders ignored their warnings starting in 2005 about this growing risk.
The FDIC's board has approved liability suits against 576 individuals -- including the six at First Piedmont -- though not all of those cases have been filed.
The agency seeks damages in hopes of recouping its insurance fund either from liability insurance policies, if the bank had one in place when it failed, or from bank leaders.
The height of failures nationally was 2009, and the FDIC has three years from the date of failure to assert a claim, said Kevin LaCroix, an attorney and failed bank litigation expert with Oakbridge Insurance Services in Ohio.But the landslide of bank lawsuits expected for 2012 hasn't happened yet.
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