Appendix — Hudson v. United States

Supreme Court brief1997

Ask Donna

What actually matters in this document.

Text

5) 96 976 DEC 17 19%,

\¢ No.

In THE

Supreme Court of the United States

OCTOBER TERM, 1996

JOHN Hupson, LARRY BARESEL, and

JACK BUTLER RACKLEY,

- Petitioners,

UNITED STATES OF AMERICA,

Respondent.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Tenth Circuit

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI

C. MERLE GILE JACK L. NEVILLE, JR.

2200 N. Classen Boulevard BERNARD J. ROTHBAUM *

2000 Citizen’s Tower LINN & NEVILLE, P.C.

Oklahoma City, OK 73106 1200 Bank of Oklahoma Plaza

JAMEs A. ROLFE 201 Robert S. Kerr Avenue

Dallas, TX 75201 (405) 239-6781

LYNN PRINGLE Counsel for Petitioners

PRINGLE & PRINGLE

4101 N. Classen Boulevard °

Oklahoma City, OK 73118 *Counsel of Record

December 17, 1996

WILSON - Eres Printing Co., Inc. - 789-0096 - WASHINGTON, D.C. 20001

APPENDIX TABLE OF CONTENTS

Opinion of the United States Court of Appeals for

the Tenth Circuit, Filed August 8, 1996 ..................

Opinion of the United States District Court for the

Western District of Oklahoma, Filed December 16,

1994

Order of the United States District Court for the

Western District of Oklahoma Staying Proceedings

Pending Disposition of Petition for Writ of Cer-

tiorari, Filed November 5, 1996 ...............................

Order of the United States Court of Appeals for

the Tenth Circuit Denying Rehearing, Entered

NE TR, HD cescceiincisrntnicicictbhideadistnincmnhentdisiens

Transcript of Proceedings had on April 7, 1994 in

the United States District Court for the Western

District of Oklahoma SEAMS SO an

Opinion of the United States Court of Appeals for

the Tenth Circuit, Filed January 24, 1994 .............

Order of the United States District Court for the

Western District of Oklahoma, Filed March 25,

I pacitaeceptietnitineeecteeettnaniensinidntnateciinimatandseatenvicamacnes

Notice of Assessment of a Civil Money Penalty Di-

rected to John Hudson, Jack B. Rackley and Larry

Baresel Dated February 13, 1989

Notice of Intention to Prohibit Further Participa-

tion Directed to John Hudson, Dated August 31,

RE RERTGT dpi eRATT cR TAL ERR Tieden loa ee aN

Notice of Intention to Prohibit Further Participa-

tion Directed to Larry Baresel, Dated August 31,

REPRE, Es a SUE NO TN ECO, SAN

Page

15a

18a

69a

89a

109a

APPENDIX TABLE OF CONTENTS—Continued

L. Stipulation and Consent Order Signed by John

Hudson on October 26, 1989

M. Stipulation and Consent Order Signed by Jack

Rackley on October 25, 1989

N. Stipulation and Consent Order Signed by Larry

Baresel on October 24, 1989

O. Relevant Provisions of the United States Code

APPENDIX A

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

No. 95-6030

UNITED STATES OF AMERICA,

Plaintiff-A ppellant,

JouNn HupSON; LARRY BARESEL; JACK B. RACKLEY,

Defendants-A ppellees.

Aug. 8, 1996

Before TACHA, LOGAN and REAVLEY,* Circuit

Judges.

REAVLEY, Circuit Judge.

The United States appeals the dismissal on double

jeopardy grounds of its criminal indictment against John

Hudson, Larry Baresel, and Jack B. Rackley (“defend-

ants” or “appellees”). Prior to being indicted the defend-

ants had been fined by the Office of the Comptroller of the

Currency (“OCC”). The defendants moved to dismiss the

indictment for violating the “multiple punishments” prong

of the Double Jeopardy Clause.’ The district court granted

* The Honorable Thomas M. Reaviey, United States Court of

Appeals, Fifth Circuit, sitting by designation.

1 The Double Jeopardy Clause of the Fifth Amendment provides:

“(Nor shall any

the motion, concluding that the OCC fines were punish-

ment for the same offenses charged in the indictment. Be-

cause we find that the fines were not punitive, we reverse

and remand for further proceedings.

PROCEDURAL HISTORY

In 1989, the OCC issued civil penalties against the

appellees for alleged banking violations.” The OCC main-

tained that the violations caused approximately $900,000

in losses to the Federal Deposit Insurance Corporation,

and ordered Hudson to pay $100,000 and Rackley and

Baresel to pay $50,000 each. The OCC also issued orders

(“prohibition orders”) which in essence sought to prohibit

appellees from all banking activities.

As a resut of the then pending administrative actions

against them, the appellees and the OCC entered into

agreements (“consent orders”) in which Hudson consented

to pay $16,600 and Rackley and Baresel consented to pay

$15,000 each. The appellees also agreed not to participate

in most, if not all, banking activities without prior authori-

zation from the government. In addition, each consent

order contained a provision (“waiver provision”) stating

that nothing in the consent order constituted a waiver of

any right the government had to bring other actions

against the appellee. Hudson’s and Baresel’s consent orders

each contained a provision stating that the order “does not

constitute an admission” by either “to any of the charges

contained” in the OCC’s notices.

After the government indicted the defendants for the

same transactions upon which the OCC sanctions were

fense after acquittal; (2) a second prosecution for the same offense

after conviction; and (3) the imposition of multiple punishments

for the same offense. United States v. Halper, 490 U.S. 435, 440,

109 S.Ct. 1892, 1897, 104 L.Ed.2d 487 (1989).

2 The civil penalties were imposed pursuant to 12 U.S.C. $§ 93 (b)

and 604 for alleged violations of 12 U.S.C. §§ 84 and 375b, and of

12 C.F.R. §§ 31.2(b) and 215.4(b).

f proceedings.

See United States v. Hudson, 14 F.3d 536 (10th Cir

1994) (“Hudson I’).

Hudson I first determined that the waiver provision did

not constitute a waiver of the defendants’ double }j

rights. Id. at 539. The court then affirmed that the pro-

ANALYSIS

The only issue we need to address on this appeal is

whether the district court erred in determining that the

monetary sanctions were not solely remedial. We review

* Because we reverse the case on this issue, we do not address

whether the monetary sanctions were imposed for offenses

charged in the indictment. alee

the district court’s determination for abuse of discretion.

United States v. Halper, 490 U.S. 435, 450, 109 S.Ct.

1892, 1902, 104 L.Ed.2d 487 (1989); United States v.

Bizzell, 921 F.2d 263, 267 (10th Cir.1990).

Hudson I acknowledged that the case is controlled

by Halper, which considered when a civil sanction may be

considered punishment for double jeopardy purposes.* Un-

der the objective test outlined in Halper, a particular sanc-

tion is not punishment when it bears a rational relation to

the goal of compensating the government for its loss. Hal-

per, 490 U.S. at 449-51, 109 S.Ct. at 1902-03 The de-

brought a civil action under the False Claims

civil penalties of over $130,000, based on

vision for a civil penalty of $2000 per false

mitted. The Court held that the fine was grossly

portionate to the damage caused, and

ishment. The Court emphasized that its ruling

for the rare case,” id. at 449, 109 S.Ct. at 1902,

civil penalty is “exponentially greater than the amount

the fraud,” id. at 445, 109 S.Ct. at 1900, and is

treme and so divorced from the Government’s damages,

id. at 442, 109 S.Ct. at 1898, that it could only be char-

acterized as punishment under the Double Jeopardy Clause.

In the case at bar there was no gross disproportionalitv

between the total fines imposed, $44,000, and the proven

damages to the government, $72,000.

*The recent Supreme Court case of United States v. Ursery,

— US. ——, 116 S.Ct. 2135, 185 L.Ed.2d 549 (1996), reaffirms

that Halper controls the case at bar. In Ursery, the Supreme Court

egeee!

Heat

jeopardy purposes. Id. at ——. 116 S.Ct. at 2141-44. Because the

case at bar involves civil fines and sanctions. Halper controls.

In United States v. Bizzell, 921 F.2d 263 (10th Cir.

1990), we held that a fine is not punishment unless it is

overwhelmingly di to the government’s dam-

ages. Id, at 267. In Bizzell, the Department of Housing

and Urban Development (“HUD”) filed administrative

complaints against Charles and John Bizzell. The Bizzells

entered into settlement agreements with HUD. Both agree-

ments prohibited the Bizzells from participating in HUD

programs for a short period,’ and John Bizzell agreed to

pay a $30,000 sanction. When the government subse-

was a punishment because it bore no relation to a remedial

goal. Id. at 265. This court agreed that the prohibitions

The Bizzell court read Halper to state that “a civil

remedy enacted by the government does not rise to the

level of proscribed ‘punishment unless ‘in a particular case

a civil penalty . . . may be so extreme and so divorced

from the Government’s damages and expenses as to con-

stitute punishment.’” Jd. (quoting Halper, 490 U.S. at

442, 109 S.Ct. at 1898); see also Burke v. Board of Gov.

penses

as to constitute punishment.’” (quoting Halper, 490 U.S.

at 442, 109 S.Ct. at 1898)), cert. denied 504 U.S. 916,

112 S.Ct. 1957, 118 L.Ed.2d 559 (1992). In Bizzell we

noted that under Halper the question is “whether the civil

remedies can be fairly described as remedial,” Jd. at 267,

* John Bizzell was excluded for two years conditioned upon the

payment of his fine and Charles for 18 months. /d. at 26h

If subjective intent of the administrative agency were

;

the Halper test “constitutes an objective rule

grounded in the nature of the sanction and the

the particular case. It does not authorize courts to under-

take a broad inquiry into the subjective purposes that ma

be thought to lie behind a given judicial proceeding.”

Halper, 490 U.S. at 453, 109 S.Ct. at 1904 (Kennedy,

J., concurring); cf. Hicks v. Feiock, 485 U.S. 624, 635,

108 S.Ct. 1423, 1431, 99 L.Ed.2d 721 (1988).

Cases in two other circuits are closely on point. In

the type of insidious conduct described in this case.” Id.

at 841 (quoting United States v. Furlett, 781 F.Supp.

536, 538 oe (quoting the ALJ opinion) ). In

they were not y disproportionate to the gov-

ernment’s costs incurred in pursuing the traders. Furlert,

974 F.2d at 842.

On appeal, the traders argued that the district court

erred in upholding the ALJ's sanctions because the ALJ

The court held that the fines were remedial largely because

they were not disproportionate to the damages caused to

the government. /d. at 843.

In United States v. WRW Corp., 986 F.2d 138 (6th

Cir.1993), WRW corporation was assessed civil penalties

of $90,350 for violations of safety standards under the

these same violations, and they served prison sentences

and paid criminal fines. After the United States brought

an action to collect the civil fines that had been assessed

against the corporation, the defendants moved to dismiss

on double jeopardy grounds. Relying on Halper, they

argued that the imposition of civil penalties promoted the

aims of retribution and deterence, given the various factors

* Federal Mine Safety and Health Act of 1977, §§ 2 et seq., 110(a),

(d), 80 U.S.C. §§ 801 et seq., 820(a), (d).

used to determine the amount of the civil penalty." The

court stated that these factors may as readily be ascribed

to remedial as to punitive purposes, id. at 141-42, and

emphasized that “the fact that the Government’s expenses

may not have been considered when assessing the amount

of the penalty does not alter the objective conclusion by

the trial court that the penalty assessed is rationally related

to the goal of making the Government whole.” Id. at 142

(citing Furlett, 974 F.2d at 843-44). The court then held

that the fines were rationally related to the goal of making

the government whole in large part because the civil fines

were not excessive in relation to the United States’ ex-

penses incurred in the investigation and prosecution of

the defendants’ violations. /d. at 142.

CONCLUSION

Under Bizzell and Halper, we hold that it was an abuse

of discretion for the district court to rule that the monetary

sanctions were not solely remedial. The sanctions were

rationally related to the government’s damages. We there-

fore reverse the order granting the defendant’s motion to

dismiss and remand for further proceedings.

REVERSED AND REMANDED.

™ These factors included: the operator’s history of previous vio-

lations, the size of the penalty versus size of the operator’s business,

whether the operator was negligent, the effect of the penalty on the

operator’s ability to remain in business, and the good faith of the

operator to achieve rapid after notification of a viola-

tion. Jd. at 141, n. 1 (citing 80 U.S.C. § 820(i)).

APPENDIX B

UNITED STATES DISTRICT COURT

W.D. OKLAHOMA

No. CR-92-152-T

UNITED STATES OF AMERICA,

¥ Plaintiff,

JOHN Hupson, LARRY BARESEL, and

JACK BUTLER RACKLEY,

Defendants.

Dec. 16, 1994

ORDER

RALPH G. THOMPSON, District Judge.

Before the court is the motion of defendants John Hud-

son, Larry Baresel and Jack Butler Rackley to dismiss the

August 1992 indictment for criminal law violations of 18

U.S.C. §§ 2, 271, 656 and 1005. Defendants were alleged

to have violated those statutes by mismanagement and

illegal operation of several banks. These violations were

based on the same lending transactions which were the

subject of prior administrative sanctions imposed against

defendants by the Office of the Comptroller of the Currency

(“OCC”). The OCC action culminated in the execution

by defendants of a Stipulation and Consent Order (“Con-

sent Order”), which, inter alia, prohibited defendants from

future participation in banking activities and imposed

monetary fines for alleged federal law violations.

Defendants moved to dismiss the indictment on the

grounds that it constitutes punishment for the same con-

—

A 10a

duct which was the subject of the Consent Order and

there violated the double jeopardy clause. This court de-

nied that motion, finding that the Consent Order contained

a knowing and voluntary waiver of the defendants’ double

jeopardy claim. The court further found that, in any

event, the sanction prohibiting participation in banking

activities and the fines were not punitive measures encom-

passed by the double jeopardy clause.

Defendants appealed that decision to the Tenth Circuit

Court of Appeals, which affirmed in part and reversed and

remanded for further action. United States v. Hudson, 14

F.3d 536 (10th Cir.1994). The Tenth Circuit reversed

the determination that the Consent Order included a

waiver, but affirmed the decision that the prohibition

against future participation in banking activities was not

punitive. 14 F.3d at 539, 541. The Tenth Circuit re-

versed the decision that monetary sanctions were not puni-

tive and, remanded the action for further consideration of

the effect of the monetary fines. Id. at 542-43. The court

has held an evidentiary hearing and the parties have sub-

mitted additional brief on the issues presented. The ques-

tion before the court on remand is whether the Consent

Order monetary sanctions and the indictment address the

same conduct by defendants and, if so, whether the mone-

tary sanctions imposed by the OCC are remedial or puni-

tive.

Double jeopardy rights arise where an individual is

punished twice for the same conduct or offense. The test

to be applied to determine whether there are two offenses

or only one is whether each provision “requires proof of

an additional fact which the other does not.” Burke v.

Board, 940 F.2d 1360, 1367 (10th Cir.1991), citing

Blockburger v. United States, 284 U.S. 299, 304, 52 S.Ct.

180, 182, 76 L.Ed. 306 (1932). If the same offense

results in criminal punishment and civil money penalties,

lla

multiple punishments exist for purposes of double jeopardy

where “a civil penalty [is] so extreme and so divorced from

the government’s damages and expenses as to constitute

punishment.” Burke, 940 F.2d at 1367, citing United

States v. Halper, 490 U.S. 435, 442, 109 S.Ct. 1892, 1898,

104 L.Ed.2d 487 (1989).

The OCC charged defendants with participating in a

plan to have banks with which they were associated make

nominee loans to nominal borrowers in a manner which

allowed defendants to receive the benefit of the loans. The

OCC asserted that this resulted in violations of the statu-

tory restrictions regarding lending limits, those concerning

loans to officers, directors or other controlling persons of

banks, and the statutes requiring accurate recordation of

loans on the books of national banks. The monetary

sanctions were imposed by the OCC pursuant to the au-

thority granted by 12 U.S.C. § 93(b) and 504, as well as

12 U.S.C. §§ 84 and 375a and 375b. In the indictment

at issue, defendants are charged with, inter alia, violations

of 18 U.S.C. § 656, which prohibits misapplication of bank

funds. The government concedes that the violations which

were the subject of the Consent Order and those charged

in the indictment, are based on the same loan transactions.

However, the government argues that different statutes are

involved and, accordingly, different offenses are at issue

for double jeopardy purposes. Defendants argue that, if

the OCC proved the allegations which were the subject

of a Consent Order, that same proof would also establish

a violation of 18 U.S.C. § 656, the statute charged in the

indictment.

A review of the evidence establishes that, for double

jeopardy purposes, the Consent Order and the indictment

involve the same conduct. As defendants correctly note,

a violation of the statutes under which the OCC proceeded

in the Consent Order necessarily encompasses a violation

of 18 U.S.C. § 656. United States v. Twiford, 600 F.2d

1339, 1343-44 (10th Cir.1979). See also United States v.

oS ae

12a

Davis, 953 F.2d 1482, 1492 (10th Cir.1992). The broad

range of conduct prohibited by 12 U.S.C. § 93(b) and

§ 504 necessarily encompasses the conduct which is the

subject of 18 U.S.C. § 656. Furthermore, the same loan

transactions are the subject of both the indictment and

the Consent Order. As a result, this case is distinguishable

from Burke, where the court determined double jeopardy

was not violated because a cease and desist order ad-

dressed conduct occurring at a time different from that at

issue in the challenged indictment. 940 F.2d at 1367.

Because the same conduct is addressed in the indictment

and the Consent Order, the court must next determine

whether the punishment imposed under the civil penalty

is sufficient to invoke double jeopardy protection against

the subsequent indictment. Double jeopardy does not

apply where the civil penalty at issue is solely remedial,

but applies if that penalty is also partially designed to

punish. Austin v. United States, —— US.

113 S.Ct. 2801, 2802, 125 L.Ed.2d 488 (1993); Hudson,

14 F.2d at 540. It is not sufficient to show only that the

statute authorizing the saix<ions has a remedial purpose;

rather, the sanctions themselves must be solely remedial.

Hudson, 14 F.3d at 542. Furthermore, the government

must identify the precise injury to the government which

the sanction is designed to remedy and provide an account-

ing of the actual losses on which the sanctions are based.

Id. If there is no injury to be remedied, the fines pre-

sumably were imposed to deter defendants from continued

violations of the banking laws and, as a result, are puni-

tive in nature. If there was an injury, then the fines must

uo inant Wy See er eee

jeopardy. A civil penalty is generally punitive where it is

overwhelmingly to the damages caused.

United States v. Bizzell, 921 F.2d 263, 267 (10th Cir.

1990), citing Halper, 490 U.S. at 449, 109 S.Ct. at 1902.

