IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

DENNIS PANTANO, as Independent Administrator)

of the Estate of Marie Sasso, Deceased, as of )

Co-Trustee of the Marie M. Sasso Trust dated )

August 15, 2001, AS Restated on October 21, 2005, )

and MICHAEL MANNO, as Co-Trustee of the )

Marie M. Sasso Trusted dated August 15, 2001, )

and Restated on October 21, 2005, )

)

Plaintiffs, ) No. 12 C 3951

v. )

) Judge Robert W. Gettleman

FEDERAL DEPOSIT INSURANCE )

CORPORATION, in its corporate capacity as )

deposit insurer of First Chicago Bank & Trust, )

f/k/a LABE BANK, )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

In a Second Amended Complaint, plaintiffs Dennis Pantano, as Independent

Administrator of the Estate of Marie M. Sasso, deceased, and as Co-Trustee of Marie M. Sasso

Trust (the “Trust”), and Michael Manno as Co-Trustee of the Trust, seek review of the denial by

defendant Federal Deposit Insurance Corporation in its corporate capacity (“FDIC-C”) of

plaintiffs’ claim for deposit insurance on accounts maintained in a failed financial institution. 

The parties agree that the operative material facts are not in dispute and have filed a joint

statement of facts and cross-motions for summary judgment. Because the FDIC-C’s decision

was not arbitrary or capricious, the court grants its motion for summary judgment and denies

plaintiffs’ motion for summary judgment.
BACKGROUND

On August 15, 2001, Marie M. Sasso executed the Trust, which was restated on

October 21, 2005. Marie was the sole trustee until her death on September 10, 2008. As trustee

Marie maintained certain bank accounts including Account No. 1889 at First Chicago Bank and

Trust (the “Account”). The Account was designated in the name of Marie M. Sasso as Trustee

of the Marie M. Sasso Trust. 

On September 19, 2008, nine days after Marie’s death, a transfer from another trust

account was made in the amount of $16,246 into the Account. On October 6, 2008, a second

deposit for in the amount of $59,590.32 from another trust account was made into the Account.

After Marie’s death on September 10, 2008, checks totaling $89,524.04 were made

payable to Gary Sasso or for his benefit bearing the signature of Marie M. Sasso and drawn on

an account at First Chicago in the name of the Trust. Gary Sasso is Marie’s son and beneficiary

of the Trust. The checks were all presented for payment after Marie’s death and honored by

First Chicago. 

On September 24, 2008, the balance of the account was $21,556.47. On October 24,

2008, the balance of the Account was $901.36, and on November 25, 2008, the balance on the

Account was $823.36. 

On January 5, 2009, Gary Sasso filed a petition for probate of Marie’s estate in the

Circuit Court of Cook County, Illinois (the “probate proceedings”). Letters of Office were

issued to Gary eleven days later.

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Gary was removed as the Independent Representative of the Estate on August 31, 2009,

because he had obtained the Letters of Office under false pretenses due to a previous conviction

for felony forgery. Plaintiff Pantano was appointed the Independent Representative. 

On July 23, 2010, plaintiffs initiated supplemental proceedings in the probate court to

recover from First Chicago the amount of $89,524.04 for allegedly unauthorized and improper

withdrawals, check payments, and charges made against the Trust Accounts after Marie’s death. 

One year later, on July 8, 2011, the Illinois Department of Financial and Professional Regulation

closed First Chicago and appointed the FDIC as Receiver. As a result of the closure, the

supplemental proceedings in the probate court were dismissed. 

