Case 2:13-cv-00044 Document 1 Filed in TXSD on 02/19/13 Page 1 of 7

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION

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UNITED STATES OF AMERICA,

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Plainti~

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v.

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TEXAS CHAMPION BANK,

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)

Defendant

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o

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----------------------------)

COMPLAINT

CIVIL ACTION NO.

The United States ofAmerica alleges:

1. This action is brought by the United States to enforce the Equal Credit

Opportunity Act, 15 U.S.C. §§ 1691..1691f("ECOA',.

2. From at least 2006 to 2010, Defendant Texas Champion Bank ("Texas

Champion" or "the Bank'') engaged in a pattern or practice of discrimination on the basis of

national origin because it charged Hispanic borrowers higher interest rates on unsecured

consumer loans compared to the rates charged to similarly situated white bOlTowers. 111: more

than 1,000 instances, Texas Champion charged a Hispanic borrower a higher interest rate than a

white borrower with a similar credit and risk profile.

3. This Court has jurisdiction over this action pursuant to 28 U.S.C. §§o1331

and 1345 and 15 U.S.C. § 1691e(h).

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4. Venue is proper pursuant to 28 U.S.C. §§ 1391(b) and (c) because Defendant resides in the Southern District ofTexas and because a substantial part of the·events or omissions giving rise to this action occurred in the Southern District ofTexas.
5. Defendant Texas Champion is a state-chartered bank based in Alice, Texas. Texas Champion operates thirteen branches.in South Texas in Alice, Beeville, Benavides, Charlotte, Corpus Christi, George West, Kenedy, Mathis, Pleasanton, San Antonio, and San Diego.
6. Texas Champion offers a variety ofloan products, including mortgage loans, consumer loans, commercia110ans, and agricu1turalloans. The Bank o~ginates its loans through loan officers operating at one or more of its thirteen branches.
7. As of September 30,2011, the Bankh8d total assets of$338 million and total equity capital of $32.14 million. Texas Champion is subject to the regulatory authority of the Federal Deposit Insurance Corporation ("FDIC").
8. Texas Champion is subject to federal laws governing fair lending, including BCOA and the regulations promulgated thereunder. ECOA prohibits financial institutions from discriminating on the basis of, inter alia, national origin in their lending practices. Charging higher prices for loans on the basis ofnational origin, including charging higher rates ofinterest, is one ofthe discriminatory lending practices prohibited by BCOA. Texas Champion is a "creditor" within the meaning ofsection 702(e) ofECOA, 15 U.S.C. § 1691a(e).
9. Be~ning in March 2010, the FDIC conducted an examination ofthe lending practices ofTexas Champion to evaluate compliance with ECOA. Based ~n analysis ofthe average rates ofinterest that the Bank charged on unsecured consumer loans made between
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February 1,2009 and January 21~ 2010, the FDIC found reason to believe that Texas Champion had engaged in a pattern or practice of discrimination on the basis ofnational origin against Hispanic bolTOwers.
10. On December 6,2010, following its examination, the FDIC referred the lending practices ofTexas Champion to the United States Department ofJustice pursuant to 15 U.S.C. § 16~le(g).
11. After receiving the referral from the FDIC, the United States analyzed the interest rates that Texas Champion charged for unsecured consumer loans originated between January 1, 2006 and March 31, 2011. The United States also reviewed and evaluated the Bank's loan policies, procedures, and practices for that time period.
12. Prior to J1Ule 1, 2010, Texas Champion provided only general guidance to its loan officers regarding the pricing ofunsecured consumer loans. The Bank's Credit Policy and Procedures Guide provided the following general, non-exclusive list of factors for loan officers to consider when setting rates:
(a) Money market conditions (b) Local economic conditions (c) Liquidity ofthe total asset portfolio (d) State usury statutes (e) Competitive lending practices (f) The total customer relationship (past, present, arid future) (g) The term ofthe loan (h) The Banks [sic] profit objectives
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13. The Credit Policy and Procedures Guide stated that it was a ''broad guide" for loan officers, and that "ultimate responsibility" for credit decisions rested with individual officers. The Bank did not use a uniform pricing system such as a matrix or rate sheet and did not have specific pricing guidelines; loan ,officers had broad, subjective discretion to set interest rates on unsecured consumer loans.
14. Between at least January 1, 2006 and June 1,2010, Texas Champion made approximately 2,025 loans to Hispanic borrowers. During thi~ period, Texas Champion charged . interest rates to Hispanic borrowers for unsecured consumer loans that were 176 basis pointl bigher, on average, than the rates charged to non-Hispanic borrowers. This disparity is statistically significant.
15. After accounting for relevant loan and borrower credit fa:ctors, including loan 'term, debt..to-income ratio, indicators ofthe borrower·s credit history, and the prime rate at the time the loan was originated, Texas Champion charged interest rates to Hispanic borrowers between at least January 1,2006 and June 1,2010 that were 123 basis points higher, on average, than the rates charged to similarly situated non-Hispanic borrowers. This disparity is statistically significant.
16. The differences in interest rates charged to Hispanic borrowers and those charged to non-Hispanic borrowers cannot be explained by factors unrelated to national origin.
17. The higher rates ofinterest that Texas Champion charged to Hispanic borrowers for ~ecured consumer loans are a result ofTexas Champion's policy or practice of giving its employees broad subjective discretion in setting the interest rate for unsecUred consumer loan
lOne basis point represents one hundredth. of a percentage point (0.01 %). -4- .