However, a fine may be punitive even if it is reasonably

related to the loss. Hudson, 14 F.3d at 543.

13a

case, the government contends that the OCC

solely remedial. The evidence establishes that

OCC alleged the defendants collectively caused more

than $900,000 in losses. Initially, the OCC recommended

$100,000.00 civil penalty against Hudson and $75,000.00

sion of the OCC testified that he endorsed that recom-

mendation. In his recommendation, Stipano stated that

the OCC could “accomplish a great deal by preventing

these individuals from ever re-entering the banking indus-

try and, through publicity of these actions, hopefully deter

other individuals from similar conduct.” Defendants’s Ex-

hibit 3, numbers 127-28. That conclusion was consistent

with the OCC policy and procedures manual in effect at

the time the penalties weer imposed in this case. The

manual contains guidelines for sanctions, including civil

money penalties. According to the manual, a civil money

penalty can serve as a “deterrent to similar violations by

the persons against whom penalties are assessed and

by other banks and bankers.” The manual also provided

that public disclosure of civil money penalties “may serve

as a deterrent to future violations.” Government Exhibit

21, pages 1, 3

The evidence also reflects that the amount of the mone-

14a

imposed. Defendants’ Exhibit 4. Mr. Stipano testified

that the OCC did not have the legal authority to use its

purpose, ime calasns cnn ee th wale

us,

In accordance with the evidence before the court

the factors to be considered in determining whether hether double

jeopardy is at issue, the indictment addresses the same

conduct as the OCC Consent Order. Further, the mone-

tary penalties imposed by the Consent Order are not solely

remedial but are punitive in nature. Accordingly, proceed-

ing with the indictments would subject defendants to

double jeopardy, and the motion to dismiss the indictments

is GRANTED.

IT IS SO ORDERED.

1 Hudson was ultimately fined $16,500.00, while Baresel was fined

$15,000.00 and Rackley was fined $12,500.00.

15a

APPENDIX C

[Filed Nov. 5, 1996]

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

No. CR 92-152-T

UNITED STATES OF AMERICA,

Plaintiff,

vs.

Joun Hupson, LARRY BARESEL, and

Jack BuTLER RACKLEY,

pe de hohe hecrycn aed

cause. The first opinion of the Court of Appeals is re-

ported as United States v. Hudson, 14 F.3d 536 (10th

16a

defendants state, will be whether the current indictment

against defendants is barred by the Double Jeopardy

Clause of the Fifth Amendment to the Constitution of

the United States. Defendants have advised the Court that

counsel for the government has been contacted with re-

18a

APPENDIX D

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

No. 95-6030

UNITED STATES OF AMERICA,

Plaintiff-A ppellant,

Vv.

Joun Hupson; LARRY BARESEL; JAcK B. RACKLEY,

Defendants-A ppellees.

ORDER

Entered September 20, 1996

20a

APPENDIX E

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

No. CR-92-0152-T

UNITED STATES OF AMERICA,

- Plaintiff,

JOHN Hupson, LARRY BARESEL, and

JacCK BUTLER RACKLEY,

Defendants.

REPORTER'S TRANSCRIPT OF PROCEEDINGS

HAD ON APRIL 7, 1994

EVIDENTIARY HEARING ON

MONEY SANCTIONS ISSUE

Before the

HONORABLE RALPH G. THOMPSON

Judge Presiding

~ 7 + +

[31 THE COURT: Good morning, ladies and gentle-

men.

This is the United States of America versus John Hud-

son, Larry Baresel, and Jack Butler Rackley.

This is a hearing being held pursuant to the order of

the United States Court of Appeals for the Tenth Circuit

in this case which affirmed in part, reversed in part, va-

cated in part and remanded the case for further proceed-

ings consistent with their opinion so that an evidentiary

hearing could take place and factual determinations be

made with regard to the issues subject of the remand.

Fed-

present is special agent James Strickland of

eral Bureau of Investigation?

MR. NEVILLE: Drew Neville, B.J. Rothbaum, Your

Honor, and Russell Cook for Mr. Hudson.

ROLFE: Jim Rolfe for Larry Baresel.

LE:

GILE: Merle Gile for Jack Rackley.

sete

;

aSESF

gage

the admissibility of our—of our

expedite and shorten this hearing. socal dinaae-

THE COURT: Thank you very much. |

For the record, do the other defense counsel, on behalf

of your respective clients, agree with what Mr. Neville

has just announced?

MR. ROLFE: Yes, Your Honor.

MR. PRINGLE: Yes.

MR. OGILVIE: The government would like to call

one witness this morning, Your Honor. ; That’s Daniel

Stipano.

Daniel Stipano, having been first duly sworn to tell the

truth, the whole truth, and nothing but the truth, testified

as follows:

DIRECT EXAMINATION

BY MR. OGILVIE:

. Pi Sir, good morning. Would you please state your

A. I’m Daniel Stipano.

Q. And how are you employed, Mr. Stipano?

[6] A. I’m the Assistant Directory of the Enforcemen

and Compliance Division for the Office of Comptroller of

How long have you been with the 0.C.C.?

Approximately nine years.

And are you an attorney?

I am an attorney.

>ore®

23a

Q. How long have you been practicing law?

A. Approximately eleven years.

Q. The division within the O.C.C. that you are a part

of, again, is what?

A. The enforcement/compliance division.

Q. And what are the duties of the enforcement and

compliance division?

A. Our primary duties are to ensure that banks are

operated in a safe and sound manner, and compliance with

law.

Q. And the O.C.C. is the agency, isn’t it, that super-

vises national banks?

A. We are the primary regulator of national banks.

Q. What position do you hold within the enforcement

and compliance divisions?

A. As I mentioned, I am the assistant director.

Q. And how long have you been assistant director?

A. For almost five years.

Q. And does your position as assistant director give

you an [7] understanding and some input of what the

O.C.C.’s policies are concerning the enforcement of bank-

ing regulations?

A. Very much so. In the enforcement area, part of

my job is to help draft policies on enforcement-related

matters.

Q. And does your position as assistant director also

give you familiarity with the regulations and the laws

that banks must adhere to?

A. Yes.

Q. Are you familiar with the O.C.C. civil money

penalties assessed against Mr. Hudson, Baresel, and Mr.

Rackley?

A. Yes, lam.

Q. How is it that the—the acts that led to these civil

money penalties came to your attention?

A. In 1988, I was the staff attorney for the O.C.C

who was assigned to review and investigate these matters.

Q. And who was that?

A. No, I was the staff attorney.

Q. What recommendation did you make?

A. My initial recommendation was to commence a

formal investigati

Q. And were you the attorney who was in charge of

the formal investigation?

A. Iwas in charge. Yes.

Q. Does a person have to hold a certain office, either

in a bank or a bank holding company, before they are

subject to O.C.C. jurisdiction, as it were?

A. Yes. The statute has changed since 1988, but at

the time, the individual had to be an officer or director or

a person participating in the affairs of the institution.

Q. And did Messrs. Hudson, Baresel, and Rackley all

fit within that description?

A. Yes, there did.

Q. What happened as this normal investigation com-

menced?

A. The investigation was commenced to discover addi-

tional facts concerning the transactions that had been

referred to us, and in order to develop the factual record,

we took a series of depositions, primarily in Oklahoma

City, of the people—the people who were the principals

of the transaction as well as a number of the borrowers.

The investigation lasted approximately 100 days.

[9] At the conclusion of the investigation, I presented

my findings to the O.C.C.’s supervision review committee,

which is a charging body within the agency composed

;

oTTELLTFE LE 2

spain

: tera

wits

- Hid

Bau

ri ad

ELE

26a

Tipton or Hammon during the time Mr. Hudson was the

principal shareholder?

A. Yes, I was.

Q. What—tell us about the history of the violations

that led up to the findings that you made.

A. The bank had been—or the bank had been cited

for insider violations at the previous exam, both at Tipton

and at Hammon. These were exams that were conducted

in 1986.

In addition, both institutions were operating under a

formal agreement. This is an enforceable document that

are put on banks that are in a troubled condition. It is

designed to force the banks to correct their policies and

procedures and {11] take corrective actions so that they

operate in a safe and sound manner in compliance with

the law.

Q. How seriously does the O.C.C. construe the exist-

ence of a formal agreement?

A. It’s very serious. In terms of the—if you could

look at it in terms of the hierarchy or enforcement actions,

the O.C.C. will take actions ranging from informal ac-

tions, which could be just morally suasion, asking the

bank to pass a board resolution, or enter into a non-

enforceable document, like a memorandum of understand-

ing or a commitment letter. The most serious sanction in

that hierarchy would be a cease and desist order. The

second most serious action would be a formal written

agreement.

Q. Did the O.C.C. make attempts at some of these

lesser remedies, such as the memorandums of understand-

ing or the commitment letters?

A. No, I believe that the—I believe that the first

enforcement action that was taken against the institutions

was a formal agreement in both cases. The reason for that

being that, by the time the banks had been examined in

1986, their conditions had deteriorated to the point where

we felt that we would best be able to address the problems

through a more formal document.

27a

And. eo. all were. the, parties to the formal agree-

A. The board of directors of both banks and a repre-

sentative [12] of the comptroller.

Q. Did the bann, in that formal agreement, agree to

‘ per

vision review committee, may have been called “enforce-

ment review committee” at that time, and they agreed with

my recommendations.

So notices of intent to remove and subsequent notices,

penalty assessments notices were drafted and served on

_ Q. Is the decision then to assess civil money penal-

ties and the decision to seek removal then is not made by

any one particular person; is that correct?

A. Oh, no, no, no. It’s made by the supervision re-

view committee who—who acts as a advisory body for the

senior deputy controller of the banks division.

Q. How many people sit on that committee?

A. I believe there are six.

_Q. Prior to the—the issuances of these notice to assess

civil money penalties and intent to remove these three

defendants from banking, did the O.C.C. cause what is

known as [13] 15-day letters to be sent to each of these

gentlemen?

¢ ene

. could ex to J Thom wi

a 15-day is. coins as Pa ee

A. By statute, before we assess a civil money penalty,

the agency is supposed to consider certain statutory fac-

tors. They cover things like the gravity of the violation,

the history of . ‘olations, the fi ‘al

28a

of the individual, and other factors that justice may re-

ton and two concerning Hammon, each with respect to a

different date of a report of supervisory activity; is that

correct?

A. Yeah. The first one concerns the report of super-

visory activity from September 30th of 1986, the second

one is from the report of May 31st, 1987, and the third

from September 30th, 1986, and the final one was from

May 31st of 1987.

[14] Q. Would you please turn to Exhibit Number 5.

This is the response that Mr. Hudson provided to the

0.C.C.?

A. Yes.

Q. And this is in response to the 15-day letter; cor-

rect?

A. Yes, it is.

Q. And at the very end of this exhibit there is a fairly

detailed financial statement from Mr. Hudson. Do you

A. Yes, it was.

Q. Why was the O.C.C. concerned with what Mr.

Hudson’s financial condition was?

A. Well, as I—as I mentioned, the statute requires us

to consider the financial capabilities of the individual when

. Would you please pay—turn, excuse me, to

12 of this notice, in the second full paragraph, where 1t

says “take notice.” Do you see that paragraph?

It mentions that the respondents, that being the

three defendants here,—correct? .

A. Yes.

Q. —could have a hearing, if they wanted to, before

the comptroller?

A. Yes.

Q. Did they elect to have a hearing or not?

A. I-—I don’t specifically recall them filing a request

Q. And by signing this, did Mr. Hudson agree that he

had committed the violations that the O.C.C. said that

he had [16] committed?

A. No, he did not.

30a

Q. Does this also waive any further rights to have—

whether or not he had committed these acts—litigated

before an administrative law judge?

A. Yeah. He—he waived any ability to challenge the

validity of the order.

Q. Did the O.C.C.’s inquiry then into Mr. Hudson

with respect to these transactions cease when this stipula-

tion and consent order was signed?

A. Yes.

Q. Would you please turn to Exhibits Number 8 and

9. Are these the 15-day letters that were served on Mr.

Baresel?

A. Yeah. The first one, again, is from September

30th, 1986 examination, and the second is from the—

UHM—the second one also appears to be from the same

examinations.

Q. But they were two different banks; correct?

A. Yes, The first one was First National Bank of

Tipton, and the second was First National Bank of

Q. And was that requested by the O.C.C. for the

same reason it was requested of Mr. Fudson?

A. It was.

Q. Would you please turn to exhibit number 12. Is

this the stipulation and consent order that terminated the

O.C.C.’s proceedings against Mr. Baresel?

A. Yes.

Q. In signing this, did Mr. Baresel admit that he had

done the acts that the O.C.C. said that he had?

A. No, he did.

law judge?

A. Yes, he did.

Q. So did the execution of this document also termi-

nate O.C.C. proceedings with respect to Mr. Baresel?

A. It did.

Q. Would you please turn now to government ex-

hibits number 13 and 14. Are these the two 15-day

letters that were sent to Mr. Rackley?

A. Yes, they are

Q. And did Mr. Rackley also submit two responses,

one for each bank, as indicated in government exhibits 15

and 16?

[18] A. He did.

. Rae A a a be ee el a

32a

Q. And do you know the reason for that?

A. Yeah. The primary reason was they had no money.

Judging [19] from the representation that each of them

had made about their financial condition, they did not

appear to have the financial means to pay the penalties

as assessed in the notice.

There's another reason, as well, which is that the agency

will frequently settle cases, as we did here, because it gets

the matter behind us. If we had to choose to hold out and

litigate it, it could have been, you know, a year or two

down the road before we would finally get a resolution of

caused or more reflective of their financial condition

the time?

A. It’s really a mixture of the two. In this case,

mean, their financial conditions were so poor that we—we

really couldn't assess a penalty that we thought was propor-

Q. If you would, please look at the other set of ex-

hibits, [20] the defendants’ exhivits that are on the table

next to you, at exihibit number 5, the affidavit of Susie

Pritchett.

A. Okay.

Q. Would you please turn to page 4 at paragraph E.

A. Okay.

wh mens de tty deterred ego

Laramore versus the Comptroller of the Currency, which

held that we did not have the authority to use our cease

and desist powers that way. We followed that decision

and, therefore, we did not feel that we [21] had the legal

authority to order restitution at the time.

Q. Would assessment then of a civil money penalty

be the only way that the—the O.C.C., by itself, could have

obtained any kind of enforceable money judgment, pen-

alty, whatever, against these three defendants?

A. Yes.

sa ee Ot ae

A. Okay.

Q. Okay. Could you explain what this letter is?

A. Yeah. This is a letter that I wrote to you which

addresses a number of things.

The—the first part of it, under number 1, is an esti-

mated cost of the investigation and administrative actions

that the O.C.C. incurred.

34a

Q. And you have there costs associated with your

work, that of Rosmary Cole, attorney, and Adam Bioloski,

and Larry Burch, the examiner; correct?

A. Yes.

Q. In addition to these persons, were there others who

also worked on the investigations into Messrs. Hudson,

Baresel and Rackley?

A. Yes. Larry—Larry Burch was the examiner in

charge of the examination. He had a crew with him when

he did the exam. I wouldn’t know how many people were

on the crew, but it’s fair to say that he—he didn’t do it by

himself.

[22] There’s also, obviously, clerical support at all levels,

at the duty-station level, the district office, the Washington

office, there were funds paid to the administrative law

judge who heard the case, there were other—other ex-

penses, as well.

Q. And would other people, such as Elizabeth Cory,

to whom the 15-day letter responses are directed, who also

worked on this investigation?

A. Yeah, Elizabeth was the—Elizabeth Cory was the

initial reviewing attorney in the Dallas district office, and

she—she did work on it at that level.

Q. Would you please turn to exhibit number 20, gov-

ernment’s exhibit, and explain what this document is.

A. This is the Federal Financial Institution’s examina-

tion council. It’s their policy on the assessment of civil

money penalties.

Q. And this one was in effect as of what day?

A. This became effective on July 23rd, 1980.

Q. And would you turn to exhibit number 21 and

explain what this is.

A. This is an excerpt from the O.C.C.’s policies and

procedural—procedures manual. It is—is the O.C.C. civil

money penalty policy that was in effect at—as of January

28th, 1988.

’

35a

Q. And is this the one that was in effect at the time the

[23] stipulation and consent orders were entered into by

these three defendants?

A. Yes.

Q. Do you see the paragraph on Exhibit Number 21

headed “Purpose” on the first page?

A. Yes.

Q. Would you read the sentence that’s there in the

second paragraph that begins “these policies”?

A. It states: “These policies are internal guidelines for

the use of the O.C.C. and do not create any substantive or

procedural rights enforceable at law or in any administra-

tive hearing.”

Q. Are the powers that the O.C.C. has granted to it by

Congress?

Q. And Exhibit Number 22: Could you explain what

this is.

A. This is a later version of the same policy.

Q. That's dated—when did this one go into effect?

A. April 8th, 1991.

Q. And Exhibit Number 23: What is that?

A. Yet another version of it. This is the most recent

one. It was issued on June 16th, 1993.

Q. During this period of time, had Congress changed

the law with respect to what powers the O.C.C. had? Is

that why there are changes in this policy statement?

[24] A. Yeah. The—the reason we changed the 1988

one and issued the 1991 policy was because of the enact-

ment of F.I.R.R.E.A., which I mentioned earlier.

Prior to F.LR.R.E.A., the O.C.C.’s authority was that

we could assess civil money penalties of a thousand dollars

a day. After F.L.R.R.E.A., there was a three-tiered struc-

ture that was put in place that was a substantive change

in the law, and we felt that in order to have our policy

conform to the new law, we needed to revise the policies.

That’s why we did it.

36a

The penalties against Mr. Hudson, Mr. Rackley and

Mr. Baresel were under the pre-F.I.R.R.E.A. law.

_Q. So the appropriate policy again would have been

Exhibit Number 21, January 28th, 1988?

A. Yes.

Q. What is it that the O.C.C. was trying to accomplish

in assessing civil money penalties and the removal actions

against Messrs. Hudson, Baresel and Rackley?

A. The purpose of civil money penalties is to deter

future violations of law or encourage the correction of

existing violations, and that’s what we were hoping to

accomplish.

The purpose of the removal action is to prevent the

person from working in the banking industry again so that

they cannot engage in additional violations or inside

practices.

Q. Do you know what the amount of losses due to

loans that are mentioned in the 15-day letters were at

Hammon and Tipton?

[25] A. Yeah. In both cases, they were slightly under

half a million dollars. The aggregate loss at the two

institutions was between 900,000 and $1 million.

Q. Do you know who actually bore the costs of those

losses?

A. The Federal Deposit Insurance Fund.

Q. And what kind of agency is that?

A. It’s a government agency.

wi i the

that was held in the administrative case, that was a matter

knew?

