Sixteen former officers and directors of failed Security Bank have been sued for at least $21.76 million by the Federal Deposit Insurance Corp.
On July 24, 2009, Macon-based Security Bank and its six banks were shut down by federal and state authorities. The banks assets and deposits were acquired by State Bank and Trust Co. in a transaction facilitated by the FDIC.
The lawsuit, filed in U.S. District Court in Macon this week, says the loss to the FDIC fund due to Security Banks closure is estimated at $358.9 million. The FDIC is looking to recover at least $21.76 million from the defendants, collectively, for damages caused by their negligence, gross negligence and breaches of legal duties, the lawsuit alleges.
The damage claim is based on losses from acts and omissions of the defendants regarding seven commercial real estate and construction loans and three lines of credit that were improperly approved by the defendants from Aug. 11, 2005, through April 24, 2008.
The lawsuit claims the negligent conduct by the defendants included:
The improper approval of millions of dollars in loans to borrowers -- including those to Security Bank officers and directors -- often at preferential terms.
The acceptance of loan participations from affiliated banks and entities without conducting proper due diligence regarding the loans.
The approval of loans that violated Security Banks loan policy and federal and state regulations.
The defendants being sued are Alford C. Bridges; Dr. William P. Brooks; Richard A. Collinsworth; Daniel Forrester; Frank D. Gunn; Melville A. Jamison III; Robert T. Mullis; Brenda Hopper, as executrix of the estate of Benjamin G. Porter Jr., deceased; John W. Ramsey; Dr. Alvin D. Sewell; Chris R. Sheridan Jr.; Georgia Slagle; Joe E. Timberlake III; H. Averett Walker; Frank G. Wall Jr.; and Richard W. White Jr.
Fourteen of the defendants are being represented by attorney Joseph Finley with Jones Day in Atlanta.
Our clients strongly deny the FDICs allegations and intend to vigorously defend against them, Finley said in a statement. In addition, the FDIC has brought similar claims that have been previously rejected by the courts across the country.
Attorney Robert Ambler with Womble Carlyle Sandridge & Rice law firm in Atlanta, who represents White and Brooks, said by email that he agreed with Finleys statement.
The lawsuit states that the FDIC is responsible -- under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 -- for bringing claims to recover losses suffered by the Deposit Insurance Fund and a banks depositors, creditors and shareholders.
An official legal answer to the lawsuit has not yet been filed by either Finley or Ambler.
The FDIC is requesting a jury trial.
To contact writer Linda S. Morris, call 744-4223.