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transactions. Information as to each applicant's national origin was available and known to the Batlk's loan officers, who personally handled each loan transaction at one ofBank's thirteen branch offices. Texas Champion did not properly instruct its loan officers regarding their obligation to treat prospective customers without regard to national origin, and the Bank has failed to S1:1Pervise or monitor the performance of its loan officers to ensure compliance with fair lending laws.
18. Texas Champion's policy or practice of giving its employees broad subjective discretion in handling every aspect of the unsecured consumer loan transaction has had a disparate detrimental impact on Hispanic borrowers compared to similarly situated non-Hispanic borrowers and is not justified by business necessity or legitimate business interests.
19. Texas Champion's actions, policies, and practices, as alleged herein, constitute discrimination against applicants with respect to' credit transactions on the basis of-national origin in violation of ECOA.
20. . Texas Champion's actions, policies, and practices, as alleged herein, constitute a
pattern or practice ofresistance to the full enjoyment of rights secured by ECOA. . 21. Persons who have been victims ofTexas Champion's discriminatory actions,
policies and practices are affected persons as defined in BCOA, 15 U.S.C. § 1691e, and have suffered injury and damages as a result ofTexas Champion's violation of ECOA.
22. Texas Champion's pattern or practice ofdiscrimination has been intentional» willful, and implemented with reckless disregard for the rights ofHispanic borrowers.
WHEREFOREt the United States prays that the Com enter an ORDER that: . 1. Declares that the policies and practices ofthe Defendant constitute violations of the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691-1691f;
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2. Enjoins the Defendant, its agents, employees, and successors, and all other persons in active concert or participation with it, from:
a. Discriminating on the basis ofnational origin against any person with respect to JUly aspect of a credit transaction; b. Failing or refusing to take su~ affirmative steps as may be necessary to restore, as nearly as practicable, the victims of the Defendant's unlawful conduct . to the position they would have been in but for the discriminatory conduct; and c. Failing or refusing to take such actions as may be' necessary to prevent the recurrence of any such discriininatory conduct in the future. 3. Awards monetary damages, pursuant to 15 U.S.C. § 1691e(h), to all persons harmed by the Defendant's discriminatory policies and practices. 'The United States further prays for such additional relief as the interests ofjustice may require. Dated: February 19, 2013
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KENNETH MAGIDSON United States Attorney Southern District of Texas

Respectfully submitted,
ERlC j-IOLDER Attorney General
:1:,~~
Gen Assistant Attorney ral
Civil Rights Division
STEVEN H. ROSENBAUM Chief

E. PAXTON WARNER
Assistant United States Attorney Southern District of Texas No. 555957 Texas Bar No. 24003139 600 E. Harrison, Suite 201 Brownsville, Texas 78529 Phone: (956) 548-2554 Fax: (956) 548~2776 Email: Paxton.Wamer@usdoj.gov

Trial Attorneys Housing and Civil Enforcement Sectjon Civil Rights Division U.S . Department of Justice 950 Pennsylvania Avenue NW Northwestern Building, 7th Floor Washington, D.C. 20530 Phol)e: (202) 305-0122 Fax: (202) 514-1116 Email: Coty.Montag@usdoj.gov

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 Case 2:13-cv-00044 Document 9 Filed in TXSD on 03/05/13 Page 1 of 21

UNlTBD STATES DISTRICT COURT SOUTHERN DISTRICf OF TEXAS
CORPUS CHRISTI DMSION

UNITED STATES OF AMERICA,

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Plaintiff,

)
) . ClVa ACTION NO. 2:13cv44

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~

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)

TEXAS CHAMPION BANK,

)

. )

D~mKUmt.

)

)

CONSENT ORDER

L INIROPUCl'ION

This Consent Order (Order) is submitted jointly by the parties for the approval ofand

entry by the Court simultaneously with the filing ofthe United States' Complaint in this action.

This Order resolves the'claims ofthe United States that Texas Champion Bank (''Texas

Champion" or "the bauk'') haa engaged in a pattern or practice oflending discrimination on the

basis ofnational origin in the pricing ofunsecured consumer loans in violation ofthe Equal

Credit. Opportunity Act (ECOA), 15 U.S.C. §§ 1691-1691f.

Under the provisions of tl1e Order, Texas Champion agrees to develop and establish uniform pricing policies and procedures designed to provide.that the prices it charges for the loans covered by this Order, including the portion ofthe price that reflects the discretion oftho loan officer or any company employee, are set in a non-discriminatory manner consistent with

