FINAL ENFORCEMENT DECISION ISSUED BY THE BOARD OF GOVERNORS.In the Matter of a Notice to Prohibit Further Participation Against
Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. , N.T. & S.A.
San Francisco, California “San Francisco” redirects here. For other uses, see San Francisco (disambiguation).
The City and County of San Francisco (EN IPA: [sænfrənˈsɪskoʊ]
Docket A written list of judicial proceedings set down for trial in a court.
To enter the dates of judicial proceedings scheduled for trial in a book kept by a court. Nos. AA-EC-98-04 and AA-EC-98-05
This is an administrative proceeding An administrative proceeding is a non-judicial determination of fault or guilt and may include in some cases penalties of various forms.
A "Captain's Mast", held by a commanding officer of a warship is one such proceeding. pursuant to the Federal Deposit Insurance Act ("FDI FDI
See: Foreign direct investment Act") in which the Office of the Comptroller of the Currency The Office of the Comptroller of the Currency (or OCC) was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States. of the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, ("OCC OCC
See: Options Clearing Corporation
See Options Clearing Corporation (OCC). ") seeks to prohibit the Respondent, Elena Espiritu ("Espiritu"), from further participation in the affairs of any financial institution because of her conduct as an employee of Bank of America, N.T. & S.A., San Francisco, California (the "Bank"). Under the FDI Act, the OCC may initiate a prohibition proceeding against a former employee of a national bank, but the Board must make the final determination whether to issue an order of prohibition.
Upon review of the administrative record, the Board issues this Final Decision adopting the Recommended Decision ("Recommended Decision") of Administrative Law Judge administrative law judge n. a professional hearing officer who works for the government to preside over hearings and appeals involving governmental agencies. They are generally experienced in the particular subject matter of the agency involved or of several agencies. Walter Alprin (the "ALJ ALJ Administrative Law Judge
ALJ Association for Legal Justice (Northern Ireland) "), and orders the issuance of the attached Order of Prohibition.
I. Statement of the Case
A. Statutory and Regulatory Framework
Under the FDI Act and the Board's regulations, the ALJ is responsible for conducting proceedings on a notice of charges. 12 U.S.C. [sections] 1818(e)(4). The ALJ issues a recommended decision that is referred to the deciding agency together with any exceptions to those recommendations filed by the parties. The Board makes the final findings of fact findings of fact n. (See: finding) , conclusions of law, and determination whether to issue an order of prohibition in the case of prohibition orders sought by the OCC. Id.; 12 C.F.R. 263.40.
The FDI Act sets forth the substantive basis upon which a federal banking agency may issue against a bank official or employee an order of prohibition from further participation in banking. In order to issue such an order, the Board must make each of three findings:
(1) that the respondent engaged in identified misconduct, including an unsafe or unsound practice or a breach of fiduciary duty; (2) that the conduct had a specified effect, including financial loss to the institution or gain to the respondent; and (3) that the respondent's conduct involved either personal dishonesty or a willful or continuing disregard for the safety or soundness of the institution. 12 U.S.C. [sections] 1818(e)(1)(A)-(C).
An enforcement proceeding is initiated by the filing of a notice of charges which is served on the respondent. Under the OCC's and the Board's regulations, the respondent must file an answer within 20 days of service of the notice. 12 C.F.R. 19.19(a) and 263.19(a). Failure to file an answer constitutes a waiver of the respondent's fight to contest the allegations in the notice, and a final order may be entered unless good cause is shown for failure to file a timely answer. 12 C.F.R. 19.19(c)(1) and 263.19(c)(1).
B. Procedural History
On January 29, 1998, the OCC initiated a Notice of Removal and Notice of Charges (the "Notice") against Espiritu. The Notice alleged that Espiritu engaged in an unsafe and unsound unsound
said of an animal, usually a horse, which has been examined for soundness and found to be unsatisfactory. banking practice while employed at the Bank. Specifically, the Notice alleged that Espiritu deposited into her account at the Bank two checks totaling $5200 drawn on a closed account at another institution. She then wrote a check on her Batik batik (bətēk`), method of decorating fabrics practiced for centuries by the natives of Indonesia. It consists of applying a design to the surface of the cloth by using melted wax. account for $2816 for the purchase of a cashier's check cashier's check n. a check issued by a bank on its own account for the amount paid to the bank by the purchaser with a named payee, and stating the name of the party purchasing the check (the remitter). in that amount, receiving the benefit of that cashier's check. After offsetting amounts in her account and her final paycheck, the Bank's loss from Espiritu's actions was $1905.29.
The Notice was served by certified mail certified mail
Uninsured first-class mail for which proof of delivery is obtained.
certified mail (US) n → Einschreiben nt , return receipt requested, to Espiritu's last known address in accordance with applicable regulations. 12 C.F.R. 19.11(c)(2). The return receipt indicated receipt by "Q. Espiritu." The Notice expressly warned that failure to file an answer within 20 days of service would constitute a waiver of the fight to contest the allegations contained in the Notice. Nonetheless, Espiritu failed to file an answer to the Notice. Following Enforcement Counsel's motion for entry of a default order, the ALJ issued an Order to Show Cause to determine whether good cause existed for Espiritu's default. Again, the return receipt card indicated receipt of this Order, and again Espiritu failed to respond. Accordingly, the ALJ issued a recommended decision recommending entry of an order of prohibition against Espiritu, along with an order requiring restitution of the Bank's loss. On June 16, 1998, the OCC issued a final order requiting Espiritu to repay the Bank's loss.
