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[¶5275] In the Matter of Susan E. Maddocks, International Bank of Commerce,
Laredo, Texas, Docket Nos. 00-005e, 00-092k (10-7-03).
The Board of Directors of the FDIC issued an order of prohibition and
civil money penalty against Susan E. Maddocks, in the amount of
$15,000.
[.1] Default JudgmentEntry of Order
Respondent's default constitutes consent to entry of an order of
prohibition as well as a Civil Money Penalty assessment and waiver of
her right to contest the allegations.
[.2] Civil Money Penalties (CMP)Amount of penaltyStatutory factors
The amount of any penalty is determined by statutory factors.
[.3] Prohibition, Removal, or SuspensionBank Affairs, conduct of denied
Respondent is prohibited from participating in any manner in any
conduct of the affairs of any insured depository institution, agency or
organization.
[.4] Prohibition, Removal, or SuspensionVoting rights, exercise denied
Respondent is prohibited from exercising voting rights.
In the Matter of
SUSAN E. MADDOCKS
institution-affiliated party of
INTERNATIONAL BANK OF COMMERCE
LAREDO, TEXAS
(Insured State Nonmember Bank)
DECISION AND ORDER TO PROHIBIT FROM FURTHER PARTICIPATION AND ASSESSMENT OF CIVIL MONEY PENALTY
FDIC-00-005e;
FDIC-00-092k
I. STATEMENT OF THE CASE
This matter is before the Board of Directors ("Board")
following the issuance on April 10, 2003, of a Recommended Order of
Default ("Recommended Decision") by Administrative Law Judge
Ann Z. Cook ("ALJ"). The ALJ recommended that Susan E.
Maddocks ("Respondent") be subject to an order of prohibition
pursuant to section 8(e) of the Federal Deposit Insurance Act ("FDI
Act"), 12 U.S.C. §1818(e), and that a civil money penalty
("CMP") be imposed against her pursuant to section 8(i) of the
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FDI Act, 12 U.S.C. §1818(i), in the amount of $15,000.
This is an uncontested proceeding. The record shows that Respondent
received actual notice by personal service of the charges against her
as set forth in the FDIC's Notice of Intention to Prohibit from
Further Participation and Assessment of Civil Money Penalties, Findings
of Fact and Conclusions of Law, Order to Pay, and Notice of Hearing
("Notice"). Respondent failed to enter an appearance, file an
answer to charges, request a hearing, respond to an Order to Show Cause
or file exceptions to the Recommended Decision. For the reasons
discussed below, the Board adopts the Recommended Decision, as
supplemented, and issues an Order of Prohibition and Assessment of
Civil Money Penalty against Respondent.
BACKGROUND
On December 19, 2002, the FDIC issued the Notice against
Respondent pursuant to sections 8(e) and 8(i) of the FDI Act, 12 U.S.C.
§§ 1818(e) and (i)(2). Respondent, a collections teller at the
International Bank of Commerce, Laredo, Texas ("Bank"), was
charged with engaging in unsafe and unsound banking practices which
caused losses to the Bank. In addition, the Notice charged that by
engaging in the unsafe and unsound banking practices described therein,
Respondent demonstrated personal dishonesty and/or willful or
continuing disregard for the safety and soundness of the Bank.
Specifically, the Notice charged that during the periods September
through November 1998, Respondent engaged in a series of sham
transactions which benefited certain Bank customers who operated
used car businesses. Respondent's alleged misconduct, which
involved more than 70 transactions and resulted in losses to
the Bank in excess of $1 million, included issuing unfunded cashiers
checks, honoring checks from customers who she knew had insufficient
funds to cover the amounts in questions, and releasing title to 62
vehicles knowing that payment for the vehicles was not sufficiently
funded.1 Notice ¶ ¶ 15-38.
The FDIC employed the services of a process server, Larry Sparkman
("Sparkman"), to effect service of the Notice on Respondent. On
January 24, 2003, Sparkman personally served Respondent at her
residence. Enf. Brief, Exh. A. The Notice directed Respondent to file
an answer and request for a hearing within twenty days from the date of
service, as required by section 308.19 of the FDIC's Rules of Practice
and Procedure ("FDIC's Rules"), 12 C.F.R. §308.19.
Respondent's answer and request for hearing were due on or before
February 13, 2003. Respondent never responded in any manner to the
Notice. R.D. at 1.
On March 7, 2003, FDIC Enforcement Counsel ("Enforcement
Counsel") moved, pursuant to section 308.19 of the FDIC's Rules,
for Entry of Default Judgment ("Enforcement Counsel's
Motion").2 Respondent again failed to respond. On March
11, 2003, the ALJ issued an Order to Show Cause ("Show Cause
Order") directing that Respondent respond to the Notice by April 2,
2003 and to show good cause for having failed to do so previously. The
Show Cause Order also provided that unless Respondent submitted a
response by the April 2, 2003 deadline, a default order would be
entered against her granting the relief requested in the
Notice.3 In the absence of a response to any of these
documents, the ALJ, on April 10, 2003, granted Enforcement Counsel's
Motion and issued the Recommended Decision.