Case 2:13-cv-00044 Document 9 Filed in TXSD on 03/05/13 Page 2 of 21
the requirements of BCOA. Texas Champion also shall compensate its Hispanic borrowers of unsecured COIlSUIDer loaDS.
There has been no factual finding or adjudication with respect to any ~tter alleged by the United States. Accordingly, the execution ofthis Order is not. and is not to be considered as, an admission or finding ofany violation of ECOA by Texas Champiop.. Texas Champion denies the United States' allegations that it engaged in national origin discrimination and maintains that at all times it conducted its lending in compliance with the letter and spirit offair lending laws and in a non~ manner. ~ parties have entered into this agreed Order to resolve voluntarily the claims asserted by the United States in order to avoid the risks and bunions of litigation. The parties agree that full implementation ofthe terms ofthis Order shall provide a resolution ofthe allegations ofthe United States in a manner consistent with Texas Champion's legitimate business interests.
n. BACKGROUND
Texas Champion is bued in Alice, Texas, with corporate offices in Corpus Christi. The bank oper:ates thirteen branches in South Texas in the area around Corpus Christi and San Antonio. AJJ ofthe 2010 ceDSUS, the population ofAlice was approximately 19,100 and 85% Hispanic. The Corpus Christi and San Antonio Metropolitan Statistical Areas also have substantial Hispanic populations, 58% and 54% respectively. As ofDecember 31, 2010, Texas Champion bad assets of$345.5 million and deposits of S269.3 mil1i~n. The bank is owned by Mesquite Financial Services, Inc., a one-bank holding company. Texas Champion is subject to the regulatory authority ofthe Federal Deposit Insurance Corporation ("FDIC',). .
Beginning in March 2010, the FDIC conduCted an examination ofthe lending practices of Texas Champion to evaluate compliance with BCOA. Based on aDalysis oftho" average rates of
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interest that the bamk: charged between 2009 and 2010 for unsecured consumer loans. the FDIC found reason to believe ~at Texas Champion had displayed a pattern or practice of discrimination on the basis ofnational origin against Hispanic borrowers. On December 6, 2010, following the ex~ination descnoed above. the FDIC referred the lending practices ofTexas
Champion to ,the United states Department ofJustice pursuant to IS U.S.C. § 1691e(g).
After conducting its own investigation and reviewing the information provided by the FDIC, the United States contends that Texas Champion baa charged bigher interest rates on unsecured consumer loans to Hispanic borrowers as compared to non-Hispanic bmrowers from January 1, 2006 to May 31.2010. The Complaint alleges that during this time period. the higher rates ofinterest that Texas Champion charged to Hispanic borrowers for unsecured consmner loans were a result ofTexas Champion's policy or practice ofgiving its employees broad subjective discretion in setting the interest rate for unsecured consumer 10~ transactions. infOrmation as to each applicant's national origin was available and known to the bank·s loan officers. who personally handled each loan transaction at one or more ofTexas Champion's branch offices. The Complaint alleges that prior to June 1, 2010. Texas Champion did not properly instruct its loan officers regarding their obligation to treat prospective custoDiers without regard to national origin, and the bank failed to supervise or monitor the performance of its 1080 officers effectively to provide compliance with fair lending laws. The Complaint 81leges that prior to June 1, 2010, Texas Champion's policy or practice of giving its emp~oyees broad subjective discretion in handling every aspect oftho unsecured consumer loan transaction was not justified by business necessity or legitimate business interests.
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DL TERM80~ORDER 1. Unless otherwise stated herein, the remedial provisions of this Order shall be
implemented within ninety (90) days of the Effective Date of this Order and shall continue
throughout its term. The Effective Date of t1tis Order shall be the date OD which it is approved and entered by the Court.
2. Unless otherwise stated herein, the types of loans covered by this Order include all residential real estate construction finailcing that are owner-occupied 1-4 family mortgage loans, automobUe financing, home improvement loans, mortgage loans, and unsecured consumer loans.
A. Geaeral Prohfbltory WIUPeUOD ,
3. Texas Champion, including all ofits officers, employees, agents, representatives, assignees, and all those in active concert or participation with any ofthem, is hereby enjoined from engaging in any act at practice that discriminate.s on the basis ofnational origin in any aspect ofa credit transaction in violation of BCOA. This prohibition includes, but is Dot limited to: the adoption, performance, or implementation ofany policy, practice, or act that results in 'national origin discrimination in the charging ofloan prices, inclucting the portion ofthe loan price that retlects the discretion of the loan officer or any other company employee, to those who' borrow money for loans covered by this Order.
4. This Order requireS the bank to talce actions to remedy its alleged discrimination. Texas Champion retains the discretion to take any additional actions that it believes are appropriate to achieve the goals ofthis Order. No1hing in this Order will require Texas Champion to make unsafe or unsound loans or to require loans to be originated or priced based upon the national origin ofthe borrower or prospective borrower.
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B. Pricing PoJidu and ProcedJll'el
S. In 2010, Texas Champion began to develop uniform pricing policies and procedures for unsecured consumer loans. Texas Champion shall tbrther revise these pricing policies to include the ~olloWing: (1) standards for collecting applications, current financial docaments, and credit reports for all borrowers for the loans covered by this Order; (2) standards for maintaining loan files for the loans covered by this Order; and (3) a uniform pricing matrix or matrices for the loans covered by this Order. Bach uniform pricing matrix or matrices must set forth objective, non-discriminatory standards for detennining interest rates for the loaDS covered by this Order and, ifthe bank elects to retain a discretionary element in its loan pricin& must include: (i) limits on the amount by which the interest rate may deviate, either upward or downward, from the rate as d~termined by the matrix or matrices; (il) the factors that a loan
officer or bint official may consider in the exercise oft.hat discretio.n; (iii) a requirement that
each loan file must include written documentation ofthe !acton set forth in the pricing matriX or matrices and, where the final interest rate varies from the published rate. the &ctors relied on in connection with an individual loan application and how those factors affected the pricing decision; and (iv) a requirement that before an interest rate is fixed, loan officers must inform applicants in writing that the rate is determined by a variety of factors and may be negotiable within limits set by the loan policies.
6. Texas Champion will provide a copy' ofits revised loan pricing policies to counsel
for the United States within ninety (90) days ofthe Effective Date ofthis Order. The United States wiD have thirty (30) days from receipt oftho loan pricing policies to raise any objections . to them, and ifit raises any, the parties shall confer to resolve their differences. In the event they
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are unable to do so, either party may bring the dispute to this Court for resolution. Until the

Court resolves such a dispute, the revised loan pricing policies will not go into effect.

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7. Texas Champion shall require all loan officers and employees who originate loans

covered by this Order to comply with its pricing policies, once approved by the United States.

Texas Champion alsO shall require an appropriate manager,·under the supervision ofa designated

senior official ofthe bank, to review compliance with these requirements, including the existence

ofa legitimate non-discriminatory reason for any disparities between Hispanic and non-HispllDic

borrowers and steps to provide that discretionary loan prices do not vary materially by national

origin. Ally loan that is not in compliance with these requirements may not be timdecl. In the

event that aloan inadvertently is f\m~ in material violation ofthe policies, an appropriate

retune! shall be provided to the borrower ofany Qvercharge or the rate may be adjusted

prospectively. All reviews shall be dOcumented and kept in the loan files•.