After the closure, plaintiffs submitted a claim for deposit insurance to FDIC-C, seeking

the $89,524.04 representing the withdrawals from the Trust Accounts after Marie’s death. To

support their claim, plaintiffs submitted bank statements for the Account for the periods of

September 25, 2008, through November 25, 2008. Plaintiffs also submitted copies of a number

of checks written on the Account that were dated and paid after Marie’s death: 

(1) Check No. 336 in the amount of $14,300 dated July 22, 2008, payable to Gary Sasso,

presented and paid on September 29, 2008;

(2) Check No. 338 in the amount of $9,174.35 dated July 22, 2008, payable to Illinois

State Disbursement Unit, presented and paid on September 23, 2008;

(3) Check No. 361 in the amount of $78 dated October 7, 2008, payable to the Illinois

Secretary of State, presented on and paid on October 29, 2008;

(4) Check No. 362 in the amount of $826.68, dated October 7, 2008, payable to Cook

County Treasurer, presented and paid on October 14, 2008;

(5) Check No. 363 in the amount of $145.01, dated October 7, 2008, payable to Comcast,

presented and paid on October 16, 2008; and

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(6) Check No. 364 in the amount of $65,000, dated June 22, 2008, payable to Gary Sasso,

presented and paid on October 17, 2008.

In addition to the checks, plaintiffs submitted to FDIC-C an affidavit of forgery with

supporting exhibits from Forensic Document Examiner Ellen Mulcrone Schuetzner, an affidavit

of forgery from plaintiff Pantano, a copy Chicago Police Department Case Incident Report RD

#HV579902, a copy of plaintiffs’ amended verified petition in the probate proceeding against

First Chicago and others, and a copy of a May 18, 2011, judgment order entered by the probate

court in favor of plaintiffs and against Gary Sasso in the amount of $271,299.25. 

The FDIC-C disallowed plaintiffs’ claim on February 13, 2013, determining that on

July 8, 2011, the date FDIC was appointed receiver of First Chicago, Marie Sasso had one

account titled Marie M. Sasso Trustee, Marie M. Sasso Trust DTD October 21, 2005. That

account had a balance of $513.36 at the time of the failure of First Chicago, and Marie M. Sasso

was the only signatory on the account. That account was subsequently transferred to the

Northbrook Bank & Trust Company under a Purchase and Assumption Agreement.

DISCUSSION

In this action, plaintiffs claim that FDIC-C should have credited the Account with the

$89,524.04 of improper and unauthorized debits from the Account for the purposes of

calculating the proper amount of deposit insurance. As the parties agree, deposit insurance

determinations are reviewable under the Administrative Procedure Act, 5 U.S.C. § 706. The

FDIC-C’s decision must be affirmed unless it is “found to arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with the law.” 5 U.S.C. § 706(2)(A); Nimon v.

Resolution Trust Corp., 975 F.2d 240, 244 (5th Cir. 1992). As noted by the court in Clancey v.

Office of Foreign Assets Control, 559 F.3d 595, 599 (7th Cir. 2009)(internal citations omitted):

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[The court’s] inquiry is searching and careful but the ultimate standard of review

is a narrow one. We must consider whether the [agency’s] decision was based on

a consideration of the relevant factors and whether there has been a clear error of

judgment but we may not substitute our judgment for that of the agency.

Review under this standard is highly deferential to the agency’s determination. Citizens

to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971). In conducting this review the

court must consider whether the agency followed its governing regulations, according “a great

deal of deference to the FDIC’s interpretation of what these regulations do and do not include

within their definition of deposit.” Raine v. Reed, 14 F.3d 280, 283 (5th Cir. 1994)(quoting

Federal Deposit Ins. Corp. v. Philadelphia Gear Corp., 476 U.S. 426, 438 (1986). 

When a bank fails and is closed, FDIC-C determines the existence of an insured deposit

based on the circumstances at the time of the bank’s closing. That determination is governed by

12 C.F.R. § 330.3(i)(1), which provides that “the amount of a deposit is the balance of principal

and interest unconditionally credited to the deposit account as of the date of default of the

insured depository institution . . ..” Thus, as FDIC-C argues, the depositor relationship depends

on the deposit shown in the bank’s books and records at that time. Raine, 14 F.3d at 283-84; In

re Collins Securities Corp. v. FDIC, 998 F.2d 551, 554-55 (8th Cir. 1993). 

