Ex-Silver State executive agrees to $35,000 fine
A former Silver State Bank executive has agreed to a $35,000 settlement to resolve a government lawsuit charging he engaged in unsafe banking practices, which led to the failure of the Henderson bank.
Douglas E. French, the former executive vice president and real estate manager at Silver State, also was banned from working in the banking industry without prior written approval from the Federal Deposit Insurance Corp. or other federal regulators.
The settlement announced by the FDIC on Friday is part of the agency's ongoing effort to sue former banking executives to recover funds from failed banks. FDIC regulators declined comment.
French was unavailable for comment Friday, but in a Jan. 28 email he had dismissed the FDIC's complaint as "no more than a series of unsubstantiated claims cobbled together in an effort to find a scapegoat for the collapse of Silver State Bank."
The FDIC accused French in a 26-page complaint issued Dec. 17, 2010, of being associated with bad loans that cost Silver State more than $10 million. FDIC officials said French "violated various federal laws and regulations" involving certain loans that went into delinquency, and that French had been paid $98,000 in loan fee commissions involving failed loans.
In the original complaint, the FDIC indicated it would seek a $125,000 fine and ban from working at any FDIC-insured bank. Agency officials didn't say Friday why they agreed to a smaller fine. A four-page consent agreement said only that the "civil money penalty was appropriate" considering French's "financial resources" and "good faith."
French resigned from Silver State on May 15, 2008. The FDIC seized the subsidiary of Silver State Bancorp, about four months later. He is now president of the Ludwig von Mises Institute, a libertarian social and economic think tank in Auburn, Ala.
Nevada State Bank took over Silver State's branches and deposits in Nevada, while National Bank of Arizona, another Zions Bancorp subsidiary, took over four Silver State branches in Arizona.
The transaction cost the Deposit Insurance Fund $450 million to $550 million, the FDIC said. Silver State had loans and assets of $1.887 billion when it was seized.
Former Silver State Bank officer Steven D. Haynes received a similar FDIC enforcement action in September. The FDIC charged that Haynes breached his fiduciary duties as a bank officer in approving poor quality home construction loans that eventually cost it and the FDIC more than $2.6 million.
The complaint against Haynes proposes a $75,000 fine and ban on working for any insured depository institution. The case has not yet been resolved.
Contact reporter Chris Sieroty at
csieroty@reviewjournal.com or 702-477-3893.