8. During the term ofthis Order, Texas Ghampion may change its loan pricing policies as set forth in paragraph Supon written advance nqtice to the United States, which sball ~ve thirty (30) days from receipt ofsuch notice to raise any objection to the proposed change(s). Ifit raises any objection, the parties shall confer to resolve their differenees and the United States shall obtain the position ofTexas Champion's regulator with respect to such differences. Ifthey are uDable to do so, either party may bring the dispute to this Court for resolution. Texas Champion shall not implement the cbange(s) during such a dispute.

C. Monitorin, ProvaDI
9. Within ninety (90) days ofthe Bffective Date oftbis Order, Texas Champion shall have in place a monitoring program designed to provide compliance with this Order. The
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program sball be designed to monitor the bank's loans for potential disparities basecf.on national origin. At a minimum, Texas Champion shall monitor the interest rates ofits loan products " covered by this Order. The program also shall require a quarterly review by senior managers. Each such quarterly review shall be documented and presented to Texas Champion's Board of Directors, or a committee thereof. for review and approval not later ~an sixty (60) days after the and ofeach quarter. Each quarterly review shall include, but not be limited to, an analysis designed to detect interest rate disparities based on national origin with respect to the bBDk~s 10~ products covered by this Order.
a. In the event that any such review discloses interest rate disparities between Hispanic and non-Hispanic borrowers, Texas Champion sball attempt to determine the reBSOn(s) for those disparities and shall prompdy talce corrective action to address disparities that are not justified by a legitimate business need. Conective action 'shall include, as warranted, financial remediation for borrowers, further modifications to Texas Champion's pricing policies and/or" monitoring programs as appropriate, and education, discipline, or termination of employee{s). Texas Champion shall document all such disparities, determinations, and actions taken and sball provide a summary oft,Jte quarterly reviews and any documentation and analysis rel,aling thereto to the United States on a quarterly basis.
b. In the event that any such review discloses significant disparities with respect to any particular employee or branch, Texas Champion shall require the employee or branch manager to explain the non-discriminatory reason(s) for those disparities. ,Ifthere is" no reasonable, non-national origin-based explanation for the noted disparities, Texas Champion shall require the employee or branch manager to take prompt corrective action to address the disparities.
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10. Ifthe United States raises any objections to Texas Champion's determinations or remodial actions, the parties shall meet and confer to consider appropriate steps to address the concerns raised by the United States' revi~. Ifthe parties are unable to come to an agreement regarding such objectioDB, any party may bring the dispute to this Court for resolution.

D. Notifleation tG the United Statu and RIght to Obiect

11. Texas Champion shall provide a copy ofthe policies it utilizes to implement

paragraphs 5-8 oftbis Order and descriptions ofthe monitoring programs required under

paragraphs 9-10 to the United states within ninety (90) days oftho Bffective Date oftbis Order.

The United States shall have thirty (30) dayg from receipt ofthe policies and descriptions to raise

any objections to them, and if it raises any. the parties shall confer to resolve their differences

and the United states shall obtain the position ofTexas ~on'8 regulator with respect to

i

such differences. In the event the parties are unable to do so, either party may bring the dispute

I

!.,I .

to this Court for resolution.

E. Borrower Nolee.

12. Texas Champion shall post and prominently display in eacb.location where loan applications are received by the bank a notice ofnon-discrimioation (a sample ofwbich is attached as Appendix A).