In the instant case, there is no dispute that the $89,524.03 in disputed funds were “simply

not unconditionally credited” to the Account at the time First Chicago closed, leading FDIC-C to

determine that the funds were not covered by deposit insurance. Despite these undisputed facts,

plaintiffs argue that the disputed funds should be considered a “deposit” because First Chicago,

before it failed, improperly paid the checks upon presentment, and then refused to credit the

Account when informed of its error. According to plaintiffs, the documents presented to the

FDIC constitute “deposit records” under 12 C.F.R. § 330.3(h). Those records, according to

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plaintiffs, demonstrate that bank employees were negligent in paying the checks and FDIC is

mistaken in claiming that plaintiffs can rely on the bank’s records alone. To support this

argument, plaintiffs cite to an FDIC advisory opinion dated August 8, 1991, from Roger Hood,

Assistant General Counsel, entitled “Handling of Claims Where Depositor Alleges that Balance

of Account is Less Than it Should Be Due to Negligence or Willful Wrongdoing of Employee of

Insured Depository Institution.” In that opinion, Hood states:

Where there is convincing evidence that, due to the negligence or willful

wrongdoing of an employee of the failed insured institution, a depositor’s account

balance, as shown on the institution’s records, as less than it should be, then the

precepts of equity require, I think, that the depositor should be permitted to

include the amount of the deficiency in a claim for deposit insurance.

As FDIC-C notes, plaintiffs’ reliance on the advisory letter is misplaced. First, plaintiffs

have not directed the court to a single case that has cited, let alone relied on, the letter to

conclude that the FDIC-C’s reliance on the bank records at the time of its closing is arbitrary or

capricious. For good reason. The opinion was prepared by an FDIC attorney in response to a

specific inquiry and indicates that “our comments reflect an FDIC point of view and are offered

for informational purposes only.”

Moreover, as FDIC-C points out, the advisory opinion addresses only the situation in

which there is “convincing evidence” that the account is less than it should be due to the

negligence or willful wrongdoing of an employee of a failed institution.” In the instant case, the

alleged under balance is due to Gary Sasso’s forgeries. There is no evidence to suggest that a

First Chicago employee acted negligently or engaged in wilful wrongdoing. In a very similar

case the Fifth Circuit rejected the notion, advanced by the instant plaintiffs, that a depositor

should not be precluded from coverage by federal deposit insurance because of an error by the

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bank. The court noted that the fact that FDIC must “make determinations of deposit insurance

coverage overnight when it decides to enter into a Purchase and Assumption Transaction,”

justifies rules that allow it to rely upon the failed institution’s books and records.” Raine, 14

F.3d at 283. The reason is obvious. “Deposit insurance protects depositors from loss due to the

bank’s insolvency, not loss from the bank’s pre-insolvency mistakes.” In re Collins Securities

Corp., 998 F.2d at 554-55. 

Even when the bank has committed a mistake, courts have thus refused to alter the

requirement that deposits be on the books of the insolvent bank to be covered by deposit

insurance. Nimon, 975 F.2d at 246. “Deposit insurance simply does not cover losses such as

those claimed by Plaintiffs here, which relate to pre-insolvency actions of the failed bank.” Beck

Bus. Center Inc. v. Michigan Heritage Bank, 2010 WL 3075080 *5 (E.D. Mich. 2010). As the

Raine court stated, “[t]he regulations are clear and simple, either the amount is credited to the

account, in which case it is covered by deposit insurance, or the amount is not on the books, in

which case it becomes a general liability of the bank.” Raine, 14 F.3d at 284. In the instant

case, the amount was not credited to the Account and is not covered by deposit insurance. 

Consequently, defendant is entitled to summary judgment.

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CONCLUSION

For the reasons described above, plaintiffs’ motion for summary judgment (Doc. 33) is

denied and defendant’s motion for summary judgment (Doc. 35) is granted.

ENTER: February 7, 2014

__________________________________________

Robert W. Gettleman

United States District Judge

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