A. . Rackley knew, as well.

I would also add that I deposed all three individuals as

part of my investigation. My recollection is that Mr.

Hudson [26] and Mr. Baresel took the Fifth Amendment

to every question, and Mr. Rackley took the Fifth Amend-

ment to a number of questions.

Q. What group is it—what class of people is it that

the O.C.C. exists to protect?

A. The depositions of the financial institutions.

Q. And were the actions taken by the O.C.C. in this

A. In my judgment, yes.

MR. OGILVIE: May I have just one moment, please,

Your Honor?

THE COURT: Yes.

MR. OGILVIE: That’s all I have of Mr. Stipano,

Your Honor.

CROSS-EXAMINATION

Q. —that went—that statement went into effect in

1991; is that correct?

A. It did.

38a

Q. And that, of course, was after the stipulation and

consent order that had been entered into by all of the

defendants in [27] this case; correct?

A. That is correct.

Q. Now, plaintiff's exhibit number 19, which, I be-

lieve, is your letter to Mr. Ogilvie in April of this year,—

A. Yes.

Q. —what was the purpose of you sending the letter

to Mr. Ogilvie?

A. He asked me for a breakdown of how much the

agency spent on the investigation and prosecution.

Q. And that was for purposes of establishing what you

claim to be the government loss for purposes of this

ing?

A. I don’t know why he wanted it. He asked me to

provide it.

Q. When did you first start to assemble the informa-

tion that’s set forth in the Government Exhibit 19?

A. I don’t have a precise date. My—well, for—the

specific information in the letter I started putting together

Penny: S8¥> & week to a week-and-e-half before the date

letter.

That would be late March or early April—

Yes.

A. Well, in some areas I was able to provide @ figure

that I think has a degree of reliability.

travel expenses, the—all of us—all

39a

In other areas, I think it’s less precise, you know, at

this late date, to go back and to try to figure out what—

what the cost

A. It was the only investigation I had going. Yes.

Q. Okay, but you were tending to other matters in the

Comptroller’s Office, I take it,—

[29] A. Yes.

Q. —related to enforcement and compliance?

A. Yes.

Q. And I think it if the Hudson matter had not been

on the table, so to speak, you would have still been work-

ing for the Comptroller’s Office.

A. IThope so.

Q. And that would have been the same with Mrs.

Burch or—or Mr. Burch and Mr. Hill?

A. As far as I know, yeah.

Q. And they would have had other matters they would

have been tending to, as well; correct?

A. Sure.

Q. Now, also you factored into the cost something

called “benefits”; is that right?

A. - Yes.

40a

Q. And is the government in this proceeding claiming,

as part of their investigatory loss, some bene- —some kind

of benefits?

A. No, it’s—it’s just a percentage of our total com-

pensation. It’s just a—I multiplied our salary—the per-

centage of our salaries by 36 percent.

Q. Okay. What kind of benefits? Are we talking

health care and—

A. Yeah, exactly.

[30] Q. —that kind of thing?

A. Yes.

Q. So that that’s part of the so-called investigative

loss that the government’s—

A. Well, it’s part of our-—our compensation as gov-

ernment employees.

Q. Is that part of the investigative cost that you’re

asking the court to consider in determining whether the

civil monetary penalties were solely remedial as opposed

to punishment?

A. I—not directly. No.

Q. Now, the notice of assessment that you made an

earlier reference to, that was issued in February of 1989;

is that correct?

A. Is there a copy of it in the exhibits?

Q. You might look on—in the defendants’ list as

Bates Number 00153, and that will either be exhibit 2

or 3, but there'll be—you’ll see a Bates number in the

lower right-hand side. Be in Exhibit 3.

A. Yeath, I—I found it.

Your question goes to the notice of assessment?

Q. Yes, the date that it was issued. The date I have

is February of 1989.

A. February 13th, 1989.

Q. Yes. And when did the Office of the

first consider assessing the sum, the amount of $100,000

against [31] Hudson and $50,000 against Baresel and

Rackley, and I’m talking about the amount?

A. The amount would first have been considered

when I presented the findings of my investigation to the

4la

supervision review committee. I don’t have a precise date.

It would probably have been January of 89.

Q. Well, isn’t it true that Mrs. Elizabeth Cory es-

tablished the sum of $100,000 to be assessed against Mr.

Hudson, Rackley—or Mr. Hudson, $50,000 against

Baresel and Rackley, in March of 19887

A. No. Ms. Cory had no authority to establish any

penalty. f

Q. Okay. Didn’t she make a recommendation in that

regard?

A. I don’t know if she did or not. If it’s—

Q. Okay. Let me invite your attention to defendants’

exhibit number 2 and the Bates Stamp 00032. -

A. Okay. She made a recommendation to that effect.

Q. Yes, sir. And you identified this Bates Number

00032 in Exhibit 2 as being Mrs. Cory’s memorandum

to Mr. Bodner dated 3-23-88, just to make sure we're all

reading from the same page?

A. That's correct.

Q. And Mrs. Cory, after reviewing all of the facts set

forth in—in an "86 examination and in an ’87 examina-

tion, Mrs. Cory, in March of ’88, made a recommendation

of! 2 $100,000 assessment against Mr. Baresel; is that cor-

[32] A. Yes, she did.

. Or Mr. Hudson, is that correct?

A hundred thousand against Mr. Hudson.

And 50,000 against Rackley and Baresel; correct?

No, she recommended 75,000.

Okay. She made a recommendation of an amount?

Yes, she did.

POPOPOPO

Q. And that was prior to the time that the Govern-

ment incurred all of these—this $72,500 in investigatory

expenses; correct?

A. Yeah. Yes, that’s correct. Although, I—let me—

I'm sorry, let me clarify that. Probably a portion of the

42a

examiner, Larry Burch’s, expenses had already been in-

curred, because he had done the examination.

Q. Okay. But my point is that the amount—there

had been a recommendation of a hundred thousand dol-

lars against Mr, Hudson. After Mrs. Cory reviewed all

of the ’86 and °87 examinations of the bank, she made

that recommendation in March of '88?

A. She did.

Q. And, in fact, that’s what ultimately was assessed

against Mr. Hudson, at least initially.

A. Y¥es.

[33] Q. And that was prior to the time that the—these

deposition expenses were—were incurred by the Govern-

A. Mrs.Cory’s recommendation was prior to the in-

vestigation.

Q. Yeah.

Now, you indicated also that you had financial infor-

mation from Mr. Hudson?

A. Yeah, as—as provided in—in his 15-day letter

response.

Q. And you received financial information from Mr.

Hudson prior to the notice of assesment; did you not?

A. I did.

Q. In fact, you had financial information from Mr.

Hudson in February of 1988; correct?

If you want to take a look at plaintiff's exhibit number

5, or Government's exhibit number 5, which should be a

letter.

A. Yes.

Q. Okay. That a letter—just for the record, that’s a

letter from Mr. Hudson’s counsel to Mrs. Cory; correct?

A. Yes.

Q. And it sets forth Mr. Hudson's positions with re-

spect to the comptroller’s allegations?

A. It does.

A. Yes.

Q. And in fact, Mr. Hudson’s counsel—you were

vised through his counsel that Mr. Hudson had a negative

worth of some $5 million; correct? Page 14, if that

but

attention to exhibit 14 in the Feb-

art

2O>rOrO>0>

—_

ork of

_—

44a

against Mr. Hudson in the face of a negative net worth

of what was represented to you to be $5 million; correct?

A. Yes.

Q. And Mr. Baresel and Mr. Rackley, you had finan-

cial information on them, as well; did you not?

A. We did.

Q. And that information, basically, showed a very

weak financial condition; correct?

A. Yes.

Q. And you had that information prior to the time

the Government initiated the investigation, the costs of

which you have referenced in the letter.

A. We did.

Q. Now, the total, if I understand correctly, in your

letter—your April letter to Mr. Ogilvie, the investi

loss was $72,000? Isn’t that what it totaled?

wanted to, you could have made those same estimates in

1988; could you have not?

A. I don’t understand the question.

Q. Well, you provided Mr. Ogilvie with a letter esti-

mating—

Oh.

—the cost breakdown to the 0.C.C.—

a result of this investigation?

same information would have been available

early 1989; would it—would it have not?

It—it would have been available as of the time

we settled the case.

Okay. Which was in—in what? The fall of ’89?

Yeah. November.

ZzOP0?

73)

>of>

taken in the fall of °88; correct?

pHa tt!

Hf i it :

A ine

Be Ih

= gigiae Hi if ; 3 é i

segs ioizaaige i 1Ai F i

jedan ta af Bil

ae ju ah i ; i :

Wie Hii a fy

ae 3 S -

a 4 | : 7 / ily “31 *5 i;

Alea ue patie at |

aha 2 Hil pubis FEL

aWololcpell ly sb lifetge 3

s 2 opieohey! Ho sg<ol<g

48a

Q. Okay.

A. —and, in addition to that, we sometimes issue

press reicases on settlements.

Q. And isn't it true that, according to your policies,

an appropriate supervisory enforcement action.

Q. And part of the reasons is deterrents?

A. Absolutely.

Q. Now, when was it that the comptroller, or some-

one in the comptroller’s office, first considered assessing

Q. Well, Mr.—didn’t Mr. Burch recommend assess-

ment of civil monetary penalties back in 1987?

A. Mr. Burch submitted a referral recommending that,

yes ,—

Q. Okay?

A. —but he—he didn’t have the authority to do it.

Q. Okay, but Mr. Burch is a national bank examiner;

correct?

A. Yes.

49a

Hecame in and examined the banks in question

in this case; correct?

Yes.

And he did that in the fall of 19877

I—I don’t have the precise dates, but—

Okay.

f atc ered

Q. And that’s Mr. Burch’s memo to Mr. Kraft of

9-21-87; correct?

[43] A. Yes, itis.

Q. And that—the subject of his memo is a civil mone-

tary penalty referral; correct?

A. In a sense. I mean, it was

i that it Was & filbetope exeel that lookad at al aapect

including compliance with law.

Office of the Comptroller policy

assess-

sik

50a

Q. And that’s set forth in dependants’ Exhibit Number

1; is it not?

A. Yes. Part of it.

Q. Part of it?

A. Yeah.

[44] Q. Okay.

A. Two out of 30 pages.

Q. Yes. And this policy statement was in effect at

the time Mr. Burch made—was making his investigation

and review; correct?

A. This—this was in effect at the time that Mr. Burch

did the examination and submitted his referral.

Q. Yes. And isn’t it true that the policy of the Comp-

troller at the time that Mr. Burch did his report in Septem-

ber of '87 and recommended civil monetary penalties was

that civil monetary penalties should provide a deterrent to

similar violations?

A. Yes.

Q. And on page 2 of the policy, again referring to de-

fendants’ Exhibit Number 1, it sets forth what should be

considered in determining the amount of the civil monetary

penalty; correct?

A. Yes.

Q. And what is supposed to be considered in the

amount of the civil monetary penalty is good faith. I

suppose that’s the good faith of the defendants or what the:

Comptroller perceives to be the good faith of the defend-

ants; correct?

A. Good or bad faith. Yes.

Q. Yes. The gravity of the violation?

A. Yes.

[45] Q. Would that include whether or not, in the

comptroller’s view, the defendants had violated the law?

A. If they hadn’t violated the law, there wouldn’t—

there couldn’t be a civil money penalty.

Q. Right. So it would necessarily include—

A. Yeah, the—

S5la

Q. —a perceived—or a conclusion that they'd vio-

lated the law?

A. Yeah. In this occasion, the bank’s lending limit

and Regulation O.

Q. Okay. So one of the factors in determining the

amount of the civil monetary penalty is the defendant's

conduct and whether or not it violated the law in the

opinion of the comptroller?

A. Not—not really. I think that the inquiry initially

is going to be whether or not they violated the law. I mean,

that’s—that’s—if you don’t have a violation of the law,

you don’t even consider a penalty. Then after—after

you've decided there’s a violation of law, then would you

look at these factors which come out of the C.M.P. statute.

Q. Okay.

A. In determining gravity, we would look at things

like the loss to the institutions, whether there was conceal-

ment—

Q. Willfulness?

A. Willfulness, certainly. Yeah. Good or bad faith.

[46] Q. Whether they’d acted in concert with others?

A. No.

Q. Okay. But at least willfulness and concealment

would be factors; correct?

A. We would—we would consider a violation to be

more serious if it was willful as opposed to being unin-

tentional. Yes.

Q. All right. Now, with respect to concern—consider-

ing the gravity of the violation, there are some 13 factors

that are at play according to the policy of the comptroller

that existed in 1987.

A. There are—there are 13 factors that were set out

in the F.F.L.A.C. policy statement of July 23rd, 1980, and

we did take those into consideration.

Q. And those were some of which you’ve mentioned:

willfulness, concealment.

But intent, was intent one of the factors that’s con-

sidered?

52a.

A. I would have to see the policy, but I would think so.

Q. Okay. Now—now, ia January of 1988, another

policy was adopted—

A. Yes.

Q. —by the comptroller, part of which we’ve made

reference to here; correct?

A. Yes.

Q. And there was placed into effect something called a

[47] matrix, a civil monetary penalty matrix.

A. Yes, sir.

a And can you tell us what a civil monetary matrix

A. It was an attempt by the agency, in a non-scientific

Q. Well, in fact,trying to—trying to cut through some

f this, the civil monetary penalty matrix was, in part,

used as guidance to determine the amount of civil mone-

tary penalty.

A. Oh, yeah. Yes.

Q. And there are some—a number of factors that go

into the—the determination of amount as per the civil

Q. And those factors are found on the fourth page of

Government Exhibit 21; correct?

A. Yes. I’m looking at your—the Defense Exhibit

Number 4, but I assume it’s the same matrix.

Q. Okay, they are—they are the same, or at least rl

represent to you that they’re the same.

A. Okay.

[48] Q. It’s also attached, not in a filled-out fashion, to

Government’s Exhibit 21.

But anyway, this matrix, Defendants’ Exhibit Number

4, or what’s attached to Government’s Exhibit 21, is used,

53a.

in part, at least to determine the amount of the civil mone-

tary penalty.

A. It’s a guide.

Q. Yes. It’s a guide to determine the amount.

A. Yeah. I mean, it’s—you know, when I say it’s a

guide, I guess what I’m getting at is we don’t pretend that

this is science and we're not wedded to it, but it’s a guide.

Q. And I take it the reason you're saying that is be-

cause there’s some exercise of judgment required before

the civil monetary penalty is actually, in fact, assessed.

A. Yes.

Q. But the matrix is used as a guide in determining the

amount?

A. Yes.

Q. And the factors that are used in the civil monetary

penalty matrix are, and I won't bother to go through all

of them, but willfulness, correct?

A. Yes.

Q. Insider?

A. Whether it’s insider related. Yes.

Q. History?

[49] A. Yes.

Q. Loss?

A. Yes.

Q. Number of violations?

A. Yes.

Q. Duration of violations?

A. Yes.

Q. Concealment?

A. Yes.

Q. Impact?

A. Yes.

Q. Okay. And then I take it that what happens is

that this is filled out in some form; is that not correct?

A. Yeah, at several stages. The examiner initially

fills it out because it gives the examiner some guidance as

to whether or not they have a violation that’s serious

54a

enough to consider further pursuing; it’s also considered,

you know, at the review level at the district office; and

then finally by the attorney in Washington who is responsi-

ble for presenting the case to S.R.C.

Q. Let’s take a moment to look at page 5 of Defend-

ants’ Exhibit Number 21.

A. Okay.

Q. Or Government Exhibit 21, which is the comp-

troller’s policy on civil monetary penalties at January the

28th of 1988. Do [50] you have that in front of you?

A. Page 5 of the Government’s Exhibit 21?

Q. Yes.

A. I show three pages, and then the matrix, and then

the second page of the matrix.

Q. Do you have a last page that has a points—

A. Yeah.

Q. —reference to it?

A. Yes.

Q. Okay. And just for the record, that would be one,

two, three, four,—well the fifth page.

A. Yes.

Q. Okay.

A. It doesn’t say five on it, but that’s correct.

Q. All right. The fifth page of the—of Government’s

Exhibit 21 has a—has columns, “Points,” “Suggested Ac-

tion,” and “Responsibility”; correct?

A. It does.

Q. And the points ave intended to reflect a score that’s

calculated on the mate—on the matrix; right?

A. Yes.

Q. And that translates into an amount of the fine—

of the assessment or a guideline for the amount of the fine?

A. That's right.

Q. And was this matrix used in at least initially con-

sidering [51] how much money to assess against Mr.

Hudson?

A. It was used by me, because I—I completed the one

that’s in the—in the books here.

55a

Q. All right. Let's take a look at Defendant’s Exhibit

Number 4.

A. That—that’s the matrix that I completed on Mr.

Hudson.

Q. Okay. And you com—completed the—this civil

monetary penalty matrix against Mr. Hudson pursuant to

the policy that’s set forth in Government’s Exhibit 21;

correct?

A. Yes.

Q. And you filled it all out and he like over a hundred

points.

A. Yes, he did.

Q. And according to your policy, that would call for

a fine of like a hundred thousand dollars.

A. Assessment of—consider assessment greater than a

hundred thousand.

Q. Yeah. And that was determined on the basis, or

at least you were given a guideline determination based

upon the factors that are set out in the matrix.

A. That's correct.

Q. Now, and I guess it—it just so happened that that

calculation worked out to be the same as Mrs. Cory’s

recommendation back in March of ’88?

A. I—well, she recommnded a hundred thousand, and

my [52] point total was off the scale, but I decided—my

recommendation was a hundred thousand, as well.

Q. Right.

A. I thought her recommendation was appropriate.

Q. Now, you mentioned in your earlier testimony the

supervisory review committee?

A. Yes, I did.

Q. What was the supervisory review committee?

A. It is a committee composed of senior agency offi-

cials who are responsible for making decisions of whether

to pursue enforcement actions against banks and bankers.

Q. And you made a report to that committee; did you

not?

A. I did.

56a

Q. And that report is in exhibit 3, defendants’ ex-

hibit number 3, at Bates 114

A. Yes.

Q. And on page 11 of that report, you set forth the

factors you considered in assessing the civil monetary pen-

alty; did you not?

If I misspoke, I apologize.

A. Yes.

Q. Page 11 of your memo that would be Bates

Stamped 00124.

A. Yeath. I don’t agree with that. Page 11 dosen't

really address that. Page 13 does, where I talk about

—the paragraph that starts, “the violations are extremely

serious.”

[53] Q. Well, your—your page 11 has a column,

“civil money penalties”; does it not?

A. Yeah, but all I do there is recite the statute.

Q. Well, in the last sentence don’t you say, “in de-

termining the amount of the statutory penalty”?

