Opinion ID: 566084
Heading Depth: 3
Heading Rank: 3

Heading: C & D Compliance

Text: 18 The petitioners contend they complied with the C & Ds and should not be subject to civil money penalties. The FDI Act provides that any officer, director, ... or other person participating in the conduct of affairs of an insured institution who violated the terms of a C & D issued by a federal banking agency shall forfeit and pay a civil penalty of not more than $1,000 per day for each day during which such violation continues. 12 U.S.C. Sec. 1818(i)(2)(i). To assess a penalty, the agency only must establish an individual's violation of an agency order. Fitzpatrick v. FDIC, 765 F.2d 569, 578 (6th Cir.1985). 19 The ALJ found the petitioners failed to submit a viable plan to reimburse EVCO and SSBC and failed to divest those companies' investment options. There is substantial evidence in the record supporting these findings. The petitioners submitted the first plan for compliance with the C & Ds on August 23, 1985, over a week later than the C & D deadline, and this plan was rejected by the Board. They submitted another plan to the Board in October 1985 that also was rejected. A third plan was submitted in October 1986. Because that plan was not submitted in complete form, it did not receive the Board's approval. The petitioners failed to submit timely plans as contemplated by the C & Ds. They did not make the required reimbursements, divestitures, and compliance reports. Additionally, the record shows the petitioners violated the EVCO C & D by increasing EVCO's outstanding debt, violated the SSBC C & D by paying Edmiston's travel expenses in 1986, and violated the individual C & Ds by failing to submit individual quarterly compliance reports. 20 The petitioners argue they complied with the C & Ds by submitting the proposals and that any failure to further comply resulted from delay in response, lack of guidance, and bad faith on the part of the Reserve Bank. The language of the C & Ds, however, supports the Board's conclusion that responsibility for failure to comply rests entirely on the petitioners. The duties of the petitioners to submit plans by August 15, 1985 and to reimburse and divest by September 30, 1985 are mandatory. The discussion regarding Reserve Bank comment and approval, however, is discretionary. Nothing in the C & Ds or the record demonstrates the petitioners' duty to comply hinges on agency action. 21 The petitioners also argue any noncompliance with the C & Ds should be excused because the agency fraudulently induced their consent to the C & Ds based on the petitioners' understanding that criminal charges against them would not be pursued. The record shows no discussion between the petitioners and the Board regarding criminal referral for the petitioners' conduct. The Board's statement that the agency's intention in seeking the orders was remedial and not punitive does not amount to fraudulent misrepresentation by the Board. This statement refers only to the C & Ds and could not reasonably be construed to be a broader grant of immunity from criminal prosecution. 22 Finally, Davis suggested for the first time in oral argument that because he did not sign the SSBC C & D, he is not required to comply. Davis failed to raise this objection with the Board during the fifteen day time period, and therefore waived it. Even if Davis' objection were not waived, it is without merit. The SSBC C & D named Davis as a director and was signed by Edmiston, a corporate officer. Moreover, Davis concedes and the record shows he had notice of the terms of that C & D. Davis was therefore responsible in his capacity as an officer of SSBC for compliance with this C & D.