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FDIC Enforcement Decisions and Orders |
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Board adopts ALJ's Recommended Decision finding that Respondent's answer to a notice of assessment of a civil money penalty was untimely filed, and that he did not establish good cause for his failure to file a timely answer. Respondent ordered to pay $125,000 for violations of Change in Bank Control Act. [This order was reversed, along with the order at ¶5171, by the 8th Circuit Court of Appeals, 987 F.2d 494 (3-2-93).]
[.1] Practice and Procedure Civil Money Penalty Answer Time to File
[.2] Civil Money Penalty Notice of Assessment Good Cause for Failure to Answer
In the Matter of
This matter is before the Board of Directors ("Board") of the Federal Deposit Insurance Corporation ("FDIC") following the issuance of a Recommended Decision by Administrative Law Judge Arthur L. Shipe ("ALJ").1The ALJ's Recommended Decision found that the answer of Respondent Paul E. Oberstar ("Respondent") was untimely filed and that Respondent failed to establish good cause for his failure to file a timely answer. The ALJ therefore recommended the issuance of an order to pay a civil money penalty in accordance with the Notice of Assessment of Civil Money Penalty, Findings of Fact and Conclusions of Law, Order to Pay, and Notice of Hearing ("Notice") which had been issued to Respondent on December 31, 1991, pursuant to sections 7(j)(16) and 8(i)(2) of the Federal Deposit Insurance Act ("FDI Act"), 12 U.S.C. §1817(j)(16) and 12 U.S.C. §1818(i)(2).
The case before the Board is the second enforcement action against Respondent taken by the FDIC. Argument was held on June 8, 1992, in the Court of Appeals for the Eighth Circuit on Respondent's petition for review of the Order of the FDIC Board prohibiting Respondent from further participation in the conduct of the affairs of any insured depository institution ("Oberstar I").2In Oberstar I Respondent was represented by the same counsel representing him in this proceeding ("Oberstar II"). Respondent filed a timely request for a hearing and a timely answer in Oberstar I. Resp. Exceptions at 2.
[.1] The Board and both parties recognize that under the Uniform Rules of Practice and Procedure governing this proceeding (12 C.F.R. §308.19), where a timely request for a hearing has been made, a Respondent's failure to file a timely answer does not trigger an automatic default judgment.3See Resp. Exceptions at 6. Rather, the Board must consider whether Respondent has made a showing of good cause for his failure to file a timely answer. Had Respondent not preserved his right to proceed by filing a timely request for a hearing, the Notice would have become a final and un-appealable order. 12 U.S.C. §1818(i)(2). It is only because a hearing request was timely filed that the issue of good cause for failing to file a timely answer is before is before the Board. In the absence of good cause, an entry of a default order is appropriate as the FDIC's Rules provide:
[.2] First, Respondent's counsel claims that "since the assignment and hearing process in these matters is usually somewhat lengthy, and because [Respondent's counsel] deemed it likely that this matter would in all probability be continued to permit the Eighth Circuit to rule, an Answer seemed to be an unnecessary expense." Resp. Exceptions at 34; Bonner Affidavit at ¶5. The Board is at a loss to discern why or how Respondent's counsel "deemed it likely" that this matter would be continued to permit the Eighth Circuit to rule in Oberstar I. Only Respondent had an interest in such a continuance, and Respondent never requested a continuance or a stay of any kind. Obvi-
For the reasons set forth above, the Board adopts and incorporates the Findings of Fact and Conclusions of Law of the ALJ and enters the following Order to Pay ("Order").
The Board of the FDIC, has considered the entire record in this proceeding, including the ALJ's Recommended Decision and Order and Exceptions to the Recommended Decision filed by Respondent. It hereby adopts the recommendation of the ALJ that based upon Respondent's failure to provide good cause for the untimely filing of his answer in this proceeding, the Default Motion of FDIC Enforcement Counsel should be granted and an order to pay civil money penalty should be issued against Respondent.
In the Matter of
This matter comes before me on the FDIC's Motion for Entry of Order of Default ("Default Motion"), filed by its Enforcement Counsel. On December 31, 1991, the Federal Deposit Insurance Corporation ("FDIC") issued a Notice of Assessment of Civil Money Penalty, Findings of Fact and Conclusions of Law, Order to Pay and Notice of Hearing ("Notice") against Paul E. Oberstar ("Respondent") pursuant to sections 7(j)(16) and 8(i)(2) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. § 1817(j)(16) and 12 U.S.C. §1818(i)(2).
1. Prior to its closing on November 30, 1990, the Bank was a corporation existing and doing business under the laws of the State of Minnesota with its principal place of business at Ely, Minnesota. At all times pertinent to this proceeding, the Bank was and had been a State nonmember bank within the meaning of section 3(e)(2) of the Act, 12 U.S.C. §1813(e)(2), an insured depository institution within the meaning of section 3(c)(2) of the Act, 12 U.S.C. §1813(c)(2), and subject to the Act, 12 U.S.C. §1811-1831l, the Rules and Regulations of the FDIC, 12 C.F.R. Chapter III, and the laws of the State of Minnesota.
5. On April 28, 1989, Respondent and James H. Peterson submitted to the FDIC a Notice of Acquisition of Control concerning the Bank, under section 7(j) of the Act, 12 U.S.C. §1817(j), which was accepted as complete on or about May 17, 1989.
10. At all times pertinent to this proceeding, the Bank had 65,000 shares of voting common stock outstanding.
16. On September 26, 1988, the FDIC issued a final Order of Prohibition, FDIC-88-100e, against Craig Kronholm, which became effective October 6, 1988, and, among other things, prohibited Mr. Kronholm from directly or indirectly soliciting or procuring, or transferring or attempting to transfer, or voting or attempting to vote, any proxies, consents or authorizations in respect of any voting rights in the Bank.
IT IS ORDERED that a default order is hereby entered against the Respondent in this proceeding. |
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Last Updated 6/6/2003 | legal@fdic.gov |
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