A. I say what the statute requires.

Q. “—the O.C.C. is statutorily required to consider”?

A. Yeah.

Q. And is, in fact—aren’t those the factors you con-

sidered in assessing the civil monetary penalty?

A. Oh, they were considered. Yes.

Q. Yeah. And then you go on to say, “in addition

to the matrix.”

A. Yes.

Q. Okay. And then you had a conclusion—you

ended your memo with a conclusion; did you not?

A. I did.

Q. That expressed your objective, in part?

A. Yes.

Q. And you report to the supervisory review com-

mittee, and tell me if I don’t read it correctly, that:

“The Office of the Comptroller can accomplish a

great deal by preventing these individuals from ever

reentering the banking industry and, through pub-

;

Blof

]

F :

Fie

58a

true that the F.D.LC. is funded by

insurance premiums paid by the banks?

Okay. But the—at least in part, in fact, in large

C. is funded by insurance premiums paid

F.D.LC. insurance fund is. If the fund be-

[56] A. It is im the sense that it’s turned over to the

F.D.LC., which is a government agency.

Q. Okay. But the source of the money is not from

the government treasury; is it? It comes from the banks?

A. The source of any government money does not—

comes from people and businesses.

Q. Well, I—

A. In my judgment it is government money. Yes.

Q. Well, okay, let me ask it this way: Isn’t it true

that the—that the banks pay insurance premiums which

go into the F.D.LC. fund?

A. Yes.

Q. Thank you.

CROSS-EXAMINATION (Continued)

Other

degree of culpability with reference to Mr. Hudson, Bare-

sel, and Rackley, did not treat this as one case and treat

—treat these individuals and make your recommendations

based on one investigation?

59a

A. We did a single investigation. In deciding what

sclinad nis eau Gl Gal os tall Gee

©. Okay. Was the same rationale, basically, used in

your [57] judgment with reference to the actions you

took?

sé

frit

si]!

riteii

I—I skimmed it and I read portions of it.

I believe you've commented on the—

60a

MR. ROLFE: Okay. Thank you.

CROSS-EXAMINATION (Continued)

BY MR. GILE:

Q. Sir, if I asked you the same questions with re-

gard to Mr. Rackley, would your answers be the same

> Yes, it does.

- Were you also aware that Mr. Rackley’s—his sole

profession, I believe since college, had been i

ing industry; had it not?

A. I know that he was a national bank examiner and

BY MR. OGILVIE:

Q. Mr. Stipano, would you look at the C.M_P. Matrix

that is Defendants’ Exhibit Number 4, please, the one

you identified as having filled out.

A. Yeah. Okay.

6la

Q. Do you recall when in the investigative process

this was done?

;

=§

See

Pee

[

9° 5

se §

- _ ct abi Mi Di ee di ee ae ee ee

62a

[61] A. The comptroller has that power since passage

of F.I.R.R.E.A. In this case, we—we could have—after

F.I.R.R.EA. was passed, we could have assessed these in-

dividuals for violations of the formal agreement. Prior to

F.I.R.R.E.A., we could not have.

Q. Prior to F.L.R.R.E.A., could the comptroller have

made the same assessment against these three defendants

if they had simply been negligent rather than willful?

—when—that govern these transactions only provide tha

we could only assess penalties for violations

are civil regulatory laws that apply to national banks,

like the lending-limit statute; the

which, again, are banking statutes

primarily by Federal Reserve; and

cease—cease and desist orders. Those are the

of things that we could assess penalties for at that time.

Q. You had also mentioned in your testimony, excuse

me, there [62] was one C.M.P. policy that took effect in

January of 1985; correct?

A. Yes.

Q. And that was superseded by one that took effect

in January of 19887

A. That's correct.

Q. Did Congress change the O.C.C.’s powers by stat-

ute during that period of time?

A. No.

Q. Would the O.C.C. still have the powers that it was

delegated by Congress whether there was any policy in

effect at any time?

A. Yes.

63a

MR. OGILVIE: That's all I have of Mr. Stipano;

Your Honor.

MR. NEVILLE: No questions, Your Honor.

MR. ROLFE: Nothing further, Your Honor.

MR. GILE: No

THE COURT: Thank you. Please step down.

THE WITNESS: Thank you.

(Witness Excused )

THE COURT: Mr. Ogilvie?

MR. OGILVIE: Your Honor, I don’t have any fur-

ther testimony to offer the court.

I submit all of the Government's exhibits, being 1

through [63] 23, that we stipulated to earlier, and again

I'll state that we stipulate to the admissibility for the

court’s consideration of all of the defendants exhibits, as

well.

I don’t have anything further of an evidentiary nature

to offer the court. I have a suggestion concerning, per-

haps, how—how we might proceed from here, if the court

wouldn’t mind my—my suggestion.

THE COURT: Before you make that suggestion, I'll

be glad to hear it, plaintiff's Exhibit 1 through 24, inclu-

sive, are admitted by stipulate without objection, and

defendants’ Exhibit 1 through 5, inclusive—

MR. NEVILLE: Yes, Your Honor.

THE COURT: —are also, on the same basis, ad-

mitted.

MR. OGILVIE: Your Honor, I see, at least from the

Government’s standpoint, that there are two fairly com-

plicated legal issues that remain. One is whether these

sanctions now, in light of the new evidence the court has

received today, are punitive or remedial; and secondly,

whether the actions by the O.C.C. encompass the same

conduct as is mentioned in the indictment.

I recall from Your Honor’s earlier ruling that that

point was—was not decided by this court, and it’s also

mentioned in the Tenth Circuit's opinion as a finding

that this court might have to determine.

64a

[64] Because of the complexity of the—the legal prin-

ciples that guide the resolution of both of those issues,

my suggestion to the court would be to allow both parties

a period of time to submit briefs in writing so that both

sides can give this a more studied treatment than we could

here in court today.

My suggestion, if the court would accommodate my

schedule, since I am due to be out of town at a school

next week, is to permit us two weeks from tomorrow in

order to, perhaps, file simultaneous briefs on these two

issues and any other issues that the court might wish to

hear addressed by the parties.

Thank you, Your Honor.

Mr. NEVILLE: Your Honor, I have no objection or

no problem with the suggestion by Mr. Ogilvie.

It might be helpful, and probably Mr. Marks might be

overloaded, if we could have reference to the transcript,

if the court thinks that that would be beneficial. I know

we'd like to have—try to get a reference to the tran-

script before the briefing is done. We have no objection

and no problem with that schedule.

I guess my question is, if that’s agreeable with the

court, and if so, are we talking simultaneous briefs, or

how does the court wish us to proceed?

THE COURT: Well, let’s talk about that.

Counsel for the defendants, are you in agreement with

[65] that?

MR. ROLFE: Yes, Your Honor.

THE COURT: Mr. Gile?

MR.GILE: Yes, Your Honor.

THE COURT: My suggestion would be that we first

consult with the court reporter to see what he can do to

accommodate you.

The second would be whether the Government should

file a brief, and I should think, for the court’s purposes,

it might be most useful to have, also, proposed findings

of fact and conclusions of law, as we would do in a civil

case, non-jury case, because, ultimately, this court must

65a

make factual determinations and conclusions of law to

satisfy the requirements of the opinion and order of the

Court of Appeals. I believe, from my standpoint that

would facilitate my work.

So since it is the Government’s burden to establish the

two findings on the two issues, wouldn’t it be more or-

derly and in keeping with our usual procedures to have

you file yours, Mr. Ogilvie, in proposed findings of fact

and conclusions of law and a supporting trial brief, and

then give the defendants the opportunity to respond to it.

I don’t think it matters much, and I think that we have a

clear choice as between those two, that is, the sequential

version or the simultaneous version, and I really don’t

care. I'm going to have to go through it anyway.

[66] What’s your suggestion?

MR. OGILVIE: Your Honor, the only reason I sug-

gested that briefs might be filed simultaneously is first,

that in this hearing, unlike in many, I think the issues of

fact and the issues of law are fairly well identified, since

many of these issues have been addressed to this court in

motions and responses before and because of the benefit

of the Tenth Circuit Court’s opinion. Because of those

things, my suggestion was simultaneous briefs, because I

gathered that we would probably all be in agreement as

to what the issues are.

If the court would like for the Government to file its

brief first and permit a response, I think that that would

be perfectly appropriate also. I think that my concern

was more the length of time to have an opportunity to

do that, in a considered fashion, more so than forcing

the defendants to reply to something they hadn’t seen

before.

THE COURT: Yes. Well, I—

MR. OGILVIE: If the court would be more inclined

for me to file first and permit an opportunity for reply, I

think that’s appropriate also.

THE COURT: The only reason not to do that is

simply it takes longer, and I know it’s in everyone’s inter-

‘

66a

est to keep the case moving and to make these determina-

tions as soon as possible.

As I understand the testimony and the evidence, there’s

[67] not a lot of disagreement with regard to the factual

issues. It’s what those facts from the evidence constitute

in contemplation of these two issues, under largely un-

disputed acts, whether it was punitive or solely remedial,

and whether it was the same conduct to be applied.

Am I misreading this or misinterpreting it, or are we

Cealing with, largely, undisputed facts but hotly disputed

characterizations of those facts?

MR. OGILVIE: I think that’s very accurately stated,

Your Honor.

MR. NEVILLE: I would agree with that, Your

Honor, and I—I—the only reason I was—after hearing

Mr. Ogilvie phrasing the issues, that I would prefer to

go after his brief, respond to his brief, is I don’t agree with

exactly the issues that he’s framed. We think the ques-

tion before the court, setting aside the similar conduct or

facts, is whether or not the Government’s effort here was

solely remedial. I didn’t understand him exactly to say

that when he postured what he viewed the issue to be.

Therefore, I would prefer to respond to his brief.

THE COURT: Well, let’s discuss that. Under the

opinion of the Court of Appeals, must it not be solely

remedial, Mr. Ogilvie? Do you have a copy of the

opinion?

MR. OGILVIE: I do, Your Honor, and I’m examin-

ing the end of the court’s opinion where I recalled that

that statement [68] is made.

It does say that in the Court’s opinion at the bottom

of page 4, there must be a determination whether or not

the fines are solely remedial.

THE COURT: That’s the issue that I thought we

were

MR. OGILVIE: I think I—I think we agree on what

the issues are, although I may have phrased it in an in-

artful way.

67a

THE COURT: Well, but let’s be sure. That is the

issue as defined by the Circuit’s opinion?

MR. OGILVIE: I agree with that, Your Honor.

THE COURT: Well, if that’s the case, Mr. Neville, is

there any particular need or benefit to the defendants to

respond rather than file simultaneous findings and briefs?

MR. NEVILLE: May I ask Mr. Rothbaum to address

the court on that issue, Your Honor?

THE COURT: Yes.

MR. ROTHBAUM: Only on one point, Your Honor,

the same conduct issue. This as a developing area after

Halper. The same conduct issue in this case will en-

compass, for example, Section 93(b) the statute under

which the comptroller acted here in comparison to the

statutes on which the indictment has been brought. Sec-

tion 93(b), in turn, encompasses all of Chapter 2 of Title

12, the National Bank Act.

[69] The only problem I see with the simultaneous brief

is, without knowing the government’s theory, our brief

will, necessarily, be very abstract, will be a discussion of

general principles of law.

THE COURT: I’m convinced, Mr. Rothbaum. Thank

you.

I think that the whole goal here is to address these

issues thoroughly and responsibly, and if it requires a little

more investment of time, it won’t be that much, and I

think everyone will be better served if we invest that

extra time and approach it in the sequential fashion.

So with that said, Mr. Ogilvie, when did you want

your deadline to be?

MR. OGILVIE: Your Honor, I had originally asked

for it to be two weeks from tomorrow. If it might—if it

might be appropriate, perhaps the Court could tie the

briefing schedule to the completion of the transcript by

Mr. Marks. The Court, for example, might give the Gov-

ernment a certain amount of time after that event, when-

ever it might occur, and then the an appropriate response

68a

time for the defendants after the submisison of the Gov-

ernment’s brief or after that deadline.

THE COURT: All right, I think we'll do it this way.

I’m going to recess the hearing if there’s nothing further at

this time. I’m going to give you gentlemen and Ms. Poarch

the opportunity to speak with the court reporter to see

what his schedule will permit to accommodate your needs.

On that basis, [70] I'd like then to ask you to propose

a briefing and submission schedule, and if it’s reasonable,

I'm going to approve it, and I know it will be. So talk

to him, propose a schedule, and I’m sure I'll approve it,

and we probably will not need to formally reconvene for

that purpose.

Agreeable?

MR. OGILVIE: Yes,Your Honor.

MR. NEVILLE: Yes, Your Honor.

MR. ROLFE: Yes, sir.

THE COURT: We'll be in recess.

(Proceedings closed)

69a

APPENDIX F

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

Nos. 93-6117, 93-6123, and 93-6125

UNITED STATES OF AMERICA,

sf Plaintiff-A ppelles,

JoHN C. Hupson, LARRY BARESEL, and

JACK BUTLER RACKLEY,

Defendants-A ppellants.

Jan. 24, 1994

Before KELLY, SETH, and GOODWIN *, Circuit

Judges.

SETH, Circuit Judge.

Appellants John Hudson, Larry Baresel and Jack Rack-

ley were indicted in August 1992 for criminal law viola-

tions of 18 U.S.C. §§ 2, 371, 656 and 1005 because of

their alleged mismanagement and illegal operation of sev-

eral banks. These violations were based on the same lend-

ing transactions which were the subject of prior administra-

tive sanctions imposed against the Appellants by the Comp-

troller of the Currency (“OCC”) for violations of various

federal banking laws.

* Honorable Alfred T. Goodwin, United States Circuit Judge for

the Ninth Circuit, sitting by designation.

70a

Each Appellant moved to dismiss the indictment on

double jeopardy grounds. The United States District Court

for the Western District of Oklahoma consolidated and

denied all three motions, and this appeal followed.

In early 1989 the OCC issued a “Notice of Assessment

of a Civil Money Penalty” against the Appellants assessing

civil penalties pursuant to 12 U.S.C. §§ 93(b) and 504

for alleged violations of 12 U.S.C. §§ 84 and 375b and

12 C.F.R. §§ 31.2(b) and 215.4(b). The OCC main-

tained that Appellants’ violations caused approximately

$900,000.00 in “losses”. Appellant Hudson was ordered to

pay $100,000.00, and Appellants Rackley and Baresel

to pay $50,000.00 each. Payments were to be made to the

Treasurer of the United States. Later in 1989 the OCC

issued a “Notice of Intent to Prohibit Further Participa-

tion” (“Prohibition Order”) to the Appellants, which

sought to prevent the Appellants “from further participa-

tion, in any manner, in the conduct of the affairs of any

insured depository institution.” In essence, the OCC

sought to prohibit Appellants from all banking activities.

As a result of the then pending OCC administrative pro-

ceedings, the Appellants entered into a Stipulation and

Consent Order (“Consent Order”) (October 1989)

whereby Appellant Hudson consented to pay $16,500.00

and Appellants Rackley and Baresel consented to pay

$15,000.00 each. The Appellants also agreed not to par-

ticipate in most, if not all, banking activities unless they

received prior written authorization from the OCC and the

appropriate federal regulatory agency. In addition, the

Consent Order at the end included a provision (“Waiver

Provision”) stating:

“Respondent understands that nothing herein shall

preclude any proceedings brought by the Comptroller

to enforce the terms of this Stipulation and Consent,

and that nothing herein constitutes, nor shall Re-

spondent contend that it constitutes, a waiver of any

Tla

right, power, or authority of any other representatives

of the United States, or agencies thereof, to bring

other actions deemed appropriate.”

The first issue to be considered is whether the Waiver

Provision of the Consent Order effectively cut off Appel-

lant’s rights to raise the double jeopardy defense. We

review the decision of the district court on this issue de

novo. Larson v. Tansy, 911 F.2d 392 (10th Cir.). To

be valid waivers “not only must be voluntary but must be

knowing, intelligent acts done with sufficient awareness

of the relevant circumstances and likely consequences.”

Brady v. United States, 397 U.S. 742, 748, 90 S.Ct. 1463,

1469, 25 L.Ed.2d 747. Moreover, because a fundamental

constitutional right is at issue, we must subject the pur-

ported waiver to stringent scrutiny and “indulge every rea-

sonable presumption against the loss of constitutional

rights.” United States v. Geittmann, 733 F.2d 1419, 1423

(10th Cir.) (quoting Jilinois v. Allen, 397 U.S. 343, 90

S.Ct. 1057, 1060, 25 L.Ed.2d 353).

The pertinent language of the Waiver Provision pro-

vides that “nothing herein constitutes, nor shall Respond-

‘ent contend that it constitutes, a waiver of any right,

United States . . . to bring other actions... .” This lan-

guage states that the Government does not waive its rights

to institute further actions against Appellants. In fact, the

The Government would have us rely on United States v.

Marcus Schloss & Co., 724 F.Supp. 1123 (S.D.N.Y.), in

which the court held:

“{T]he defendant in an SEC civil proceeding who,

disposition, even accompanied by monetary sanctions,

as the basis for a claim of double jeopardy.”

Id. at 1127 (emphasis added). The problem with the

Government's reliance on Marcus Schloss is that there is

74a

as we have come to understand the term... . We

therefore hold that under the Double Jeopardy Clause

a defendant who already has been punished in a crimi-

nal prosecution may not be subjected to an additional

civil sanction to the extent that the second sanction

may not fairly be characterized as remedial, but only

as a deterrent or retribution.”

Id. at 448-49, 109 S.Ct. at 1902 (citations omitted).

Applicants contend that the above quoted language

means that unless a sanction is “solely” remedial, i.e., not

serving deterrent or retributive ends, it is punishment.

This position is confirmed by the recent Supreme Court

decision .n Austin v. United States, ——- US. ——, 113

S.Ct. 2801, 125 L.Ed.2d 488.

In Austin, the Court addressed whether a civil forfeiture

was punishment for purposes of the Eighth Amendment’s

Excessive Fines Clause. The Court noted that “sanctions

frequently serve more than one purpose” Jd. at ——-, 113

S.Ct. at 2802. However, even if a sanction is remedial,

it is still subject to the Excessive Fines Clause if “it can

only be explained as serving in part to punish.” I/d.

(emphasis added). The Court went on to quote the

Halper decision in support of its holding that the forfeiture

was punishment because it did not serve “solely” remedi

purposes. /d. at ——. 113 S.Ct. at 4816.

is supported by common sense. That is to say, if a par-

ticular remedial sanction can only be understood as also

punishments also serve remedial purposes. We therefore

75a

must conclude that if a sanction is noi exclusively remedial,

but rather can only be explained as also affecting deter-

rence or retribution, it is punishment for double jeopardy

analysis. We are careful to note that a determination that

a sanction is at least in part punishment requires that it

must be explained as also serving as a deterrent or retribu-

tion, not merely that it may be so explained.