13. Texas Champion shall require its employees who originate loans covered by this Order to provide to the borrower"a notice ofnon-difJcrimination that provides substantially the" same information as is contained in Appendix A. This disclosure sbaIl be in writing, signed by the originator and the borrower (ifthe borrower executes), and submitted by the originator to be made part ofthe loan file maintained by Texas Champion. This disclosu:re shall be made as early
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as practicable but not later than the time ofthe loan application (unless the application is made by telephone).
F. Eqgal Credit OPvortpDlty IremlnR Program
14. Within ninety (90) days ofthe Effective Date ofthis Order, Texas Champion shall provide equal credit opportunity training to its management officials engaged in lending or who oversee loan officers, loan officers, and'any other employees or agents who participate in the
origination ofthe bank's loans covered by this Order. During this training, Texas Champion aha11 provide to each participant: (a) access to a copy oftbis Order imd the loan policies adopted
pursuant to it; and (b) training on the terms ofthis Order, the loan policies adopted pursuant to it, the requirements ofBCOA, and his or her responsibilities under each. During the term of'this Order, Texas Champion shall provide annual training to covered employees with respect to his or
her responsibilities and obligations Under BCOA and this Order.
IS. Texas Champion shall secure from each employee or agent specified in the preceding paragraph a signed statement acknowledging that he or she has received access to a copy ofthis Order and the loan policies and has completed the initial equal credit opportunity , training. The signature ofthe acknowledgement may be either manual or electronic. These statements shall be substantially in the form ofAppendix B (Acknowledgment) and Appendix C (Equal Credit Opportunity Training). During the term olthis Order, each new employee ~r agent who participates in the origination ofthe bank's loans covered by this Order shall be provided access to a copy ofthis Order and given an opportunity to have any questions answered, and Shall sign the acknowledgment fonn statement (Appendix B) within ten (10) days ofbeginning his or her employment in that position.
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16. The content ofthis training program shall be approved in advance by the United States. Texas Champion shall bear all costs associated with the training.
G. SaUdaetioD of til' United Statu' Claim. for Monetary ReBef
17. Texas Champion shall deposit in an interest-bearing escrow aooount the total sum of$700,OOO to compensate for mODetary damages that affected persons may have suffered as a result ofthe alleged violations ofBCOA with respect to unsecured consumer loans (the "Settlement Fund"). Title to this account shall be in the name of"Texas Champion Bank for the benefit of affected persons pursuant to Order ofthe Court in Civil Action No. [xxx]". Texas Champion shall provide written verification ofthe deposit to the United States within five (5) days ofthe Effective Date oftbis Order. Any interest that accrues shall become part ofthe
Settlement Fund and be utilized and disposed ofas set forth herein.
18. Within thirty (30) days ofthe Effective Date ofthis Order. the United States shall request any information it believes shall assist in identifying atfected persons and determining any damages. Texas Champion shall, within thirty (30) days ofreceipt of such request, supply, to the extent that it is within the bank's control, such information as requested. Requested data may be supplied as a supplement to the database already provided to the United states by the
bank in the course ofthe United States' in.guify. To the extent that the information is not within
Texas Champion's control, the bank: shall, within thirty (30) days ofreceipt ofsuch request, supply any data in its control that identifies other parties that may have the infonnation.
19. The United States shall, upon reasonable notice, be allowed access to the bimlc's records and files to verify the accuracy ofthe data provided and to otherwise identify persons entitled to the payments from the Settlement Fund.
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20. Within ninety (90) days ofthe Bffective Date ofthis Order, the United States shall provide to Texas Champion a list ofaffected persons and an amount each individual shall receive &om the Settlement Fund to compensate for monotary damages those persons may have suffered, subject to the conditions set forth in paragraph 21. Texas Champion sba11 have sixty (60) days· fi'om receipt ofsuch list in which to review the list an~ the United States shall consider in good
faith any issues raised by the bBDk.
.21. Payments from the Settlement Fund to affected persons shall be subject to the following conditions, provided that the details in administration ofthe Settlement Fund set forth in paragraphs 22-23, can be modified by agreement ofthe parties and without further Court approval:
<a> No affected person shall be paid any amount from the Settlement Fund untilhe or she has executed and delivered to Texas Champion a written release, as set forth in Appendix D, ofall claims, legal or equitable, that he or she might have against the released persons and .entities regarding the claims asserted by the United States in this lawsuit, so long as such claims . BCCIUed prior to ~e entry ofthis Order, and
(b) The total amount paid by Texas Champion collectively to the affected persons shall not exceed the amount ofthe Settlement Fund, including accmed intere$t.
22. Texas Champion shall, DO later than sixty (60) days after receiving the compensation list referred to in paragraph 20, notify each identified person eligible for compensation by a lettar (using its reasonable best efforts to locate each person). The fbnn of this letter shall be subject to the review and approval ofthe United States. At a minimum, the letter sba11 state that the identified person is eliglble for compcmsation in the indicated amount
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'.
provided he or she executes and returns to the bank a copy ofthe agreed-upon release, which , release shall be enclosed with the ~otice along with an addressed and postage-paid return
envelope. Bach letter shall identify the loan(s) the bank originated to the identified person. The letter shall explain the complaint resolution program referenced in paragraph 27 ofthis Order~ If the parti~ are unable to agree on the terms of the letter, any party may bring the dispute to the Court for resolution. Ally letters that are returned with a forwarding address shall promptly be fOosent to that new addres~. Texas Cbablpion shall provide an accounting ofthese notifications, indicating the name and address to which each was dispatched, within the sixty (60) da)' period ~ed to in this paragraph.
. 2j. Texas Champion sball issue checks in the amount indicated on the compensation list to all. identified persons who execute and return the releues. TexaS Cba1npion shall issue and mail such checks no later than twenty-one (21) days after the receipt ofthe release. Texas Champion shall set forth reasonable deadlines for requirements ofreturn ofreleases, and for the timely deposit ofchecks, subject to approval ofthe.United States, so that the compensation is distributed and chcicks are presented for payment or become void prior to the date that is one year ftom the date the initial notifications are sent. For the twelve (12) month period after the initial notifications are sent to affected persons punuant to paragraph 22, Texas Champion sha11
provide the United states with a quarterly accounting ofreleases received, checks.sent, and
'notifications for which no response has been received or that were reported to be undeliverable. The United States may malee its own efforts to looa,te aft'ected persons.
24. All money not distributed to allegedly affected persons from the Settlement Fund, including accrued interest, within one year ofthe date the initial notifications are sent to persons
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deemed to be affected by the United States shall be distributed to one or more organizations that provide 'services including credit counseling (including assistance in obtaining loan modification), legal representation ofborrowers seeking to obtain a loan modification, financial
literacy, and other related educational programs targeted at Hispanic potential and former
borrowers in communities where the Complaint alleges significant discrimination OCCUlTed against Hispanic borrowers. Recipient(s) of such funds m~t not be related to Texas Champion, Texas Champion's parent, or any entity owned by Texas Champion. Texas Champion shall consult with and obtain the approval ofthe United States in selectingrecipient(s) ofthese funds and the amount each organization will receive.
2S. The parties shall obtain the Court's approval for the organizations to receive funds and the amount to be distributed to eadl prior to distribution provided by Paragraph 24. The parties shall provide the Court with information regarding how the propo~ed organizations meet the requirements set forth in Paragraph 24. Texas Champion sba1l require eaclt recipient to
submit to the Court, the bank, and the United Stales a report detailing that funds are uti:llzed for
the purposes identified in Paragraph 24 within one year after the funds are distributed. For.any
recipient that does not provide such a report:, Texas Champion shall require that the funds be
ret\lrD.ed to it for redistribution to the other organizMon(s) approved to receive funds.
26.. Texas Champion shall not be entitled a setooOfi; or any other reduction, ofthe amount ofpayments to affected persons because ofany debts owed by the identified persons. The bank also shall not refuse to make a payment based on a release oflega! claims or loan modification previously signed by any affected persons.
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B. CmnP',lpt Resolution Progam
27. During the period oftbis Order, Texas Champion shall maintain a complaint resolution program to address consumer complaints alleging discrimination regarding loans ori~ed by the bank. Documentation regarding this complaint resolution program, including documentation ofindividual complaints and zesolutions, ifany, shall be made available to the
United states on a quarterly basis and included in the reports referenced in paragraph 29. This
program will not review complaints conceming the SeUlmnent Fund provided by Paragraphs 1726. A person shall not be deemed ineligible for the complaint resolution program on the basis of havmg executed the release described in paragraph 21(a), but there is no requirement under this Order that any complaint necessarily be resolved for or against the bank.
IV. EYALUATING AND MONITORING COMPLIANCE
28. For the duration of this Order, TexaS Champion shall retain all records relating to
its obligations hereunder as well as ita compliance activities as set forth herein. The United
States shall have the right to review and copy such records upon request. 29. Within six months ofthe effective date ofthis Order. Texas Champion shall
submit a report to the United States on the bauk's progress in establishing and implementing each ofthe remedial items specified in this Order. ' A second report shall be filed on the first anniversary ofthis Order. Thereafter, Texas Champion shall submit a,report on each subsequent anniversary ofthe date ofthe Order for the term of the Order desa;binJ the actions taken in compliance with the provisions ofthe Order. The ~ort abal1 include an objective assessment of the extent to which each quantifiable obligation was'met. an explanation ofwhy any particular component feU short ofmeeting the goal for that year, and any recommendations for a&litional
14

