The chairman of the state House banking committee is negotiating a settlement with federal regulators over a lawsuit that followed the 2012 failure of a small South Georgia bank where he was a director.
State Rep. Greg Morris, R-Vidalia, served on the board of Montgomery Bank & Trust, a community bank in Ailey. Montgomery Bank was mortally wounded in a fraud scheme by a former preacher and investment adviser, Aubrey Lee Price, who made international headlines when he disappeared after admitting in faked suicide notes to ripping off clients and the bank.
The Federal Deposit Insurance Corp. sued Morris and 10 other Montgomery Bank insiders last July. It alleged gross negligence and breaches of fiduciary duty that allowed Price to defraud the bank of $14.7 million.
A filing in the case this month said the parties “have agreed to the form of a written settlement agreement.”
Patrick O’Connor, an attorney for Morris and nine other bank insiders, said “we are working to negotiate a resolution to the case based on economic factors.”
“Our clients, which are 10 of the 11 defendants, have consistently and adamantly denied any liability and any resolution will not include any admission of liability,” he said.
Court documents show a judge has given the parties in the case until June 3 to reach a deal. The settlement talks were first reported by the website Atlanta Unfiltered.
A message left with Morris, who faces opposition in Tuesday’s Republican primary, was not immediately returned.
Pete Robinson, a former chairman of the bank and a well-known lobbyist at the state Capitol, is among the defendants.
Another former Montgomery Bank director not involved in this litigation previously settled with the FDIC for $200,000, FDIC records show.
Georgia had more banks fail than any other state following the financial collapse. In the aftermath of many, the FDIC sued former bank directors and officers alleging reckless conduct and seeking to collect against liability insurance policies or against bank officials directly.
Morris’ one-time counterpart in the state Senate faced a similar lawsuit in a separate bank failure.
Jack Murphy, then a state senator from Cumming, was sued in 2011 by the FDIC just days after becoming that chamber’s banking chairman. Murphy and several other insiders of the failed Integrity Bank later settled with the FDIC.
Most of Georgia’s failed banks were small lenders swamped with residential or commercial development loans that soured when the economy collapsed.
Montgomery Bank was founded in 1926 in Ailey, about 170 miles southeast of Atlanta. The bank remained a slow-growing, but stable player in Montgomery and Toombs counties for much of its history. But a decision in the mid-2000s to expand to the Georgia coast proved disastrous.
The bank was one of the most troubled in the state and was under strict regulatory censure by regulators by late 2010, when Price led a group of investors to try to save it. Price and his investors raised about $10 million and locals in the area of Ailey raised another $4 million.
Price took a seat on the board following the investment, and prosecutors said he essentially engaged in day trading of the bank’s capital. He later disappeared, left faked suicide notes and was declared dead by a Florida judge.
Price was captured near Brunswick in late 2013, pleaded guilty to federal fraud charges and is serving a three-decade prison sentence.
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