Although Halper dealt with the scenario where civil

sanctions were meted out after a criminal prosecution, we

have recognized that a civil sanction’s being exacted first

does not alter the applicability of Halper. United States

v. Bizzell, 921 F.2d 263 (10th Cir.).

The Nonparticipation Sanctions

The nonparticipation sanctions were agreed to by Appel-

lants when they signed the Consent Order. The gist of

these sanctions, which were premised on 12 U.S.C. § 1818

(e), (i), was that Appellants were indefinitely barred from

0 ne ae Wen, Cus Gio tn thay a

tained the written consent of the OCC and other appropri-

ate regulatory agencies to reenter the banking industry.

The parties are primarily concerned with § 1818(e) which

provides:

(1) Authority to issue order. Whenever the ap-

propriate Federal banking agency determines that—

(A) any institution-affiliated party has, directly

or indirectly —

(i) violated—-

(1) any law or regulation;

(ii) engaged or participated in any un-

safe or unsound practice in connection

with any insured depository institution or

“ew” institution: or

76a

(iii) committed or engaged in any act,

omission, or practice which constitutes a

breach of such party’s fiduciary duty;

(B) by reason of the violation, practice, or

breach described in any clause of subparagraph

(A)—

(i) such insured depository institution

or busines institution has suffered or will

probably suffer financial loss or other dam-

ages;

(ii) the interests of the insured deposi-

tory institution’s depositors have been or

could be prejudiced; or

(iii) such party has received financial

gain or other benefit by reason of such

violation, practice, or breach; and

(i) involves personal dishonesty on the

part of such party; or

(ii) demonstrates willful or continuing

disregard by such party for the safety or

soundness of such insured depository insti-

tution or business institution.

the agency may serve upon such party a written no-

tice of the agency’s intention to remove such rf . ‘ty

from office or to prohibit any further participation

by such party, in any manner, in the conduct of the

affairs of any insured depository institution.

Although the Supreme Court has expressly refused to

rely on statutory language as determinative of the remedial

or punitive qualities of a sanction, Halper, 490 U.S. at

447, 109 S.Ct. at 1902 (“the labels ‘criminal’ and ‘civil’

are not a paramount importance”), “the Court did not

77a

abandon earlier analytical framework used to determine

whether a specific penalty provision may be characterized

as remedial or punitive in a general sense.” United States

v. WRW Corp., 986 F.2d 138, 140 (6th Cir.). With this

in mind, Appellants argue that the express language of

§ 1818(¢) coupled with its legislative history clearly dem-

onstrate that the statute was intended to serve punitive

goals. However, Appellants concede that § 1818(e) is

also designed in part to protect the integrity of the bank-

ing system which promotes a remedial goal. While we

United States v. Bizzell, 921 F.2d 263 (10th Cir.). In

that case, the two defendants were charged by the Depart-

Similarly, the OCC’s use of debarment as a means

protecting the integrity of the banking system and

78a

interests of the depositors is a legitimate remedial pur-

pose that need not necessarily be defined as also serving

as deterrence or retribution. Appellants attempt to dis-

tinguish Bizzell by arguing that they are barred for life

as opposed to eighteen or twenty-four months. This dis-

tinction is unpersuasive because the Prohibition Order

clearly states that they may again participate in banking

activities if they obtain the proper consent.

Moreover, Appellants claim that the OCC’s prohibition

is punitive because there was a finding of scienter, i.e.,

that Appellants had violated a law of regulation through

personal dishonesty. Again this fails because the finding

by the OCC was that Appellants had “engaged in con-

duct or practice . . . which resulted in substantial financial

loss or other damage. . . .” Prohibition Order, p. 1. The

fact that Appellants’ violations involved personal dishon-

esty is not dispositive. See Bizzell, 921 F.2d at 265 (de-

fendants’ sanctions based on filing false statements). While

Appellants “may interpret debarment as punitive, and in-

deed feel as though they have been punished, debarment

constitutes the ‘rough remedial justice’ permissible as a

prophylactic governmental action.” Jd. at 267 (citation

omitted).

Having reviewed the evidence surrounding Appellants’

alleged misconduct and the subsequent Consent Order, we

are convinced that the Government’s nonparticipation sanc-

tion was solely designed to protect the integrity of the

banking industry by purging the system of corrupt in-

fluences. We therefore hold that Appellants’ revokable

ban from further participation in banking activities is

solely remedial even though it carries the sting of punish-

ment in the eyes of Appellants.

The Money Sanctions

The prohibition sanctions were remedial, but what of

the money sanctions? Halper, Bizzell and WRW addressed

the situation where the sanctions allegedly exceeded the

79a

actual damage caused by the various defendants. In the

case presented herein, Appellants allegedly caused over

$900,000.00 in losses, yet were originally fined $200,-

000.00, which was later reduced substantially by the Con-

sent Order. From this the district court concluded:

“It is not disputed by the defendants that 12 U.S.C.

§§ 93 .. . [and 504] give the Comptroller authority

to assess civil money penalties for violations. . . .

As noted by the government:

“The amounts of money that may be assessed

[under the statutes] is stated in terms of the

number of days that each violation continues.

In addition, both statutes require the OCC to

take into account the financial resources and

good faith of the person against whom sanc-

tions are sought, the gravity of the violation,

the history of previous violations, and any other

factors that justice may require, in determining

the appropriate sanction to impose.

“The amounts of the agreed fines appear to be rea-

sonable under the guidelines set forth in the statutes,

and the statutes serve legitimate remedial goals.”

Order, pgs. 5-6 (filed March 25, 1993) (citation

omitted).

Our problem with this holding is that the district court

determined only that “the statutes” are remedial. As we

have stated, the fact that a statute may be remedial does

noi necessarily mean that sanctions imposed thereunder

are solely remedial. We are also troubled by the absence

of any declaration of what the precise remedial goals of

the statutes are. Moreover, we disagree with the trial

court’s implied conclusion that the statutes are exclusively

remedial because they authorize civil remedies which take

into account various factors like history of violations, a

party’s financial resources and good faith, and the gravity

of the violation. These factors are equally consistent with

80a

a deterence determination. Thus the Government may

employ these factors in order to exact an appropriate

money sanction that will effectively deter a party from

further wrongdoing.

Additionally, we recognize that the language of 12

U.S.C. § 504 closely parallels that of 12 U.S.C. § 93(b),

and that both expressly permit civil sanctions. However,

these sanctions are “money penalties” limited to a maxi-

mum of $1,000.00 per day of a continuing violation.

Rather than remedying any particular loss, these statutes

appear to be designed, at least in part, to punish and deter

improper conduct. This is further exemplified by § 93(a)

which provides that parties are personally liable for all

damages caused by any knowing violations. On its face,

this provision seems to remedy injured parties for losses

incurred by the same conduct that is subjected to penal-

ties pursuant to §§ 93(b) and 504.

We also conclude that the court’s determination that

the amounts of the fines were reasonable was without any

factual support in the record. The court made no findings

as to the actual losses incurred nor who may have suf-

fered the losses, and how they compared to the sanctions

imposed. In addition, even if they were reasonable, the

sanctions could still be punitive. Merely because overly

excessive fines may be deemed punitive, see Hulper, 490

U.S. at 452, 109 S.Ct. at 1904, the converse is not neces-

sarily true, i.e., a money sanction can be reasonably re-

lated to one’s violations and still be used as punishment.

We must therefore vacate the district court’s holding con-

cerning the money sanctions and remand for further pro-

ceedings.

In deciding whether or not the fines are solely remedial,

the court must determine the precise injury caused to the

Government for which the sanctions are the remedy. See

Halper, 490 U.S. at 452, 109 S.Ct. at 1904 (on remand

Government must provide accounting of actual losses).

See also 12 U.S.C. §§ 93(b)(8) and 504(g) (monies

8la

are to be paid to the United States Treasury). If there

was no injury to be remedied, then presumably the fines

were imposed to deter the Appellants from continued vio-

lations. If there was an injury, the court must determine

if the fines were in fact intended solely to remedy the

injury, which will include a determination whether they

were reasonable. The “same conduct” issue may have to

be decided. See Burke v. Board, 940 F.2d 1360 (10th

Cir.), wherein the court decided that the two did not re-

late to the same offense.

Accordingly, the district court’s holding on the waiver

issue is REVERSED; its holding on the nonparticipation

sanction issue is AFFIRMED; its decision on the money

sanction issue is VACATED; and the case is REMAND-

ED for further proceedings consistent with this opinion.

IT IS SO ORDERED.

82a

APPENDIX G

[Filed Mar. 25, 1993]

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

CR-92-152-T

UNITED STATES OF AMERICA,

7 Plaintiff,

JOHN HupDSoNn, LARRY BARESEL, and

JACK BUTLER RACKLEY,

Defendants.

ORDER

Under consideration are the defendants’ respective

motions to dismiss the indictment on grounds of double

jeopardy. All three defendants contend that the indictment

violates the double jeopardy clause of the Fifth Amend-

ment because civil penalties imposed by the Comptroller

of the Currency constitute “punishment” and were im-

posed for the same offense or offenses for which the de-

fendants now stand indicted. The government contests

both the assertion that the civil penalties imposed consti-

tute punishment and the assertion that they were imposed

for the same offenses. For reasons set forth infra, the

court concludes that the civil sanctions imposed were not

“punishment” in the double jeopardy sense. Therefore,

the issue of whether the offenses charged in the indict-

ment are the same as those invoking the civil sanctions

need not be addressed.

As to each defendant, the Comptroller of the Currency

(“Comptroller”) issued a “Notice of Assessment of a

83a

Civil Money Penalty” on February 13, 1989 for alleged

violations of 12 U.S.C. §§ 84, and 375(b), and 12 C.F.R.

§§ 31.2(b) and 215.4(b). The amount of the assessment

sought by the Comptroller as to the respective defendants

was: (1) $100,000 assessed against John Hudson; (2)

$50,000 assessed against Jack Butler Rackley, (3)

$50,000 assessed against Larry Baresel.

The Comptroller also issued a “Notice of Intent to Pro-

hibit Further Participation” to each defendant, which

sought prohibition “from further participation, in any

manner, in the conduct of the affairs of any insured

depository institution.” *

As a result of the civil proceedings, each defendant

entered into a Stipulation and Consent Order.* The de-

fendants consented to civil money penalties in the follow-

ing amounts:

John Hudson $16,500.00

Jack Rackley $15,000.00

Larry Baresel $15,000.00

The defendants also consented with respect to institu-

tions and agencies set forth in the agreements,® that they

would not:

1 See Brief in Support of Defendant Larry Baresel’s Motion to

Dismiss Indictment on Grounds of Double Jeopardy and Motion to

Adopt Co-defendant’s Plea of Double Jeopardy, Exhibit “B”, p. 1;

Brief in Support of Motion of Defendant Rackley to Dismiss In-

dictment on Grounds of Double Jeopardy, Att-2, p. 1; Brief of

John Hudson in Support of Motion to Dismiss Indictment on

Grounds of Double Jeopardy, Exhibit “Prohibition Notice,” p. 1.

2 See Brief in Support of Defendant Larry Baresel’s Motion to

Dismiss Indictment on Grounds of Double Jeopardy and Motion to

Adopt Co-Defendant’s Plea of Double Jeopardy, Exhibit “C”; Brief

in Support of Motion of Defendant Rackley to Dismiss Indictment

on Grounds of Double Jepardy, Att-83; Brief of John Hudson in

Support of Motion to Dismiss Indictment on Grounds of Double

Jeopardy, Exhibit [Stipulation and Consent Order].

* Id. at 2-4.

? {i

84a

(a) participate in any manner in the conduct of

their affairs;

(b) solicit, procure, transfer, attempt to transfer,

vote or attempt to vote any proxy, consent, or au-

thorization with respect to any voting rights;

stitution-affiliated party,” as defined in 12 U.S.C.

§ 1813(u) (as amended); or

(d) violate any voting agreement previously ap-

proved by the “appropriate federal banking agency,”

as defined in 12 U.S.C. § 1813(q) (as amended);

Also included in the Stipulation and Consent Order as

to each defendant was a provision © stating:

Respondent understands that nothing herein shall

preclude any proceedings brought by the Comptroller

to enforce the terms of this Stipulation and Consent,

and that nothing herein constitutes, nor shall Re-

spondent contend that it constitutes, a waiver of any

right, power, or authority of any other representatives

of the United States, or agencies thereof, to bring

other actions deemed appropriate.

In analyzing the double jeopardy question, the court

looks for guidance to the seminal United States

Court case of United States v. Halper, 490 U.S. 435

(1989). In that case the Court stated “that in determin-

ing whether a particular civil sanction constitutes criminal

punishment, it is the purposes actually served by the

sanction in question, not the underlying nature of the

proceeding giving rise to the sanction, that must be evalu-

ated.” Id. at 447 n.7. The assessment of whether or not

a sanction constitutes criminal punishment is set forth as

follows:

* Id. at p. 3.

5 Id. at p. 5.

85a

In making this assessment, the labels “criminal” and

“civil” are not of paramount importance. .. . [T]he

These goals are familiar. We have recognized in

other contexts that punishment serves the twin aims

of retribution and deterrence. . . . From these prem-

ises, it follows that a civil sanction that cannot fairly

be said solely to serve a remedial purpose, but rather

can be explained only as serving either retributive or

deterrent purposes, is punishment, as we have come

to understand the term. .. . We therefore hold that

Id. at 447-448.

Of course, in Halper the criminal prosecution occurred

first, but its teaching is just as viable here. See United

States ». Sanchez-Escarcno, 950 F.2d 193, 200 (5th Cir.

1991), cert. denied, —— US. , 113 S. Ct. 123

(1992) (“[T]}he Halper principle that a civil penalty can

be factored into the double jeopardy matrix should apply

whether the civil penalty precedes or follows the criminal

proceeding.”); United States v. Mayers, 897 F.2d 1126,

1127 (11th Cir. 1990), cert. denied, 498 US. 865

(1990) (order of proceedings, civil or criminal, does not

affect double jeopardy application ).

Upon review of the record, it is concluded that the non-

participation agreement and the agreed fines were solely

86a 87a

remedial. The statute authorizing the Comptroller’s ac- The court is satisfied that the agreed civil sanctions serve

tions demonstrates that it is intended to maintain the the legitimate governmental purpose of protecting the

integriy of the banking system. 12 U.S.C. § 1818(c)(1) integrity of the banking system, and that they are reme-

(B)(c) provides in pertinent part: dial. While the defendants find the sanctions harsh, it

(1) Authority to issue order. Whenever the ap- counts. As is pointed out in Halper, 490 U.S. at 447

propriate federal banking agency determines that— n.7: “This is not to say that whether a sanction consti-

(A) tutes punishment must be determined from the defendant's

B&8 perspective. On the contrary, our cases have acknowl-

(B) by reason of the violation, practice, or edged that for the defendant even remedial sanctions

breach described in any clause of subparagraph carry the sting of punishment.”

(A)— ; . The same is, of course, true as respects the agreed

(i) such insured depository institution money penalties. It is not disputed by the defendants that

or business institution has suffered or will 12 U.S.C. §§ 93, 503 give the Comptroller authority to

probably suffer financial loss or other dam- assess civil money penalties for violations. It is reiterated

age; here that each defendant agreed to the assessment made.

(ii) the interest of the insured deposi- As noted by the government:

tory institution’s depositors have been or The amounts of money that may be assessed [under

could be prejudiced; Hh eatutes] is stated in terms of the number of days

(iii) such party has received financial violation continues. In addition, both stat-

gain or other benefit by reason of such vio- utes require the OCC to take into account the fihan-

lation, practice, or breach; and cial resources and good faith of the person against

ies whom sanctions are sought, the gravity of the viola-

(i) involves personal dishonesty on the factors that justice may require, in determining the |

part of such party; or appropriate sanction to impose. |

ii) demonstrates willful or continuin Government’s Consolidated Response to Defendants’ Mo-

andl hake tion to Dismiss Indictment on Grounds of Double Jeop-

soundness of such insured depository in- ardy, p. 10. The amounts of the agreed fines appear to

DM ie eh i ee

88a

In United States v. Bizzell, 921 F.2d 263, 267 n.5

a proscribed multiple punishment. See generally United

States v. Broce, 781 F.2d 792 (10th Cir. 1986). See also

United States v. Marcus-Schloss & Co., Inc., 724 F. Supp.

1123, 1127 (S.D.N.Y. 1989) (“I hold that the defendant

by monetary sanctions, as the basis for a claim of double

jeopardy.”).

These conclusions make unnecessary comparison of the

civil complaint and indictment for purposes of determin-

ing whether the same conduct was involved.

A lingly, the tosis to diemiss the indi on

double jeopardy grounds, filed by all defendants, are

IT IS SO ORDERED this 25th day of March, 1993.

/s/ (Ilegible]

United States District Judge

89a

APPENDIX H

To: John Hudson, Jack B.

formerly of the First National Bank of Tipton, Tip-

ton, Oklahoma, and the First National Bank of Ham-

mon, Hammon, Oklahoma

The Comptroller of the Currency of the United States

of America (Comptroller) hereby assesses civil money

penalties against John Hudson, Jack B. Rackley and Larry

Baresel (Respondents), pursuant to the provisions of 12

U.S.C. §§ 93(b) and 504. These assessments are issued

on the basis of the hereinafter described violations of 12

U.S.C. §§84, 375b and 12 CFR. §$§ 31.2(b) and

215.4(b) which occurred at the First National Bank of

Tipton, Tipton, Oklahoma (Tipton), and the First Na-

y require, as required by 12 U.S.C.

; (b), and after soliciting and giving

full consideration to Respondents’ views with respect to

' Comptroller assesses

against Respondent Hudson a penalty of one hundred

thousand dollars ($100,000), and against Respondents

Rackley and Baresel penalties of fifty thousand dollars

COP

—

N ..

These assessments are based on the following :

90a

ARTICLE I

(1) Tipton and Hammon were national banking asso-

ciations, chartered and examined by the Comptroller pur-

suant to the National Bank Act of 1864, as amended

(12 U.S.C. § 1 ef seq.).

(2) At all times relevant to the violations described

below, Respondent Hudson was participating in the con-

duct of Tipton’s and Hammon’s affairs, Respondent Rack-

ley was Tipton’s president and a director at Hammon, and

Respondent Baresel was a director at Tipton and Ham-

mon. In their capacities as officers and directors, Re-

spondents Rackley and Baresel were under a statutory and

fiduciary duty to supervise Tipton’s and Hammon’s affairs

in accordance with all applicable laws, rules and regula-

tions.