Case 2:13-cv-00044 Document 9 Filed in TXSD on 03/05/13 Page 15 of 21
actions to achieve the goals oftbis Order. Ifapplicable, Texas Champion shall attach to the annual reports representative copies oftraining material and disseminated pursuant to this Order. V. ADMINISTRATION
30. The Order shall terminate (a) three (3) months after the submission ofTexas Champion's fourth annual report to the United States. Notwithstanding'the above, this Order
may be extended upon further motion ofthe United States to the Court" for good Cause shown.
31. Any time limits for performance fixed by this Order may be extended by mutuil written agreement ofthe parties. Other modifications to this Order may be made only upon
approval ofthe Court, by motion by either party. The parties recognize thai there may be
changes in relevant and material factual circumstances during the term of this Order that may . impact the accomplishment ofits goals. The parties agree to work cooperatively to discuss and
attempt to agree upon any proposed modifications ~ this Order resulting therefrom. 32. In the event that Mesquite Financial Services, Inc. seeks to engage in a merger or
sale ofsubstantially all ofits assets during the term ofthis Order, Texas Champion will provide written notice to the United States at the same time that notice is provided to its regulator.
33. In the event that any disputes arise about the interpretation ofor compliance with the terms oftbis Order, the parties shall endeavor in good faith to resolve any such dispute
between themselves before bringing it to this Comt for resolution. The parties agree that ifit
either reasonably believes that the other party failed to comply with any obligation under this Order, it shall provide written notice thereofand allow a period ofat least thirty (30) days to discuss a voluntarily resolution ofthe alleged violation before presenting the matter to this Comt. In the event of either a failure by Texas Champion to perform in a timely manner any act
IS

Case 2:13-cv-00044 Document 9 Filed in TXSD on 03/05/13 Page 16 of 21

required by this Order or an act by Texas Champion, in violation ofany provision bereof; the United states.may move this Court to impose any remedy authorized by law or'equity, including attomeys' fees and costs.
34. The parties agree th~ as ofthe date ofthe entry of this Consent Order. litigation is not 'Msonably foreseeableu ~g the matters described above. To the extent that either party Previously implemented a litigation hold to preserve documents. electronically stored ~ormation (BSI), or things related to the matters described above, the party is no longer required to maintain such litigation hold. Nothing in this paragraph relieves either party ofany other obligations imposed by this Order.

35. Nothing in this Order shall excuse the bank's compliance with any currently or subsequently effective provision oflaw or order ofa regulator with authority over Texas· Champion tbat imposes additional obligations on the bank.

36. .Texas Champion's compliance with the terms ofthis Order shall fully and fiDally
resolve alI claims ofthe United States relating to the alleged violation oftbe fair lending laws by
.
means ofdiscriminating on the basis ofDational origin, as alleged in the Complaint in this action,
including all claims for equitable reliefand monetary damqes and penalties. Bach party to this
Consent order sba11 bear its own costs and attomey's' fees" associated with this litigation.

37. The Order does not create any third-party beneficiaries.

38. The Court shall retain jurisdiction for the duration ofthis Consent Order to

enforce the terms oCthe OnIer, after which time the case shall be dismissed with prejudice.
t.:" SOAPPROVEO AND ORDBRJID, this daYO~~

16

(jv"

..J...<:.d

ShJ~ ~~
'.

~ 17 ~- 0 •

Case 2:13-cv-00044 Document 9 Filed in TXSD on 03/05/13 Page 17 of 21

The wldersigned hereby apply for and consent to the entry of this Order:

For the United States:

KENNETH MAGIDSON

THOMAS E. PEREZ

United States Attorney

Assistant Attorney General

Southern District of Texas

Civil Rights Division '"

~------~~

E. PAXTON WARNER

STEVEN H. ROSENBAUM

Assistant United States Attorney

Chief

Southern District of Texas No. 555957

Civil Rights Division

Texas Bar No. 24003139

Ho . and Civil Enforcement Section

600 E. Harrison, Suite 201

Brownsville, Texas 78520

Phone: (956) 548-2554

Fax: (956) 548-2776

Email: Paxton. Warner@usdoj.gov

. nBank:

Trial Attorneys United States Department of Justice Civil Rights Division Housing and Civil Enforcement Section 950 Pennsylvania Avenue, N.W. - G St. Washington, DC 20530 Tel.: (202) 305-0122 Fax: (202) 514-1116 Email: Coty.Montag(@,usdo;'gov

JOHN L 0 lXOO Hunton & Williams LLP SabadeI Financial Center 1111 Brickell Avenue, Suite 2500 Miami, Florida 33131 Phone: (305) 536-2752
Fax: (305) 810-1678 jdelionado@hunton.com

Case 2:13-cv-00044 Document 9 Filed in TXSD on 03/05/13 Page 18 of 21

APPENDIX A
We do Business in Accordance with Federal Fair Lending Laws

UNDER THE EQUAL CREDIT OPPORTUNITY ACT, IT IS ILLEGAL TO DISCRIMINATE IN ANY
CREDIT TRANSACTION:

On the basis of race, color, national origin, reHgion,
~ex, marital status, or age; .