Because Espiritu's default prevents her from contesting the allegations in the Notice, the Board may take those allegations as established.(1) According to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. the Notice, Espiritu knowingly deposited worthless checks into her account at the Bank. She then wrote a check on her account at the Bank and obtained a Bank cashier's check in exchange, knowing that her account at the Bank lacked sufficient funds to cover the check. As a result of these actions, the Bank lost over $1900.
These actions meet all of the requirements of an order of prohibition. Espiritu's action in causing the Bank to disburse dis·burse
tr.v. dis·bursed, dis·burs·ing, dis·burs·es
To pay out, as from a fund; expend. See Synonyms at spend.
[Obsolete French desbourser, from Old French desborser funds on an account in which insufficient funds existed was both an unsafe or unsound banking practice and a breach of the fiduciary duty Noun 1. fiduciary duty - the legal duty of a fiduciary to act in the best interests of the beneficiary
legal duty - acts which the law requires be done or forborne of loyalty owed by all bank employees to place the interests of their institution above their own personal interests. The action caused both a loss to the Bank and a gain to the respondent. Finally, Espiritu's action evidenced personal dishonesty in that she was aware that the checks she had deposited at the Bank were worthless and that her account at the Bank lacked sufficient funds to cover the check she drew upon it. In sum, all elements necessary for the issuance of a prohibition order are presented in this case.
For these reasons, the Board orders the issuance of the attached Order of Prohibition.
By Order of the Board of Governors, this 8th day of September, 1998.
Order of Prohibition
WHEREAS, pursuant to section 8(e) of the Federal Deposit Insurance Act, as amended, (the "Act") (12 U.S.C. [sections] 1818(e)), the Board of Governors of the Federal Reserve System Board of Governors of the Federal Reserve System
The managing body of the Federal Reserve System, which sets policies on bank practices and the money supply. ("the Board") is of the opinion, for the reasons set forth in the accompanying Final Decision, that a final Order of Prohibition should issue against ELENA ESPIRITU ("Espiritu");
NOW, THEREFORE, IT IS HEREBY ORDERED, pursuant to section 8(e) of the Federal Deposit Insurance Act, as amended, (12 U.S.C. [sections] 1818(e)), that:
1. In the, absence of prior written approval by the Board, and by any other Federal financial institution regulatory agency regulatory agency
Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. where necessary pursuant to section 8(e)(7)(B) of the Act (12 U.S.C. [sections] 1818(e)(7)(B)), Espiritu is hereby prohibited:
(a) from participating in the conduct of the affairs of any bank holding company, any insured depository institution or any other institution specified in subsection 8(e)(7)(A) of the Act (12 U.S.C. [sections] 1818(e)(7)(A)); (b) from soliciting, procuring, transferring, attempting to transfer, voting or attempting to vote any proxy, consent, or authorization with respect to any voting rights in any institution described in subsection 8(e)(7)(A) of the Act (12 U.S.C. [sections] 1818(e)(7)(A)); (c) from violating any voting agreement previously approved by the appropriate Federal banking agency; or (d) from voting for a director, or from serving or acting as an institution-affiliated party as defined in section 3(u) of the Act, (12 U.S.C. [sections] 1813(u)), such as an officer, director, or employee.
2. This Order, and each provision hereof, is and shall remain fully effective and enforceable until expressly stayed, modified, terminated or suspended in writing by the Board.
This Order shall become effective at the expiration of thirty days after service is made.
By Order of the Board of Governors, this 8th day of September, 1998.
WRITTEN AGREEMENTS APPROVED BY FEDERAL RESERVE BANKS
The Federal Reserve Board announced on September 18, 1998, the execution of a Written Agreement by and between the Shorebank, Cleveland, Cleveland, Ohio, the Federal Reserve Bank of Cleveland The Federal Reserve Bank of Cleveland is the Cleveland-based headquarters of the U.S. Federal Reserve System's Fourth District. The district is composed of Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia. , and the Ohio Division of Financial Institutions.
(1.) Service of a notice by certified mail, return receipt requested, to the respondent's last known address is adequate under the OCC's and the Board's rules. 12 C.F.R. 19.11(c)(2)(iv) & 263.11(c)(2)(iv); In the Matter of Paul E. Lokey, 1991 WL 536895 (Board order of prohibition upon default where service was made by registered mail and received by agent for respondent); In the Matter of Agha Hasan Abedi Agha Hasan Abedi (May 14 1922, Lucknow - Aug 5 1995, Karachi) was a leading banker in Pakistan. He founded the Bank of Credit and Commerce International (BCCI) in 1972. BCCI, at one point the seventh largest private bank in the world, collapsed in 1991 after an international effort and Swaleh Naqvi, 80 Federal Reserve Bulletin 74 (1994) (Board order of prohibition upon default where service was made by international registered mail, return receipt requested); In the Matter of Kemal Shoaib, Final Decision and Order dated March 3, 1992 (same).
BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM
JENNIFER J. JOHNSON
Secretary of the Board