ARTICLE II

(1) In the early 1980’s Respondent Hudson became the

chairman of the board and controlling shareholder of Tip-

ton and Hammon, as well as the First State Bank, Blan-

chard, Oklahoma (Blanchard), the First State Bank,

Granite, Oklahoma (Granite) and the First State Bank,

Willow, Oklahoma (Willow), all of which have failed.

In July 1983, Respondent Hudson borrowed approxi-

mately $8.4 million from MBank, Dallas, Texas (MBank)

to refinance his ownership of these institutions. The notes

were secured by the banks’ stock, as well as other collate-

ral.

(2) In 1984, Tipton’s and Hammon’s boards of direc-

tors, including Respondent Hudson, executed formal

agreements with the OCC. The formal agreements ad-

dressed problems in the lending area and required the cor-

rection and prevention of violations of law.

(3) On or about June 11, 1986, Tipton made a $25,010

loan to Respondent Hudson. On or about June 27, 1986,

Tipton made a $75,010 loan to Respondent Hudson.

9la

(4) On or about March 8, 1984, Hammon made a

$25,000 loan to Respondent Hudson. On or about De-

cember 31, 1985, Hammon made a $75,020 loan to Re-

spondent Hudson.

(5) The OCC’s examinations of Tipton and Hammon

in 1986 disclosed numerous insider violations involving

Respondent Hudson, and areas of noncompliance with the

formal agreements. The September 30, 1986 Report of

Supervisory Activity of Tipton (1986 Tipton ROSA)

cited the bank for violations of 12 U.S.C, §§ 375a and

375b, and 12 C.F.R. § 31.2. The September 30, 1968

Report of Supervisory Activity of Hammon (1986 Ham-

mon ROSA) cited the bank for violations of 12 U.S.C.

§ 375a and 12 C.F.R. § 31.2. The details of these viola-

tions are specifically set forth in the 1986 Tipton ROSA

and the 1986 Hammon ROSA, which are incorporated

herein by reference the same as if fully set forth.

(6) In 1986, Respondent Hudson defaulted on his

bank stock loans at MBank. On August 8, 1986, Re-

spondent Hudson resigned as a director of Tipton. Re-

spondent Hudson also resigned as a director of Hammon

during the September 30, 1986 examination and was re-

placed by Respondent Rackley. In October 1986, Rack-

ley became Tipton’s president.

(7) In the fall of 1986, Respondent Hudson contacted

Claude Cypert, an Oklahoma businessman, to solicit his

interest in representing a group of investors known as

Macao Investment Company (Macao) who were allegedly

interested in purchasing Respondent Hudson’s bank stock

notes at MBank. Macao’s corporate records indicate that

Respondent Hudson is Macao’s president and a major

shareholder. Respondent Hudson did not disclose the name

of the group or his involvement in it to Cypert. In ex-

change for an option to purchase a five percent interest in

Tipton and Hammon, and a bus to be donated to the

Southern Nazarene University, Cypert agreed to represent

the group in its dealings with MBank.

92a

(8) On or about December 1, 1986, Respondent Hud-

son and MBank entered into a settlement agreement

whereby MBank was given the right to sell the bank stock

securing Respondent Hudson’s notes. The settlement

agreement provided that after the sale of the bank stock,

Respondent Hudson would be liable to MBank for any de-

ficiency up to $2.75 million. The agreement further pro-

vided that Respondent Hudson would sell his interest in

Blanchard to his father-in-law, Jack Marshall, and resign

as a director of all the banks and their holding companies.

(9) In December 1986, MBank agreed to sell Tipton

and Hammon notes, with an underlying interest in the

bank stock, to Cypert for $400,000. The deal was sched-

uled for closing on December 30, 1986 in Dallas.

(10) Between December 29 and 31, 1986, Tipton,

Hammon and Blanchard made a total of eight unsecured

loans to various nominee borrowers listed under subpara-

graphs (a)-(h) below. Except where noted, the proceeds

of these loans, totaling $540,000, were deposited in an ac-

count of SKL, Inc. (SKL) at the Century National Bank,

Oklahoma City, Oklahoma (Century). $400,000 of the

proceeds were subsequently transferred by cashier’s check

to Macao. The remaining $140,000 was transferred back

to Tipton, along with the proceeds of a $60,000 loan from

Hammon to Hurley Financial Corporation (Hurley), to

reimburse Tipton for $100,000 loans to Hurley and SKL

which were not booked. The amounts, granting banks,

borrowers’ names and dates of the nominee loans are as

follows:

(a) $20,000 loan from Tipton to Respondent Rack-

ley on or about December 29, 1986;

(b) $90,000 loan from Tipton to SKL on or about

December 30, 1986;

about December 3, 1986 (not booked);

93a

(d) $100,000 loan from Tipton to SKL on or about

December 30, 1986 (not booked);

(e) $90,000 loan from Hammon to Respondent

Rackley on or about December 31, 1986 (only

$40,000 was deposited in SKL’s account at

Century) ;

(f£) $90,000 loan from Hammon to SKL on or about

December 31, 1986;

(g) $60,000 loan from Hammon to Hurley on or

about December 31, 1986 (proceeds were trans-

ferred back to Tipton, to partially reimburse the

bank for the $100,000 loans to Hurley and SKL

which were not booked) ;

(h) $100,000 loan from Blanchard to SKL on or

about December 29, 1986.

(11) The loans set forth in paragraph (10) above

were made on the basis of virtually no credit information

or other documentation from the borrowers. Respondent

Rackley was the loan officer for all the nominee loans

at Tipton and Hammon, except for the loans to himself.

As directors, Respondents Rackley and Baresel approved

the loans at Tipton and Hammon, although Respondent

Rackley abstained from voting on his own notes.

(12) On or about December 30, 1986, Respondent

Baresel delivered a $400,000 cashier’s check from Macao,

payable to Cypert. The check represented the proceeds of

the nominee loans made at Tipton, Hammon and Blan-

chard set forth in paragraph (10) above. Cypert ex-

changed the cashier’s check from Macao for his own

$400,000 cashier’s check payable to MBank and, on De-

cember 30, flew to Dallas with Respondent Baresel where

they met with MBank officials. Cypert exchanged the

$400,000 cashier’s check for the Tipton and Hammon

notes and underlying stock interest. Shortly thereafter,

Cypert assigned his interest in the notes and stock to

‘

i ——

94a

Macao and gave the assignment, notes and stock to Re-

spondent Baresel.

(13) In February 1987, MBank agreed to sell the

Willow and Granite notes, with an underlying interest in

the bank stock, some additional corporate stock and a

real estate mortgage held as collateral, to Cypert for

$750,000. The deal was scheduled for closing on Febru-

ary 27, 1987 in Dallas.

(14) Between February 23 and 27, 1987, Tipton,

Hammon, Blanchard and the First National Bank of Del

City, Del City, Oklahoma (Del City) made a total of ten

unsecured loans to various borrowers listed under sub-

paragraphs (a)-(j) below. Except where noted, the pro-

ceeds of these loans, totaling $520,000, were deposited

in SKL’s account at Century and subsequently transferred

by cashier’s check to Macao. The amounts, granting

banks, borrowers’ names and dates of the nominee loans

are as follows:

(a) $60,000 loan from Tipton to Tom Lucas on or

about February 23, 1987;

(b) $93,000 loan from Tipton to Jack Marshall on

or about February 24, 1987 (only $65,351 was

deposited in SKL’s account at Century; the re-

maining $27,649 was used to make a payment

on one of Respondent Hudson’s loans at the

Peoples State Bank, Claremore, Oklahoma

(Peoples) ) ;

or about February 25, 1987;

(d) $92,000 loan from Hammon to Jack Marshall

on or about February 24, 1987 (only $64,649

was deposited in SKL’s account at Century;

the remaining $27,351 was used to make a

payment on one of Respondent Hudson’s loans

at Peoples) ;

95a

(e) $20,000 loan from Hammon to David Tuck on

or about February 27, 1987;

(f) $10,000 loan from Hammon to Sharon Mat-

thews on or about February 27, 1987;

(g) $40,000 loan from Blanchard to Tom Lucas on

or about February 26, 1987;

(h) $60,000 loan from Blanchard to Respondent

Rackley on or about February 26, 1987;

(i) $100,000 loan from Blanchard to Partridge

Capital Corp., on or about February 26, 1987;

(j) $70,000 loan from Del City to SKL on or about

February 25, 1987.

(15) In addition to the loans set forth in paragraph

(14) above, Tipton made a $50,000 loan to H.H. Clifford

on or about February 25, 1987. The proceeds of this loan

were transferred to Executive Bank Management Services,

Inc., a company controlled by Respondent Hudson. Re-

spondent Hudson used the proceeds to purchase a $50,000

cashier’s check payable to Macao.

(16) Tipton also made a $90,000 loan to Cypert on

or about February 19, 1987, and Hammon made a

$90,000 loan to Cypert on or about February 27, 1987.

(17) The loans set forth in paragraphs (14) through

(16) above were made on the basis of virtually no credit

information or other documentation from the borrowers.

Respondent Rackley was the loan officer for all of the

nominee loans at Tipton and Hammon, except for the

$92,000 loan from Hammon to Jack Marshall. As di-

rectors, Respondents Rackley and Baresel approved the

loans at Tipton and Hammon, although Respondent Rack-

ley abstained from voting ci his own notes.

(18) On or about February 27, 1987, Respondent

Baresel delivered a $570,000 cashier’s check from Macao,

96a

payable to Cypert. The check represented the proceeds

of the nominee loans made at Tipton, Hammon, Blanchard

and Del City set forth in paragraphs (14) and (15) above.

Cypert exchanged the $570,000 cashier’s check and the

proceeds of the two $90,000 loans from Tipton and Ham-

mon for a $750,000 cashier’s check payable to MBank.

On February 27, 1987, Cypert and Respondent Baresel

flew to Dallas where they again met with MBank officials.

Cypert exchanged the $750,000 cashier’s check for the

Willow and Granite notes, underlying stock interests, and

assignment of the real estate mortgage. At the request of

Respondents Hudson and Baresel, Cypert reassigned the

real estate mortgage to Blanchard where it was used to

provide security for one of Respondent Hudson’s loans.

(19) Respondent Hudson directly benefited from the

nominee loans at Tipton and Hammon that were used to

purchase his bank stock notes at MBank. Respondent

Hudson also directly benefited from the portions of the

Jack Marshall loans from Tipton and Hammon that were

used to make a payment on one of his loans at Peoples.

Those loans are therefore attributable to him for lending

limit purposes pursuant to 12 C.F.R. § 32.5(a)(i). At

Tipton, the $2,000 advance to Respondent Rackley on

December 29, 1986, when combined with Respondent

Hudson’s existing advances, first caused the line to exceed

the bank’s legal lending limit set forth at 12 U.S.C.

§ 84(a)(1). Total advances attributable to Respondent

Hudson equaled $533,020 at Tipton, which exceeded the

lending limit by $437,509. At Hammon, the $60,000 ad-

vance to Hurley and the $90,000 advances to SKL and

Respondent Rackley on December 31, 1986, when com-

bined with Respondent Hudson’s existing advances, first

caused the line to exceed the bank’s lending limit. Total

advances attributable to Respondent Hudson equaled

$502,020 at Hammon, which exceeded the lending limit

by $407,792.

97a

(20) The nominee loans at Tipton and Hammon are

also attributable to Respondent Hudson for purposes of

12 U.S.C. § 375b, and 12 C.F.R. §§ 31.2(b) and 215.4(b),

pursuant to 12 U.S.C. §§ 31.3 and 215.3(f). At Tipton,

the loans to Clifford, Cypert, Lucas, Marshall, SKL and

Tuck were made at a time when Respondent Hudson’s

aggregate indebtedness exceeded five percnt of capital and

surplus, but did not receive prior board approval, in viola-

tion of 12 U.S.C. §375b(2) and 12 CFR. §$§ 31.2

(b)(1) and 215.4(b)(1)(i). At Hammon, the loans to

Cypert, Marshall, Matthews and Tuck were made at a

time when Respondent Hudson’s aggregate indebtedness

exceeded five percent of capital and surplus, but did not

receive prior board approval, in violation of 12 U.S.C.

roitieen and 12 C.F.R. §§31.2(b)(1) and 215.4

)(1) (i).

(21) The violations set forth in paragraphs (19) and

(20) above were uncorrected at the close of the May 31,

1987 examination of Tipton and the June 30, 1987 exami-

nation of Hammon. The violations resulted in losses of

approximately $456,000 at Tipton and $437,000 at Ham-

mon. The losses contributed to the banks’ failures on

September 3, 1987. Further details of the violations are

specifically set forth in the Report of Supervisory Activity

of Tipton dated May 31, 1987 (1987 Tipton ROSA) and

the Report of Supervisory Activity of Hammon dated June

30, 1987 (1987 Hammon ROSA). The 1987 Tipton

ROSA and 1987 Hammon ROSA are incorporated herein

by reference the same as if fully set forth.

WHEREFORE, the Comptroller, through his authorized

representative whose hand appears below, hereby assesses

the above-described penalties, effective immediately.

TAKE NOTICE, Respondents are hereby afforded the

opportunity for a hearing before the Comptroller concern-

ing these assessments, pursuant to 12 U.S.C. §§ 93(b) (3)

and 504(c), if @ request for such a hearing is made within

sai eau a eee

98a

ten (10) days after service of this Notice of Assessment.

Any request for such hearing shall be filed with the Hear-

ing Clerk, Office of the Chief Counsel, Office of the Comp-

troller of the Currency, Washington, D.C. 20219, and such

hearing shall be conducted pursuant to 12 C.F.R. § 19.23

which requires Respondents to file an answer to this Notice

of Assessment.

If Respondents fail to request a hearing within the

above ten (10) day period, these assessments shall consti-

tute final and unappealable orders against them, pursuant

to 12 U.S.C. §§ 93(b)(3) and 504(c).

Remittance of these civil money penalties shall be pay-

able to the Treasurer of the United States and delivered

to the Hearing Clerk, Office of the Chief Counsel, Office

of the Comptroller of the Currency, Washington, D.C.

20219.

Please note that, pursuant to 12 C.F.R. § 7.5217(b),

the banks may not pay any civil money penalty or ex-

penses or other payments, including legal fees, incurred

with respect to the civil money penalty actions against the

Respondents and the Respondents may not seek such

reimbursement.

Pursuant to 12 C.F.R. § 19.10(c), the Comptroller

may, in his discretion, order that a public hearing be held

if he determines that it is necessary to protect the public

interest. Respondents are hereby afforded an opportunity

to submit their views as to whether a public hearing would

be in the public interest in this case.

IN WITNESS WHEREOF, my hand this 13 day of

Feb., 1989.

/s/ Dean S. Marriott

DEAN S. MARRIOTT

Senior Deputy Comptroller

for Bank Supervision

UNITED STATES OF AMERICA

DEPARTMENT OF THE TREASURY

OFFICE OF THE COMPTROLLER OF THE

CURRENCY

IN THE MATTER OF JoHN HUDSON

First NATIONAL BANK OF TIPTON, TIPTON, OKLAHOMA

First NATIONAL BANK OF HAMMON,

HAMMON, OKLAHOMA

NOTICE OF INTENTION TO PROHIBIT

FURTHER PARTICIPATION

To: John Hudson, formerly of the First National Bank

of Tipton, Tipton, Oklahoma, and the First National

Bank of Hammon, Hammon, Oklahoma

TAKE NOTICE, that on the 2nd day of October,

1989, a hearing will commence at 10:00 a.m. in the

United States Courthouse for the Western District of

Oklahoma, Oklahoma City, Oklahoma, pursuant to the

Federal Deposit Insurance Act, as amended, 12 U.S.C.

§ 1818(e), (i) concerning the charges set forth herein to

determine whether an Order should be issued against John

Hudson (Respondent ) prohibiting him from further par-

ticipation, in any manner, in the conduct of the affairs of

any insured-depository institution.

After examination and investigation into the affars of

the First National Bank of Tipton, Tipton, Oklahoma

(Tipton) and the First National Bank of Hammon, Ham-

mon, Oklahoma (Hammon), the Comptroller of the Cur-

rency of the United States of America (Comptroller) is

;

THEREFORE TAKE NOTICE of the Comptroller's

intention to prohibit Respondent from further participa-

tion, in any manner, in the conduct of the affairs of any

insured depository institution, pursuant to 12 U.S.C.

§ 1818(e), (i). In support of this Notice of Intention

to Prohibit Further Participation (Notice), the Comp-

troller charges the following:

ciations, chartered and examined by the Comptroller pur-

suant to the National Bank Act of 1864, as amended

(12 U.S.C. § 1 et seq.).

(2) At all times relevant to the violations described

below, Respondent was participating in the conduct of

Tipton’s and Hammon’s affairs.

(3) Tipton and Hammon were declared insolvent by

the Comptroller on September 3, 1987. The Comptroller

has jurisdiction to issue this Notice under 12 U.S.C.

§ 1818(i)(3), which provides the Comptroller with au-

thority to prohibit an individual who has become sepa-

pating in the affairs of any depository institution.

ARTICLE II

(1) In the early 1980's, Respondent became the chair-

man of the board and shareholder of Tipton

and Hammon, as well as the First State Bank, Blanchard,

ownership of these institutions. The notes were secured

by the banks’ stock, as well as other collateral.

(2) In 1984, Tipton’s and Hammon’s boards of di-

(3) On or about June 11, 1986, Tipton made a

$25,010 loan to Respondent. On or about June 27, 1986,

Tipton made a $75,010 loan to Respondent.

(4) On or about March 8, 1984, Hammon made a

$25,000 loan to Respondent. On or about December 31,

1985, Hammon made a $75,020 loan to Respondent.

(5) The OCC’s examinations of Tipton and Hammon

in 1986 disclosed numerous insider violations involving

visory Activity of Tipton (1986 Tipton ROSA) cited the

bank for violations of 12 U.S.C. §§ 375a and 375b, and

12 C.F.R. § 31.2. The September 30, 1986 Report of

Supervisory Activity of Hammon (1986 Hammon ROSA)

cited the bank for violations of 12 U.S.C. §375a and

12 C.F.R. Lb ws The details of these violations are

set forth in the 1986 Tipton ROSA and the

1986 Hammon ROSA, which are incorporated herein by

reference the same as if fully set forth.

(6) In 1986, Respondent defaulted on his bank stock

loans at MBank. On August 8, 1986, Respondent re-

signed as a director of Tipton. Respondent also resigned

as a director of Hammon during the September 30, 1986

102a

examination and was replaced by Jack B. Rackley. In

October 1986, Rackley became Tipton’s president.

involvement in it to Cypert. In exchange an

to purchase a five percent interest in Tipton and

ar Stay

the bank stock, to Cypert for $400,000. The deal was

scheduled for closing on December 30, 1986 in Dallas.