Because income is from public assistance; or

Because a right has been exercised under the Federal Consumer Credit Protection Laws.

IF YOU BELIEVE YOU HAVE BEEN DISCRIMINATED AGAINST, YOU SHOULD SEND
A COMPLAINT TO:

FDIC Consumer RIlPODH Center

OR

1100 Walnut Street. Box #11

KanlU City, MO 64106

Tel.: 1-877-275-3342

http://www.fdle.gov/con.ameni

u.s. Department ofJustice
ClvO Rights Division Souafng and CtvB Enforcement Seetfon Wa.hlngton, DC 20530 Tel: 1-800-896-7743
hUp:/Iwww.usdoJ.gov/ertJhousiDg

19

Case 2:13-cv-00044 Document 9 Filed in TXSD on 03/05/13 Page 19 of 21
APPENDIXB
Officer and Employee Aclcnowledgment
I acknowledge that on _ _ _ _ _--J; I was provided copies ofthe Consent Order
entered ~y the Court in United States v. Texas ChllP]mon Bpk (S.D. Tex.), and the loan policies
developed P\QWUlt thereto. I have read and I believe that. I understand these documents and have had my questions about these documents answered. I believe I understand the Bank's legal reapoDSlDiijties and shall seek to assist the Bankts compliance with those responsibilities.
Signature
Print Name
Job Title
Date
20

Case 2:13-cv-00044 Document 9 Filed in TXSD on 03/05/13 Page 20 of 21
APPENPIXC Officer and ~mployee TraiDing Certification
I certify'that on _ _ _ _ _--..J>. I received training with respect to my
responsibilities under the Consent Order entered by the Court in United States Va Texas
Chammon BOOk (S.D. Tex..), and the federal fair lending laws. I have had the opportunity to
have my questions about them answered. I believe I understand the Bank's legal responsibilities not to discriminate under the federal fair lending laws, including the Bqual Credit Opportunity ·A~ and shall seek to assist the Bank's compliance with those respoDSlDilities.
Signature
Print Name
10bTitle
Date
21

Case 2:13-cv-00044 Document 9 Filed in TXSD on 03/05/13 Page 21 of 21

APPENDIXD Release

In consideration for the parties' agreement to the terms ofthe Consent Order entered in

United States y. Texas Clwnpion Bap\ (S.D. Tex.), and the payment to me ofS

• pursuant

to ~e Consent Order and effective upon that payment, I'hereby release and forever discharge all

cl~ rights, remedies, and recoveries related to the facts of credit disorimiDation in the

origination ofunsecured consumer loans at issue in the matter referencod above, and release and

forever discbarge all claimst rights, remedies, and recoveries arising from credit dlscrimination

l'

alleged in that matter in colU1.OCtion with the origination, pricing, terms, and conditions ofmy

Joan(s), known and unknown, up to and including the date ofexecution oftbis release.

1undcr:stand that this releases those claims, rights, remedies and recoveries against Texas Champion Bank, and against any and all related entities, parents, predecessors, successors, subsidiaries, and affiliates, and against any and all oftheir past and present directors, officers, agents, managers, supervisors, shareholders, and employees and their heirs, executors, . adminjstrators, successors in interest, or assigns.

Executed this _ day of_ _.J' __•

Signature
Print Name
Address 22

 
 Case 2:13-cv-00044 Document 13 Filed in TXSD on 03/19/13 Page 1 of 2

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS CORPUS CHRISTI DIVISION

UNITED STATES OF AMERICA, Plaintiff,
v. TEXAS CHAMPION BANK,
Defendant.

)

)

)

CIVIL ACTION NO.: 2:13-cv-00044

)

)

)

)

)

)

ORDER Plaintiff, United States of America, and Defendant, Texas Champion Bank, requested

that the Court vacate the final judgment entered on March 5, 2013 [Dkt. Entr. 11]. Paragraph 38

of the Consent Order [Dkt. Entr. 3-1] provides that the Court shall retain jurisdiction for the

duration of the Consent Order to enforce the terms of the Order, after which time the case shall

be dismissed with prejudice. While the parties have represented that they have no objection to

the matter being administratively closed, there are certain aspects of the Consent Order that have

not yet been fulfilled and may require Court approval or intervention. The Consent Order

expires on June 5, 2017, three months after the submission of the bank's fourth annual report.

For the reasons stated above, it is hereby ORDERED that the final judgment entered on March 5, 2013 is VACATED. This case shall be administratively closed but this Court shall retain jurisdiction over this matter to address any issues with the Consent Order that may arise.

SO APPROVED AND ORDERED, this _ _ day of

Page 1 of 2

Case 2:13-cv-00044 Document 13 Filed in TXSD on 03/19/13 Page 2 of 2

The parties approve the foregoing as to form and substance.

