Opinion ID: 3009588
Heading Depth: 2
Heading Rank: 7

Heading: The Director's Decision

Text: Seidman and Bailey sought the Director's review of the ALJ's recommended decision and asked for oral argument. The Director denied the request for argument and issued a decision on December 4, 1992, finding against Seidman and issuing the Removal and Prohibition Order the ALJ had recommended. The Director determined, however, that the record was not sufficient to support the recommended civil penalty of $930,000 against Seidman and remanded the case to the ALJ to take further evidence concerning Seidman's ability to pay.16 The Director also agreed with the ALJ's recommended findings of fact and conclusions of law as to Bailey and entered a Permanent Cease and Desist Order, but he disagreed with the ALJ's conclusion that no civil penalties were warranted against Bailey and sent Bailey's case back for further fact finding on money penalties. In support of his order removing Seidman and banning him from banking, the Director found Seidman engaged in self16 . On January 15, 1993, Seidman challenged the legality of the remand by filing a motion with the Director to stay further proceedings before the ALJ. He also sought a stay from this Court. We denied Seidman's request for a stay without stating whether our denial was on the merits or because Seidman had failed to exhaust his administrative remedies. The motion before OTS remained undecided at the time Seidman filed his opening brief in this Court (March 1993). We have not been advised of any subsequent action. interested conduct by insinuating to UJB that a release from his FSA guarantee would cause Crestmont to provide end-user financing for FSA's Boonton project. The Director also found that Crestmont unlawfully made a loan commitment to Levine while Seidman was still a partner in FSA. Finding these acts of selfdealing were never disclosed to Crestmont's Board or the Senior Loan Committee, the Director held Seidman breached his fiduciary duties to Crestmont. The Director also held Seidman violated OTS's conflict of interest provision, 12 C.F.R. § 571.7(b), and sought to benefit personally from these acts through the release from his FSA guarantee. The Director independently held that Seidman's attempt to destroy evidence and cover-up his activities during the investigation violated section 1818(e)(1). He found the attempted cover-up, which involved giving misleading testimony, destroying the original record of the fax of the early draft of Risko's letter from Seidman to Risko and requesting that Risko forget about the letter, inter alia, constituted an unsafe or unsound practice. The Director concluded that these acts established personal dishonesty within the meaning of section 1818(e)(1)(C)(i) and conferred a personal benefit on Seidman within the meaning of section 1818(e)(1)(B)(iii). The Director also held Bailey had engaged in an unsafe and unsound banking practice. He found Bailey knew of Seidman's interest in FSA, failed to disclose it to the Board of Directors or the Senior Loan Committee and issued a commitment letter for the Levine loan before Seidman withdrew from FSA. The Director concluded this created an abnormal risk of loss to Crestmont and that a cease and desist order was appropriate under section 1818(b). Seidman App. at 121.