(10) Between December 29 and 31, 1986, Tipton,

Hammon and Blanchard made a total of eight unsecured

loans to various nominee borrowers listed under subpara-

graphs (a)-(h) below. Except where noted, the proceeds

of these loans, totaling $540,000, were deposited in an

account of SKL, Inc. (SKL) at the Century National

Bank, Oklahoma City, Oklahoma (Century). $400,000

103a

of the proceeds were subsequently transferred by cashier's

check to Macao. The remaining $140,000 was transferred

back to Tipton, along with the proceeds of a $60,000 loan

from Hammon to Hurley Financial Corporation (Hurley),

to reimburse Tipton for $100,000 loans to Hurley and

SKL which were not booked. The amounts, granting

banks, borrowers’ names and dates of the nominee loans

are as follows:

(a) $20,000 loan from Tipton to Rackley on or

about December 29, 1986;

(b) $90,000 loan from Tipton to SKL on or about

December 30, 1986;

about December 30, 1986 (not booked) ;

(d) $100,000 loan from Tipton to SKL on or about

December 30, 1986 (not booked);

(¢) $90,000 loan from Hammon to Rackley on or

about December 31, 1986 (only $40,000 was

deposited in SKL’s account at Century);

(f) $90,000 loan from Hammon to SKL on or about

December 31, 1986;

(g) $60,000 loan from Hammon to Hurley on or

about December 31, 1986 (proceeds were trans-

ferred back to Tipton, to partially reimburse the

bank for the $100,000 loans to Hurley and SKL

which were not booked);

(h) $100,000 loan from Blanchard to SKL on or

about December 29, 1986.

the loan officer for all of

Hammon, except for the loans to himself. As directors,

104a

Rackley and Larry Baresel approved the loans at Tipton

and Hammon, although Rackley abstained from voting

on his own notes.

(12) On or about December 30, 1986, Baresel de-

livered a $400,000 cashier’s check from Macao, payable

to Cypert. The check represented the proceeds of the

nominee loans made at Tipton, Hammon and Blanchard

set forth in paragraph (10) above. Cypert exchanged the

cashier’s check from Macao for his own $400,000 cashier’s

check payable to MBank and, on December 30, flew to

Dallas with Baresel where they met with MBank officials.

Cypert exchanged the $400,000 cashier’s check for the

Tipton and Hammon notes and underlying stock interest.

Shortly thereafter, Cypert assigned his interest in the notes

and stock to Macao and gave the assignment, notes and

stock to Baresel.

(13) In February 1987, MBank agreed to sell the

Willow and Granite notes, with an underlying interest in

the bank stock, some additional corporate stock and a

real estate mortgage held as collateral, to Cypert for

$750,000. The deal was scheduled for closing on Febru-

ary 27, 1987 in Dallas.

(14) Between February 23 and 27, 1987, Tipton,

Hammon, Blanchard and the First National Bank of Del

City, Del City, Oklahoma (Del City) made a total of ten

unsecured loans to various borrowers listed under sub-

paragraphs (a)-(j) below. Except where noted, the pro-

ceeds of these loans, totaling $520,000, were deposited

in SKL’s account at Century and subsequently transferred

by cashier’s check to Macao. The amounts, granting

banks, borrowers’ names and dates of the nominee loans

are as follows:

(a) $60,000 loan from Tipton to Tom Lucas on or

about February 23, 1987;

(b) $93,000 loan from Tipton to Jack Marshall on

or about February 24, 1987 (only $65,351 was

(f) $10,000 loan from Hammon to Sharon Mat-

thews on or about February 27, 1987;

(g) $40,000 loan from Blanchard to Tom Lucas on

or about February 26, 1987;

(h) $60,000 loan from Blanchard to Rackley on or

about February 26, 1987;

(i) $100,000 loan from Blanchard to Partridge

Capital Corp., on or about February 26, 1987;

(j) $70,000 loan from Del City to SKL on or about

February 25, 1987.

(15) In addition to the loans set forth in paragraph

(14) above, Tipton made a $50,000 loan to H.H. Clifford

on or about February 25, 1987. The proceeds of this loan

were transferred to Executive Bank Management Services,

Inc., a company controlled by Respondent. t

used the proceeds to purchase a $50,000 cashier’s check

(16) Tipton also made a $90,000 loan to Cypert on

or about February 19, 1987, and Hammon made a

$90,000 loan to Cypert on or about February 27, 1987.

106a

(17) The loans set forth in paragraphs (14) through

(16) above were made on the basis of virtually no credit

information or other documentation from the borrowers.

Rackley was the loan officer for all of the nominee loans

at Tipton and Hammon, except for the $92,000 loan from

Hammon to Jack Marshall. As directors, Rackley and

Baresel approved the loans at Tipton and Hammon, al-

though Rackley abstained from voting on his own notes.

(18) On or about February 27, 1987, Baresel de-

livered a $570,000 cashier’s check from Macao, payable

to Cypert. The check represented the proceeds of the

nominee loans made at Tipton, Hammon, Blanchard and

Del City set forth in paragraphs (14) and (15) above.

Cypert exchanged the $570,000 cashier’s check and the

proceeds of the two $90,000 loans from Tipton and

Hammon for a $750,000 cashier’s check payable to

MBank. On February 27, 1987, Cypert and Baresel flew

to Dallas where they again met with MBank officials.

Cypert exchanged the $750,000 cashier’s check for the

Willow and Granite notes, underlying stock interests, and

assignment of the real estate mortgage. At the request of

Respondent and Baresel, Cypert reassigned the real estate

mortgage to Blanchard where it was used to provide secu-

rity for one of Respondent's loans.

(19) Respondent directly benefited from the nominee

loans at Tipton and Hammon that were used to purchase

his bank stock notes at MBank. Respondent also directly

benefited from the portions of the Jack Marshall loans

from Tipton and Hammon that were used to make a pay-

ment on one of his loans at Peoples. Those loans are

therefore attributable to him for lending limit purposes

pursuant to 12 C.F.R. § 32.5(a)(1). At Tipton, the

$20,000 advance to Rackley on December 29, 1986,

when combined with Respondent’s existing advances, first

caused the line to exceed the bank’s legal lending limit set

forth at 12 U.S.C. § 84(a)(1). Total advances attribut-

able to Respondent equaled $533,020 at Tipton, which

107a

exceeded the lending limit by $437,509. At Hammon, the

$60,000 advance to Hurley and the $90,000 advances to

SKL and Rackley on December 31, 1986, when combined

with Respondent’s existing advances, first caused the

line to exceed the bank’s lending limit. Total advances

attributable to Respondent equaled $502,020 at Hammon,

which exceeded the lending limit by $407,792.

(20) The nominee loans at Tipton and Hammon are

also attributable to Respondent for purposes of 12 U.S.C.

§ 375b, and 12 C.F.R. §§ 31.2(b) and 215.4(b), pursu-

ant to 12 U.S.C. §§ 31.3 and 215.3(f). At Tipton, the

loans to Clifford, Cypert, Lucas, Marshall, SKL and Tuck

were made at a time when Respondent’s aggregate in-

debtedness exceeded five percent of capital and surplus,

but did not receive prior board approval, in violation of

12 U.S.C. § 375b(2) and 12 C.F.R. §§ 31.2(b)(1) and

215.4(b)(1)(i). At Hammon, the loans to Cypert,

Marshall, Matthews and Tuck were made at a time when

Respondent’s aggregate indebtedness exceeded five percent

of capital and surplus, but did not receive prior board

approval, in violation of 12 U.S.C. §375b(2) and 12

C.F.R. §§ 31.2(b) (1) and 215.4(b) (1) (i).

(21) The violations set forth in paragraphs (19) and

(20) above were uncorrected at the close of the May 31,

1987 examination ot Tipton and the June 30, 1987 ex-

amination of Haminon. The violations resulted in losses

of approximately $456,000 at Tipton and $437,000 at

Hammon. The losses contributed to the banks’ failures

on September 3, 1987. Further details of the violations

are specifically set forth in the Report of Supervisory

Activity of Tipton dated May 31, 1987 (1987 Tipton

ROSA) and the Report of Supervisory Activity of

Hammon dated June 30, 1987 (1987 Hammon ROSA).

The 1987 Tipton ROSA and 1987 Hammon ROSA are

may rated herein by reference the same as if fully set

108a

ARTICLE III

(1) The actions of Respondent described in Article II,

paragraphs (1) through (21) above demonstrate that

Respondent has engaged in conduct or practice with re-

spect to Tipton and Hammon which resulted in substantial

financial loss or other damage, has evidenced his personal

dishonesty and a willful and continuing disregard for such

banks’ safety and soundness and, in addition, has evi-

denced his unfitness to participate, in any manner, in the

conduct of the affairs of any insured depository institu-

tion.

THEREFORE, Respondent is directed to file an answer

in writing to the charges contained herein with the Hear-

ing Clerk, Office of the Chief Counsel, Office of the

Comptroller of the Currency, Washington, D.C. 20219,

within twenty (20) days from the date of service of this

Notice, in accordance with 12 C.F.R. Part 19.

Pursuant to 12 U.S.C. § 1818(h)(1) and 12 CFR.

§ 19.10(c), the Comptroller may, in his discretion, order

that a public hearing be held if he determines that it is

necessary to protect the public interest. Respondent is

hereby afforded an opportunity to submit his views as to

whether a public hearing would be in the public interest

in this case.

WITNESS, my hand on behalf of the Office of the

Comptroller of the Currency, given at Washington, D.C.

the 31st day of August, 1989.

109a

APPENDIX J

UNITED STATES OF AMERICA

DEPARTMENT OF THE TREASURY

OFFICE OF THE COMPTROLLER

_OF THE CURRENCY

IN THE MATTER OF LARRY BARESEL

First NATIONAL BANK OF TIPTON, TIPTON, OKLAHOMA,

First NATIONAL BANK OF HAMMON,

HAMMON, OKLAHOMA

NOTICE OF INTENTION TO

PROHIBIT FURTHER PARTICIPATION

To: Larry Baresel, formerly of the First National Bank

of Tipton, Tipton, Oklahoma, and the First Na-

tional Bank of Hammon, Hammon, Oklahoma

TAKE NOTICE, that on the 2nd day of October, 1989,

a hearing will commence at 10:00 a.m. in the United

whether an Order should be issued against Larry Baresel

(Respondent) prohibiting him from further participation,

in any manner, in the conduct of the affairs of any insured

After examination and investigation into the affairs of

the First National Bank of Tipton, Tipton, Oklahoma

(Tipton) and the First National Bank of Hammon,

Hammon, Oklahoma (Hammon), the Comptroller of the

Currency of the United States of America (Comptroller)

is of the opinion that Respondent has committed violations

110a

of law and engaged in unsafe and unsound practices at

such banks which resulted in substantial financial loss or

other damage and serious prejudice to the interests of the

depositors. The Comptroller has further determined that

the violations and practices involve personal dishonesty on

Respondent’s part and demonstrate a willful and continu-

ing disregard for the banks’ safety and soundness.

THEREFORE TAKE NOTICE of the Comptroller’s

intention to prohibit Respondent from further participa-

tion, in any manner, in the conduct of the affairs of any

insured depository institution, pursuant to 12 U.S.C.

§ 1818(e), (i). In support of this Notice of Intention to

Prohibit Further Participation (Notice), the Comptroller

charges the following:

ARTICLE I

(1) Tipton and Hammon were national banking asso-

ciations, chartered and examined by the Comptroller pur-

suant to the National Bank Act of 1864, as amended

(12 U.S.C. § 1 et seq.).

(2) At all times relevaet to the violations described

below, Respondent was a duector of Tipton and Hammon.

In his capacity as a director, Respondent was under a

statutory and fiduciary duty to supervise the banks’ affairs

in accordance with all applicable laws, rules and regula-

tions.

(3) Tipton and Hammon were declared insolvent by

the Comptroller on September 3, 1987. The Comptroller

has jurisdiction to issue this Notice under 12 US.C.

§ 1818(i)(3), which provides the Comptroller with au-

thority to prohibit an individual who has become sepa-

rated from a national banking association from icipat-

ing in the affairs of any depository institution. —

ARTICLE I

(1) In the early 1980’s, John Hudson became the

chairman of the board and controlling shareholder of

lila

Tipton and Hammon, as well as the First State Bank,

Blanchard, Oklahoma (Blanchard), the First State Bank,

Granite, Oklahoma (Granite) and the First State Bank,

Willow, Oklahoma (Willow), all of which have failed. In

July 1983, Hudson borrowed approximately $8.4 million

from MBank, Dallas, Texas (MBank) to refinance his

ownership of these institutions. The notes were secured

by the banks’ stock, as well as other collateral.

(2) In 1984, Tipton’s and Hammon’s boards of direc-

tors, including Hudson, executed formal agreements with

the OCC. The formal agreements addressed problems in

the lending area and required the correction and preven-

tion of violations of law.

(3) On or about June 11, 1986, Tipton made a

$25,010 loan to Hudson. On or about June 27, 1986,

Tipton made a $75,010 loan to Hudson.

(4) On or about March 8, 1984, Hammon made a

$25,000 loan to Hudson. On or about December 31,

1985, Hammon made a $75,020 loan to Hudson.

(5) The OCC’s examinations of Tipton and Hammon

in 1986 disclosed numerous insider violations involving

Hudson, and areas of noncompliance with the formal

agreements. The September 30, 1986 Report of Super-

visory Activity of Tipton (1986 Tipton ROSA) cited the

bank for violations of 12 U.S.C. §§ 375a and 375b, and

12 C.F.R. § 31.2. The September 30, 1986 Report of

Supervisory Activity of Hammon (1986 Hammon ROSA)

cited the bank for violations of 12 U.S.C. § 375a and 12

C.F.R. § 31.2. The details of these violations are specifi-

cally set forth in the 1986 Tipton ROSA and the 1986

Hammon ROSA, which are incorporated herein by refer-

ence the same as if fully set forth.

Hammon during the September 30, 1986 examination and

112a

was replaced by Jack B. Rackley. In October 1986,

Rackley became Tipton’s president.

(7) In the fall of 1986, Hudson contacted Claud

Cypert, an Oklahoma business, to solicit his interest in

representing a group of investors known as Macao Invest-

ment Company (Macao) who were allegedly interested in

purchasing Hudson’s bank stock notes at MBank. Macao’s

corporate records indicate that Hudson is Macao’s presi-

dent and a major shareholder. Hudson did not disclose

the name of the group or his involvement in it to Cypert.

In exchange for an option to purchase a five percent inter-

est in Tipton and Hammon, and a bus to be donated to

the Southern Nazarene University, Cypert agreed to repre-

sent the group in its dealings with MBank.

(8) On or about December 1, 1986, Hudson and

MBank entered into a settlement agreement whereby

MBank was given the right to sell the bank stock securing

Hudson’s notes. The settlement agreement provided that

after the sale of the bank stock, Hudson would be liable

to MBank for any deficiency up to $2.75 million. The

agreement further provided that Hudson would sell his

interest in Blanchard to his father-in-law, Jack Marshall,

and resign as a director of all the banks and their holding

companies.

(9) In December 1986, MBank agreed to sell the

Tipton and Hammon notes, with an underlying interest

in the bank stock, to Cypert for $400,000. The deal was

scheduled for closing on December 30, 1986 in Dallas.

(10) Between December 29 and 31, 1986, Tipton,

Hammon and Blanchard made a total of eight unsecured

loans to various nominee borrowers listed under subpara-

graphs (a)-(h) below. Except where noted, the proceeds

of these loans, totaling $540,000, were deposited in an

account of SKL, Inc. (SKL) at the Century National

Bank, Oklahoma City, Oklahoma (Century). $400,000

of the proceeds were subsequently transferred by cashier’s

check to Macao. The remaining $140,000 was transferred

are as follows:

(a) $20,000 loan from Tipton to Rackley on or

about December 29, 1986;

(b) $90,000 loan from Tipton to SKL on or about

December 30, 1986;

about December 30, 1986 (not booked):

(d) $100,000 loan from Tipton to SKL on or about

December 30, 1986 (not booked);

(e) $90,000 loan from Hammon to Rackley on or

about December 31, 1986 (only $40,000 was

deposited in SKL’s account at Century):

(f) $90,000 loan from Hammon to SKL on or about

December 31, 1986;

(g) $60,000 loan from Hammon to Hurley on or

about December 31, 1986 (proceeds were trans-

ferred back to Tipton, to partially reimburse the

bank for the $100,000 loans to Hurley and SKL

which were not booked;

(h) $100,000 loan from Blanchard to SKL on or

about December 29, 1986.

(11) The loans set forth in paragraph (10) above

were made on the basis of virtually no credit information

enenirtes fam Go tomewen. Rackley was

Hammon, except for the loans to himself. As directors,

(13) In February 1987, MBank agreed to sell the

Willow and Granite notes, with an underlying interest in

the bank stock, some additional corporate stock and a

real estate mortgage held as collateral, to Cypert for

$750,000. The deal was scheduled for closing on Febru-

ary 27, 1987 in Dallas.

(14) Between February 23 and 27, 1987, Tipton,

Hammon, Blanchard and the First National Bark of Del

City, Del City, Oklahoma (Del City) made a total of

ten unsecured loans to various borrowers listed under sub-

paragraphs (a)-(j) below. Except where the pro-

ceeds of these loans, totaling $520,000, were deposited in

SKL’s account at Century and subsequently transferred by

cashier’s check to Macao. The amounts, granting banks,

borrowers’ names and dates of the nominee loans are as

follows:

(a) $60,000 loan from Tipton to Tom Lucas on or

about February 23, 1987;

(b) $93,000 loan from Tipton to Jack Marshall on

or about February 24, 1987 (only $65,351 was

deposited in SKL’s account at Century; the

remaining $27,649 was used to make a

on one of Hudson's loans at the Peoples State

Bank, Claremore, Oklahoma (Peoples) ) ;

115a

(¢) $30,000 loan from Tipton to David Tuck on or

about February 25, 1987;

(d) $92,000 loan from Hammon to Jack Marshall

on or about February 24, 1987 (only $64,649

was deposited in SKL’s account at Century; the

remaining $27,351 was used to make a payment

on one of Hudson's loans at Peoples’);

(¢) $20,000 loan from Hammon to David Tuck on

or about February 27, 1987;

(f) $10,000 loan from Hammon to Sharon Matthews

on or about February 27, 1987;

(g) $40,000 loan from Blanchard to Tom Lucas on

or about February 26, 1987;

(h) $60,000 loan from Blanchard to Rackley on or

about February 26, 1987:

(i) $100,000 loan from Blanchard to Partridge

Capital Corp., on or about February 26, 1987;

(j) $70,000 loan from Del City to SKL on or about

February 25, 1987.

