Douglass National Bank CEO resigns: federal probe concerning housing agency may have led to departure.

Lester W. Johnson, head of the only African American-owned bank in the Kansas City, Missouri, metropolitan area, abruptly resigned from the top spot at Douglass National Bank.

Johnson's hasty exit comes amid an intense and ongoing federal probe by the U.S. Department of Housing and Urban Development regarding alleged improprieties and questionable business practices at Kansas City's former housing agency, the Housing and Economic Development Financial Corp. (HEDFC), and a $2.5 million line of credit that the agency received from Douglass Bank in March 2003.

HEDFC had been the key contractor for Kansas City on virtually all federal housing spending for decades, until the city filed a breach of contract lawsuit and requested a court-appointed receiver to oversee the agency. The city argued, among other things, that HEDFC misused the Douglass Bank loan to refurbish two small HUD homes, worth $46,000 each, for more than $1.1 million.

As a result of the investigation, HUD recommended suspending the disbursement of funds to HEDFC, and Kansas City complied with the recommendation in July 2004. Federal funding for the housing program was resumed in February.

Johnson, who joined Douglass Bank in December 2002 and stepped down in January, maintains that he left to pursue other interests. "I don't want to discuss any aspect of my departure from the bank," Johnson said in a phone conversation. "I'm currently exploring other career opportunities--preferably in banking in Kansas City and elsewhere." However, area sources say that Johnson put his Kansas City home up for sale shortly after his resignation.

Johnson's departure was followed by the resignations of three members of the bank's board of directors in April. Ralph King, chairman, stepped down, as did board members Ed Honesty Jr. and Cecilia Carter.

Denise Jordon, publisher of the Kansas City Globe, a black-owned weekly newspaper, says the problems with the former housing agency and the federal investigation may have contributed to Johnson's exit. There apparently had been serious issues at the bank long before Johnson arrived; Ron Wiley, Johnson's predecessor, left abruptly in July 2002 after a rocky tenure.