FINAL ENFORCEMENT DECISION ISSUED BY THE BOARD OF GOVERNORS.In the Matter of a Notice to Prohibit Further Participation Against James J. Redemann Former Director of Evergreen evergreen, term commonly used as synonymous with conifer and applied also to all those broad-leaved plants that bear green leaves throughout the year. Of the latter, most are plants of the tropics, subtropics, and other areas where the growing season is prolonged (e. Bank, N.A. Evergreen Bank, N.A. Poy Sippi, Wisconsin Poy Sippi is a town in Waushara County, Wisconsin, United States. The population was 972 at the 2000 census. According to the Poy Sippi Public Library website The Pine River was called "Poygan Sippi" by Potawatomie Indians, because it flowed into Poygan Lake. 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. No. AA-EC-98-09 Final Decision 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 OCC See Options Clearing Corporation (OCC). ") seeks to prohibit the Respondent, James J. Redemann ("Redemann"), from further participation in the affairs of any financial institution because of his conduct as an officer of Evergreen Bank, N.A., Poy Sippi, Wisconsin (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 The voluntary surrender of a known right; conduct supporting an inference that a particular right has been relinquished. The term waiver is used in many legal contexts. of the respondent's right 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 May 7, 1998, the OCC initiated a Notice of Removal and Notice of Charges (the "Notice") against Redemann. The Notice alleged that Redemann 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 while a Director of the Bank, Redemann engaged in a scheme to obtain Bank funds for the benefit of the Bank's president and vice-president, who are husband and wife. As a result of the scheme, the Bank suffered actual or potential loss. The scheme was carded out by means of money orders issued to Redemann, recorded as capitalized expenditures for the Bank. Some of the proceeds of the money orders, however, were used for payments for the benefit of the Bank president. The Notice was personally served on Redemann on May 8, 1998. Through counsel, Redemann obtained an extension to answer to Notice to July 7, 1998. Shortly before his answer was due, Redemann filed a "Notice of Default," expressly denying the allegations but indicating that he chose "not to contest this action because he accepts the consequences of a final order entering the relief that the [Notice] seeks...." Enforcement Counsel then moved for entry of an order of default, and the ALJ issued his Recommended Decision recommending issuance of an order of prohibition. II. Discussion Because Redemann's default prevents him from contesting the allegations in the Notice, the Board may take those allegations as established. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the Notice, Redemann engaged in a scheme in which he obtained cashier's checks 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). drawn on the Bank and booked as capitalized expenditures of the Bank. A portion of the funds were paid over to the Bank's president and his wife, causing actual or potential loss to the Bank. These actions meet all of the requirements of an order of prohibition. Redemann's action in directing Bank funds to the Bank president personally was both an unsafe or unsound banking practice and a breach of his 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 . As a result, the Bank "has suffered or will probably suffer financial loss," 12 U.S.C. [sections] 1818(e)(1)(B)(i). Finally, Redemann's action evidenced personal dishonesty dis·hon·es·ty n. pl. dis·hon·es·ties 1. Lack of honesty or integrity; improbity. 2. A dishonest act or statement. Noun 1. in that he arranged for the checks to be recorded as legitimate Bank expenses while transferring a portion of the funds to the Bank president. Redemann's action also constituted a willful Intentional; not accidental; voluntary; designed. There is no precise definition of the term willful because its meaning largely depends on the context in which it appears. or continuing disregard for the Bank's safety or soundness, as such action, if continued, could threaten the Bank's safety or soundness. In sum, all elements necessary for the issuance of a prohibition order are presented in this case. Conclusion For these reasons, the Board orders the issuance of the attached Order of Prohibition. By Order of the Board of Governors, this 30th day of November, 1998. 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. JENNIFER J. JOHNSON Secretary of the Board 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 ("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 JAMES J. REDEMANN ("Redemann"); 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 where necessary pursuant to
section 8(e)(7)(B) of the Act (12 U.S.C. [sections] 1818(e)(7)(B)),
Redemann 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 30th day of November, 1998. Board of Governors of the Federal Reserve System JENNIFER J. JOHNSON Secretary of the Board |
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