(15) In addition to the loans set forth in

paragraph

(14) above, Tipton made a $50,000 loan to H.H. Clifford

on or about February 25, 1987. The proceeds of this

116a

Hammon to Jack Marshall. As directors, Rackley and

Respondent approved the loans at Tipton and Hammon,

although Rackley abstained from voting on his own notes.

(18)On or about February 27, 1987, Respondent de-

livered a $570,000 cashier’s check from Macao, payable

to Cypert. The check represented the proceeds of the

nominee loans made at Tipton, Hammon, Blanchard and

Del City set forth in paragraphs (14) and (15) above.

Cypert exchanged the $570,000 cashier’s check and the

proceeds of the two $90,000 loans from Tipton and Ham-

mon for a $750,000 cashier’s check payable to MBank.

mortgage to Blanchard where it was used to provide se-

curity for one of Hudson’s loans.

(19) Hudson directly benefited from the nominee loans

at Tipton and Hammon that were used to purchase his

bank stock notes at MBank. Hudson also directly bene-

fited from the portions of the Jack M loans from

Tipton and Hammon that were used to make a payment

on one of his loans at Peoples. Those loans are therefore

attributable to him for lending limit purposes pursuant to

12 C.F.R. § 32.5(a)(1). At Tipton, the $20,000 ad-

vance to Rackley on December 29, 1986, when combined

with Hudson’s existing advances, first caused the line to

exceed the bank’s legal lending limit set forth at 12 U.S.C.

§ 84(a)(1). Total advances attributable to Hudson

equaled $533,020 at Tipton, which exceeded the lending

limit by $437,509. At Hammon, the $60,000 advance to

Hurley and the $90,000 advances to SKL and Rackley on

December 31, 1986, when combined with Hudson’s ex-

isting advances, first caused the line to exceed the bank’s

lending limit. Total advances attributable to Hudson

117a

equaled $52,020 at Hammon, which exceeded the lending

limit by $407,792.

(20) The nominee loans at Tipton and Hammon are

also attributable to Hudson for purposes of 12 U.S.C.

§ 375b, and 12 C.F.R. $§ 31.2(b) and 215.4(b), pursu-

ant to 12 U.S.C. §§ 31.3 and 215.3(f). At Tipton, the

loans to Cliffoit, Cypert, Lucas, Marshall, SKL and Tuck

215.4(b)(1)(i). At Hammon, the loans to Cypert, Mar-

shall, Matthews and Tuck were made at a time when

Hudson’s aggregate indebtedness exceeded five percent of

capital and surplus, but did not receive prior board ap-

proval, in violation of 12 U.S.C. § 375b(2) and 12 C.F.R.

§§ 31.2(b)(1) and 215.4(b) (1) (i).

(21) The violations set forth in paragraphs (19) and

(20) above were uncorrected at the close of the May 31,

1987 examination of Tipton and the June 30, 1987 ex-

amination of Hammon. The violations resulted in losses

of approximately $456,000 at Tipton and $437,000 at

Hammon. The losses contributed to the banks’ failures on

specifically set forth in the Report of Supervisory Activity

September 3, 1987. Further details of the violations are

of Tipton dated May 31, 1987 Tipton ROSA and the

Report of Supervisory Activity of Hammon dated June 30,

1987 (1987 Hammon ROSA). The 1987 Tipton ROSA

and 1987 Hammon ROSA are incorporated herein by ref-

erence the same as if fully set forth.

ARTICLE Ill

(1} The actions of Respondent described in Article II,

paragraphs (1) through (21) above demonstrate that Re-

spondent has committed violations of law and unsafe and

unsound practices at Tipton and Hammon which resulted

in substantial financial loss or other damage to the banks

—— ee ee eee = on

118a

and serious prejudice to depositors’ interests. The viola-

tions and practices involve personal dishonesty on Re-

spondent’s part and demonstrate a willful and continuing

disregard for such banks’ safety and soundness.

THEREFORE, Respondent is directed to file an answer

in writing to the " arges contained herein with the Hear-

ing Clerk, Office of the Chief Counsel, Office of the Comp-

troller of the Currency, Washington, D.C. 20219, within

twenty (20) days from the date of service of this Notice,

in accordance with 12 C.F.R. Part 19.

Pursuant to 12 U.S.C. § 1818(h)(1) and 12 C.F.R.

§ 19.10(c), the Comptroller may, in his discretion, order

that a public hearing be held if he determines that it is

necessary to protect the public interest. Respondent is

hereby afforded an opportunity to submit his views as to

whether a public hearing would be in the public interest in

this case.

WITNESS, my hand on behalf of the Office of the

Comptroller of the Currency, given at Washington, D.C.

the 31st day of August, 1989.

/s/ Dean S. Marriott

DEAN S. MARRIOTT

Senior Deputy Comptroller

for Bank Supervision

119a

APPENDIX K

UNITED STATES OF AMERICA

DEPARTMENT OF THE TREASURY

OFFICE OF THE COMPTROLLER OF

THE CURRENCY

IN THE MATTER OF JACK B. RACKLEY

First NATIONAL BANK OF TIPTON, TIPTON, OKLAHOMA

FIRST NATIONAL BANK OF HAMMON,

HAMMON, OKLAHOMA

NOTICE OF INTENTION TO PROHIBIT

FURTHER PARTICIPATION

To: Jack B, Rackley, formerly of the First National Bank

of Tipton, Tipton, Oklahoma, and the First National

Bank of Hammon, Hammon, Oklahoma

Oklahoma City, Oklahoma, pursuant to the Federal De.

Posit Insurance Act, as amiended, 12 U.S.C. § 1818(e),

(i) concerning the charges set forth herein to determine

whether an Order should be issued against Jack B. Rack-

ly (Respondent) Prohibiting him from further participa-

tion, in any manner, in the conduct of the affairs of any

insured depository institution.

After examination and investigation into the affairs of

the First National Bank of Tipton, Tipton, Oklahoma

(Tipton) and the First Nati Bank of Hammon, Ham-

mon, Oklahoma (Hammon), the Comptroller of the Cur-

rency of the United States of America (Comptroller) is of

the opinion that Respondent has committed violations of

law and engaged in unsafe and unsound practices at such

120a

banks which resulted in substantial financial loss or other

damage and serious prejudice to the interests of the de-

positors. The Comptroller has further determined that the

violations and practices involve personal dishonesty on

Respondent’s part and demonstrate a willful and continu-

ing disregard for the banks’ safety and soundness.

THEREFORE TAKE NOTICE of the Comptroller's

intention to prohibit Respondent from further participa-

tion, in any manner, in the conduct of the affairs of any

insured depository institution, pursuant to 12 U.S.C.

§ 1818(e), (i). In support of this Notice of Intention to

Prohibit Further Participation (Notice), the Comptroller

charges the following:

ARTICLE I

(1) Tipton and Hammon were national banking asso-

ciations, chartered and examined by the Comptroller pur-

suant to the National Bank Act of 1864, as amended (12

U.S.C. § 1 et seq.).

(2) At all times relevant to the violations described

below, Respondent was president and a director of Tipton,

and a director of Hammon. In his capacity as an officer

and director. Respondent was under a statutory and fidu-

ciary duty to supervise the banks’ affairs in accordance

with all applicable laws, rules and regulations.

(3) Tipton and Hammon were declared insolvent by

the Comptroller on September 3, 1987. The Comptroller

has jurisdiction to issue this Notice under 12 U.S.C.

§ 1818(i)(3), which provides the Comptroller with au-

thority to prohibit an individual who has become separated

from a national banking association from participating in

the affairs of any depository institution. —

ARTICLE II

(1) In the early 1980's, John Hudson became the

chairman of the board and controlling shareholder of

12la

Tipton and Hammon, as well as the First State Bank,

Blanchard, Oklahoma (Blanchard), the First State Bank,

Granite, Oklahoma (Granite) and the First State Bank.

failed.

In July 1983, Hudson borrowed approximately $8.4 mil-

lion from MBank, Dallas, Texas (MBank) to refinance

his ownership of these institutions. The notes were se-

cured by the banks’ stock, as well as other collateral.

(2) In 1984, Tipton’s and Hammon’s boards of direc-

tors, including Hudson, executed formal agreements with

the OCC. The formal agreements addressed problems in

Nenu ending area and required the correction and preven-

loan to Hudson. On or about June 27, 1986. Ti made

a $75,010 loan to Hudson. Jes.wey

(4) On or about March 8, 1984, Hammon made a

$25,000 loan to Hudson. On or about December 31,

1985, Hammon made a $75,020 loan to Hudson.

agreements. The September 30, 1986 Report of Super-

visory Activity of Tipton (1986 Tipton ROSA) cited the

bank for violations of 12 U.S.C. §§ 375a and 375b, and

12 C.F.R. § 31.2. The September 30, 1986 Report of

Hammon ROSA, which are incorpora ted herein :

erence the same as if fully set forth. esti

122a

was replaced by Respondent. In October 1986, Respond-

ent. In October 1986, Respondent became Tipton’s

president.

(7) In the fall of 1986, Hudson contacted Claud

Cypert, an Oklahoma businessman, to solicit his interest

in representing a group of investors known as Macao

Investment Company (Macao) who were allegedly inter-

ested in purchasing Hudson’s bank stock notes at MBank.

Macao’s corporate records indicate that Hudson is Macao’s

president and a major shareholder. Hudson did not dis-

close the name of the group or his involvement in it to

Cypert. In exchange for an option to purchase a five

percent interest in Tipton and Hammon, and a bus to be

donated to the Southern Nazarene University, Cypert

agreed to represent the group in its dealings with MBank.

(8) On or about December 1, 1986, Hudson and

MBank entered into a settlement agreement whereby

MBank was given the right to sell the bank stock securing

Hudson’s notes. The settlement agreement provided that

after the sale of the bank stock, Hudson would be liable

to MBank for any deficiency up to $2.75 million. The

agreement further provided that Hudson would sell his

interest in Blanchard to his father-in-law, Jack Marshall,

and resign as a director of all the banks and their holding

companies.

(9) In December 1986, MBank agreed to sell the

Tipton and Hammon notes, with an underlying interest in

the bank stock, to Cypert for $400,000. The deal was

scheduled for closing on December 30, 1986 in Dallas.

(10) Between December 29 and 31, 1986, Tipton,

Hammon and Blanchard made a total of eight unsecured

loans to various nominee borrowers listed under subpara-

graphs (a)-(h) below. Except where noted, the proceeds

of these loans, totaling $540,000, were deposited in an

account of SKL, Inc. (SKL) at the Century National

Bank, Oklahoma City, Oklahoma (Century). $400,000

123a

of the proceeds were subsequently transferred by cashier’s

check to Macao. The remaining $140,000 was transferred

back to Tipton, along with the proceeds of a $60,000

loan from Hammon to Hurley Financial Corporation

(Hurley), to reimburse Tipton for $100,000 loans to

Hurley and SKL which were not booked. The amounts,

granting banks, borrowers’ names and dates of the nomi-

nee loans are as follows:

(a) $20,000 loan from Tipton to Respondent on or

about December 29, 1986;

(b) $90,000 loan from Tipton to SKL on or about

December 30, 1986;

about December 30, 1986 (not booked);

(d) $100,000 loan from Tipton to SKL on or about

December 30, 1986 (not booked);

(€) $90,000 loan from Hammon to Respondent on

or about December 31, 1986 (only $40,000 was

deposited in SKL’s account at Century);

(f) $90,000 loan from Hammon to SKL on or about

December 31, 1986;

(g) $60,000 loan from Hammon to Hurley on or

about December 31, 1986 (proceeds were trans-

ferred back to Tipton, to partially reimburse the

bank for the $100,000 loans to Hurley and

SKL which were not booked);

(h) $100,000 loan from Blanchard to SKL on or

about December 29, 1986.

(11) The loans set forth in paragraph (10) above

were made on the basis of virtually no credit information

or other documentation from the borrowers.

was the loan officer for all of the nominee loans at Tipton

and Hammon, except for the loans to himself. As directors,

oe ee ee 8

124a

Respondent and Larry Baresel approved the loans at Tip-

ton and Hammon, although Respondent abstained from

voting on his own notes.

(12) On or about December 30, 1986, Baresel de-

livered a $400,000 cashier’s check from Macao, payable

to Cypert. The check represented the proceeds of the

nominee loans made at Tipton, Hammon and Blanchard

set forth in paragraph (10) above. Cypert exchanged the

cashier’s check from Macao for his own $400,000 cashier’s

check payable to MBank and, on December 30, flew to

Dallas with Baresel where they met with MBank officials.

Cypert exchanged the $400,000 cashier’s check for the

Tipton and Hammon notes and underlying stock interest.

Shortly thereafter, Cypert assigned his interest in the notes

and stock to Macao and gave the assignment, notes and

stock to Baresel.

(13) In February 1987, MBank agreed to sell the

Willow and Granite notes, with an underlying interest in

the bank stock, some additional corporate stock and a

real estate mortgage held as collateral, to Cypert for

$750,000. The deal was scheduled for closing on Febru-

ary 27, 1987 in Dallas.

(14) Between February 23 and 27, 1987, Tipton,

Hammon, Blanchard and the First National Bank of Del

City, Del City, Oklahoma (Del City) made a total of ten

unsecured loans to various borrowers listed under sub-

paragraphs (a)-(j) below. Except where noted, the pro-

ceeds of these loans, totaling $520,000, were deposited

in SKL’s account at Century and subsequently transferred

by cashier’s check to Macao. The amounts, granting

banks, borrowers’ names. and dates of the nominee loans

are as follows:

(a) $60,000 loan from Tipton to Tom Lucas on or

about February 23, 1987;

(b) $93,000 loan from Tipton to Jack Marshall on

or about February 24, 1987 (only $65,351 was

—

125a

deposited in SKL’s account at Century; the re-

maining $27,649 was used to make a payment

on one of Hudson’s loans at the Peoples State

Bank, Claremore, Oklahoma (Peoples) );

about February 25, 1987;

(d) $92,000 loan from Hammon to Jack Marshall

on or about February 24, 1987 (only $64,649

was deposited in SKL’s account at Century; the

remaining $27,351 wasu sed to make a payment

on one of Hudson’s loans at Peoples);

(e) $20,000 loan from Hammon to David Tuck on

or about February 27, 1987;

(f) $10,000 loan from Hammon to Sharon Matthews

on or about February 27, 1987;

(g) $40,000 loan from Blanchard to Tom Lucas on

or about February 26, 1987;

(h) $60,000 loan from Blanchard to Respondent on

or about February 26, 1987;

(i) $100,000 loan from Blanchard to Partridge

Capital Corp., on or about February 26, 1987;

(j) $70,000 loan from Del City to SKL on or about

February 25, 1987.

(15) In addition to the loans set forth in paragraph

(14) above, Tipton made a $50,000 loan to H.H. Clifford

on or about February 25, 1987. The proceeds of this loan

were transferred to Executive Bank Management Services,

Inc., a company controlled by Hudson. Hudson used the

proceeds to purchase a $50,000 cashier’s check payable

to Macao.

(16) Tipton also made a $90,000 loan to Cypert on or

about February 19, 1987, and Hammon made a $90,000

loan to Cypert on or about February 27, 1987.

ae ee eee” eee oe ee

ee ee eee

loans at Tipton and Hammon, except for the $92,000

loan from Hammon to Jack Marshall. As directors, Re-

spondent and Baresel approved the loans at Tipton and

Hammon, although Respondent abstained from voting on

his own notes.

(18) On or about February 27, 1987, Baresel delivered

a $570,000 cashier’s check from Macao, payable to Cy-

pert. The check represented the proceeds of the nominee

loans made at Tipton, Hammon, Blanchard and i

set forth in paragraphs (14) and (15) above.

exchanged the $570,000 cashier’s check and the

of the two $90,000 loans from Tipton and Hammon

$750,000 cashier’s check payable to MBank.

ary 27, 1987, Cypert and Baresel flew to Dallas

they again met with MBank officials.

the $750,000 cashier’s check for the Willow

notes, underlying stock interests, and assignment of

real estate mortgage. At the request of Hudson and

sel, Cypert reassigned the real estate mortgage to

chard where it was used to provide security for one

Hudson’s loans.

(19) Hudson directly benefited from the nominee loans

THe

all

attributable to him for lending limit purposes pursuant to

12 C.F.R. § 32.5(a)(1). At Tipton, the. $20,000 advance

to Respondent on December 29, 1986, when combined

with Hudson’s existing advances, first caused the line to

exceed the bank’s legal lending limit set forth at 12 U.S.C.

§ 84(a)(1). Total advances attributable to Hudson

existing

lending limit. Total advances attributable to Hudson

equaled $502,020 at Hammon, which exceeded the lending

limit by $407,792.

The

(20) nominee loans at Tipton and Hammon are

also attributable to Hudson for purposes of 12 U.S.C.

§ 375b, and 12 C.F.R. §§ 31.2(b) and 215.4(b), pursu-

ant to 12 U.S.C. §§ 31.3 and 215.3(f). At Tipton, the

loans to Clifford, Cypert, Lucas, Marshall, SKL and Tuck

were made at a time when Hudson's aggregate indebted-

prior in violation of 12 U.S.C.

§ 375b(2) and 12 C.F.R. §§31.2(b)(1) and 215.4

prior

violation of 12 U.S.C. § 375b(2) and 12 C.F.R. §§ 31.2

(b)(1) and 215.4(b) (1) (i).

(21) The violations set forth in paragraphs (19) and

(20) above were uncorrected at the close of the May 31,

specifically set forth in the Report of Supervi Activi

of Tipton dated May 31, 1987 (1987 Tipton ROSA) po

the Report of Supervisory Activity of Hammon dated June

30, 1987 (1987 Hammon ROSA). -The 1987 Tipton

ROSA and 1987 Hammon ROSA are incorporated herein

by reference the same as if fully set forth.

128a

ARTICLE III

(1) The actions of Respondent described in Article II,

paragraphs (1) through (21) above that Re-

spondent has committed violations of law and engaged

tinuing disregard for such banks’ safety and soundness.

THEREFORE, Respondent is directed to file an an-

swer in writing to the charges contained herein with the

Hearing Clerk, Office of the Chief Counsel, Office of the

Comptroller of the Currency, Washington, D.C. 20219,

within twenty (20) days from the date of service of this

Notice, in accordance with 12 C.F.R. Part 19.

Pursuant to 12 U.S.C. § 1818(h) F.R.

§ 19.10(c), the Comptroller may, in his discretion, order

that a public hearing held if he determines that it i

as)

in this case.

WITNESS, my hand on behalf

Comptroller of the Currency, given

the 31st day of August, 1989.

whether a public hearing would be in the public inte

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.