Banking and Finance Law Daily FDIC takes action against embezzling bank teller
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Monday, February 29, 2016

FDIC takes action against embezzling bank teller

By Colleen M. Svelnis, J.D.

The Federal Deposit Insurance Corporation has released the results of the enforcement actions taken by the agency during January 2016. During that time period, the agency issued a total of 12 orders and one notice. The administrative enforcement orders consisted of two removal and prohibition orders; four Section 19 orders; one civil money penalty; one amended consent order; four terminations of consent orders and cease and desist orders; and one notice.

The banks at issue: Transportation Alliance Bank located in Ogden, Utah; Westernbank Puerto Rico, of Mayaguez, Puerto Rico; Volunteer State Bank, located in Portland, Tenn.; and Earthstar Bank of Southampton, Pa. are all an insured State nonmember banks.

Embezzlement. The FDIC has issued a notice of intention to prohibit from further participation against Kaley Brynne Gregory, an institution-affiliated party of Volunteer State Bank, headquartered in Portland, Tenn. According to the FDIC, Gregory embezzled funds and used them for her own personal expenses and misused her position as head teller.

The FDIC found that Gregory willfully, fraudulently, and without authority, removed more than $264,000 in cash from the bank’s vault, the Teller Currency Dispenser, and one or more teller cash drawers at the bank’s branch in Gallatin, Tenn., and converted this cash to her own use. Additionally, the FDIC stated that she entered fraudulent entries in the bank’s electronic system in order to conceal her embezzlement and the resulting cash shortfall and in order to manipulate audits conducted by the bank. The bank suffered a loss of at least $264,000.

The FDIC scheduled a hearing to determine whether a permanent prohibition order should be issued against Gregory.

Unsafe banking practices. A civil money penalty of $7,000 was assessed against Rebecca A. Vigil for her actions, violations of law, unsafe or unsound banking practices, and breach of fiduciary duty as an institution-affiliated party of Transportation Alliance Bank located in Ogden, Utah. Vigil stipulated to the issuance of the FDIC’s order, which included an Order of Prohibition against her for her actions while an institution-affiliated party of Transportation Alliance Bank located in Ogden, Utah.

The FDIC determined that Vigil:

  • engaged or participated in unsafe or unsound banking practices and breaches of fiduciary duty as an institution-affiliated party;
  • by reason of such unsafe or unsound banking practices and breaches of fiduciary duty, the bank suffered financial loss or other damages; and
  • such unsafe or unsound banking practices and breaches of fiduciary duty involved personal dishonesty on the part of the institution-affiliated parties or demonstrated their willful and/or continuing disregard for the safety or soundness of the bank.

Orders of Prohibition. Orders of Prohibition were also issued against Cornelius Tamboer, an institution-affiliated party of Westernbank Puerto Rico, of Mayaguez, Puerto Rico, and David A. Lyster, an institution-affiliated party of Earthstar Bank of Southampton, Pa. Both parties consented to the issuance of the orders which were issued for violations of law and regulation, unsafe or unsound banking practices, and/or breaches of fiduciary duty.

An Order of Prohibition prevents a party from:

  • participating in any manner in the conduct of the affairs of any financial institution or organization enumerated in Section 8(e)(7)(A) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(7)(A);
  • soliciting, procuring, transferring, attempting to transfer, voting, or attempting to vote any proxy, consent, or authorization with respect to any voting rights in any financial institution enumerated in Section 8(e)(7)(A) of the Act, 12 U,S.C. § 181 S(e)(7)(A);
  • violating any voting agreement previously approved by the appropriate federal banking agency; or
  • voting for a director, or serving or acting as an institution-affiliated party.

Companies: Earthstar Bank; Transportation Alliance Bank; Volunteer State Bank; Westernbank Puerto Rico

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