Dated: March 18,2013

Respectfully submitted,

For Plaintiff United States of America:

KENNETH MAGIDSON United States Attorney Southern District of Texas Civil Rights Division
IslE. Paxton Warner PAXTON WARNER Assistant United States Attorney Southern District of Texas No. 555957 Texas Bar No. 24003139 600 E. Harrison, Suite 201 Brownsville, Texas 78520 Phone: (956) 548-2554 Fax: (956) 548-2776 Email: Paxton.Warner@usdoj.gov
For Defendant Texas Champion Bank:
IslJohn Delionado JOHN DELIONADO Hunton & Williams LLP Sabadell Financial Center 1111 Brickell Avenue, Suite 2500 Miami, Florida 33131 Phone: (305) 536-2752 Fax: (305) 810-1678 Email: jdelionado@hunton.com

STEVEN H. ROSENBAUM Chief Housing and Civil Enforcement Section
lsi Coty R. Montag DONNA M. MURPHY Principal Deputy Chief JOEL FLAXMAN COTY R. MONTAG Trial Attorneys United States Department of Justice Civil Rights Division Housing and Civil Enforcement Section 950 Pennsylvania Avenue, N.W. - G St. Washington, DC 20530 Tel.: (202) 305-0122 Fax: (202) 514-1116 Email: Coty.Montag@usdoj.gov

Page 2 of 2

 
 Case: 2:13-cv-00044 As of: 02/02/2014 10:05 PM CST 1 of 2
U.S. District Court SOUTHERN DISTRICT OF TEXAS (Corpus Christi)
CIVIL DOCKET FOR CASE #: 2:13−cv−00044

CLOSED

UNITED STATES OF AMERICA v. Texas Champion Bank Assigned to: Judge Nelva Gonzales Ramos Cause: 88:8888 Other Statutory Actions
Plaintiff

Date Filed: 02/19/2013 Date Terminated: 03/06/2013 Jury Demand: Plaintiff Nature of Suit: 444 Civil Rights: Welfare Jurisdiction: U.S. Government Plaintiff

UNITED STATES OF AMERICA

represented by Eric Paxton Warner U.S. Attorneys' Office 600 E. Harrison Ste 201 Brownsville, TX 78520 956−548−2554 Fax: 956−548−2776 Email: paxton.warner@usdoj.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED

V. Defendant Texas Champion Bank

represented by John Delionado Hunton &Williams LLP 1111 Brickell Ave Suite 2500 Miami, FL 33131 305−536−2752 LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Date Filed 02/19/2013 02/19/2013 02/19/2013
02/20/2013 02/20/2013
02/27/2013
03/01/2013 03/01/2013

# Docket Text
1 COMPLAINT against UNITED STATES OF AMERICA filed by UNITED STATES OF AMERICA.(Warner, Eric) (Entered: 02/19/2013)
2 Proposed Summons by UNITED STATES OF AMERICA, filed.(Warner, Eric) (Entered: 02/19/2013)
3 Joint MOTION for Entry of Order re: Entry of Consent Order by UNITED STATES OF AMERICA, filed. Motion Docket Date 3/12/2013. (Attachments: # 1 Proposed Order Consent Order)(Warner, Eric) (Entered: 02/19/2013)
Summons Issued as to Texas Champion Bank, filed.(vrios, ) (Entered: 02/20/2013)
4 ORDER for Initial Pretrial and Scheduling Conference and Order to Disclose Interested Persons. Initial Conference set for 5/17/2013 at 09:00 AM before Judge Nelva Gonzales Ramos. Parties notified.(vrios, ) (Entered: 02/20/2013)
5 NOTICE of Setting as to 3 Joint MOTION for Entry of Order re: Entry of Consent Order. Parties notified. Telephone Conference set for 3/4/2013 at 02:30 PM before Judge Nelva Gonzales Ramos, filed. (bcortez, ) (Entered: 02/27/2013)
6 MOTION for John Delionado to Appear Pro Hac Vice by Texas Champion Bank, filed. Motion Docket Date 3/22/2013. (bcortez, ) (Entered: 03/01/2013)
7 ORDER granting 6 Motion to Appear Pro Hac Vice.(Signed by Judge Nelva Gonzales Ramos) Parties notified.(sscotch, ) (Entered: 03/04/2013)

Case: 2:13-cv-00044 As of: 02/02/2014 10:05 PM CST 2 of 2

03/04/2013
03/05/2013 03/05/2013 03/05/2013 03/05/2013 03/18/2013 03/19/2013

Minute Entry for proceedings held before Judge Nelva Gonzales Ramos. TELEPHONE CONFERENCE held on 3/4/2013. Attorneys to submit order as stated on the record. Appearances:Coty Montag, Donna Murphy. John Delionado, Eric Paxton Warner.(Digital # 2:45−2:51pm)(ERO:Genay Rogan), filed.(ssyler, ) (Entered: 03/05/2013)
8 Joint PROPOSED ORDER Approving Consent Order re: 3 Joint MOTION for Entry of Order re: Entry of Consent Order, filed.(Warner, Eric) (Entered: 03/05/2013)
9 CONSENT ORDER (Signed by Judge Nelva Gonzales Ramos) Parties notified.(amireles, ) (Entered: 03/05/2013)
10 ORDER granting 3 Motion for Entry of Order.(Signed by Judge Nelva Gonzales Ramos) Parties notified.(amireles, ) (Entered: 03/05/2013)
11 FINAL JUDGMENT (Signed by Judge Nelva Gonzales Ramos) Parties notified.(amireles, ) (VACATED−−PER ORDER ENTERED 3/19/13) Modified on 3/21/2013 (vrios, ). (Entered: 03/05/2013)
12 Joint MOTION to Vacate by UNITED STATES OF AMERICA, filed. Motion Docket Date 4/8/2013. (Attachments: # 1 Proposed Order)(Warner, Eric) (Entered: 03/18/2013)
13 ORDER granting 12 Motion to Vacate Final Judgment entered on 3/5/13.(Signed by Judge Nelva Gonzales Ramos) Parties notified.(vrios, ) (Entered: 03/21/2013)