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FDIC finds ‘reckless misconduct’ at Sonoma Valley Bank
Posted By Sun News On January 28, 2013 @ 12:32 pm In News | Comments Disabled
Two officers of the failed Sonoma Valley Bank have been banned from the industry and fined a total of $12,500, according to a ruling of The Federal Deposit Insurance Corporation.
The FDIC said Sean Cutting, then the bank’s president and CEO, and Brian Melland, its loan officer, engaged in reckless and unsafe banking practices. Such violations “were part of a pattern of misconduct,” the Dec. 20 ruling stated, “that demonstrated a willful disregard for the soundness of the bank.”
Cutting was fined $10,000 and Melland $2,500. The men demonstrated an “unfitness to serve” that prohibits them from ever taking another banking job.
After FDIC warnings about an unsafe concentration of loans, Sonoma Valley Bank was taken over by regulators in August 2010. It’s stock, once trading at over $30 per share, was virtually worthless – approximately a $70 million loss.
Assets of the bank, which had received federal bail-out money, were ultimately bought by Westamerica Bank
Trouble for the Sonoma Valley Bank began when it made nearly $40 million in questionable real estate loans to a Marin County developer. The amount was nearly the bank’s entire capital base, and the total far exceeded the FDIC limit of lending no more than 25 percent of capital to any one borrower.
That client, Bijan Madjlessi, subsequently defaulted on most of the loans. He was arrested in 2011 for insurance fraud.
Cutting took a job with Rabobank in Sonoma, but left about a year ago.
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