Discussion
The Board concurs in and adopts the ALJ's Recommended Decision,
as supplemented by the discussion below. The record reflects that
Respondent received actual notice of the proceedings through personal
service of the Notice. Although she was served personally, she failed
to respond to the Notice, to Enforcement Counsel's Motion and to the
1 Citations to the record shall be as follows:
Notice "Notice ¶ ____"
Recommended Decision "R.D. at ____"
FDIC Enforcement Counsel's Brief in Support of Motion for Default
Judgment "Enf. Brief, Exh. ____".
2 Section 308.19(c)(1) of the FDIC's Rules
provides that when a respondent fails to timely answer a notice,
Enforcement Counsel may move for entry of default judgment which shall
be issued by the ALJ upon a finding that no good cause has been shown.
Section 308.19(c)(2) of the FDIC's Rules provides, in connection with
CMP proceedings, that unless a respondent files a request for a hearing
within 20 days of service of the notice, the assessment is final and
unappealable.
3 Enforcement Counsel's Motion and the ALJ's
Show Cause Order were served on Respondent at her personal residence,
thus satisfying the requirements of the FDIC's Rules governing method
of service upon a party who has not entered an appearance. 12 C.F.R
§308.11(b) and (c)(2).
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Show Cause Order. As described in the record, her conduct clearly
indicates an intentional and willful disregard of the FDIC's
procedural requirements. As such, default judgment is warranted.
In the Matter of Raymond M. Phillips, FDIC Enforcement
Decisions and Orders, ¶ 5232, A-2759 (1996), 1996 WL 281984, at *2;
In the Matter of Hiram L. Fong, FDIC Enforcement Decisions
and Orders, ¶ 5230, at A-2749 (1995), 1995 WL 810685, at *2.
[.1] Respondent's default constitutes consent to entry of an order of
prohibition as well as a CMP assessment and a waiver of her right to
contest the allegations in the Notice under section 308.19 of the
FDIC's Rules. In the Matter of Kevin L. Jensen, FDIC
Enforcement Decisions and Orders ¶ 5240, A-2808 (1996), 1996 WL
768366, at *4.4 Moreover, because Respondent has failed to
file exceptions to the Recommended Decision pursuant to section 308.39
of the FDIC's Rules, 12 C.F.R. §308.39, she is now barred from
challenging any aspect of the ALJ's Recommended Decision, including
the CMP assessment. In the Matter of Chul Song, FDIC
Enforcement Decisions and Orders, ¶ 5214, A-2445 (1994), 1994 WL
328058, at *2; In the Matter of Kevin L. Jensen, ¶ 5240,
A-2808 (1996), 1996 WL 768366, at *4; In the Matter of Raymond M.
Phillips, ¶ 5232, A-2759 (1996), 1996 WL 281984, at *2.
[.2] After reviewing the record in this case, the Board has determined that
the Recommended Decision should be supplemented with respect to the CMP
assessment. Because the Recommended Decision did not address
specifically the factors set forth in the statute governing assessment
of civil money penalties, the Board will briefly do so now. In
determining the amount of any penalty, section 8(i)(2)(G) of the FDI
Act, 12 U.S.C. §1818(i)(2)(G), requires consideration of the size of
financial resources and good faith of the person charged; the gravity
of the violations; the history of previous violations; and such other
matters as justice may require. As for the size of Respondent's
financial resources, Respondent has not offered any materials to assist
the agency in its determination. Regarding the "good faith"
factor above, the uncontested findings of fact set forth in the Notice
demonstrate that Respondent over a two-month period in 1998 engaged in
dozens of transactions constituting unsafe and unsound business
practices and showing her personal dishonesty and/or willful or
continuing disregard for the safety and soundness of the bank. Notice
¶¶ 15-38. The repeated nature of Respondent's misconduct,
accompanied by her failure to present any explanation for her actions,
precludes a finding that she acted in good faith. As is clear from the
record, the gravity of Respondent's misconduct was serious enough to
cause losses to the Bank in excess of $1 million. Notice ¶ 40.
Although the record does not indicate a history of prior misconduct,
the serious nature of Respondent's activities is such that the Board
concludes that a CMP far in excess of the $15,000 assessed would have
been justified in light of the factors specified by the statute, and so
adopts the $15,000 CMP actually assessed here.
Conclusion
After a thorough review of the record in this proceeding, the
Board, for the reasons set forth above, adopts the Recommended Decision
as supplemented, incorporates herein the Findings of Fact and
Conclusions of Law set forth in the Notice and issues the following
order implementing its decision.
ORDER TO PROHIBIT
The Board of the FDIC, having considered the entire record of this
proceeding and finding that Respondent Susan E. Maddocks, formerly
employed as a collections clerk by the Bank, engaged in unsafe or
unsound banking practices causing financial loss to the Bank, and that
her actions involved personal dishonesty and willful and continuing
disregard for the safety and soundness of the Bank, hereby ORDERS and
DECREES that:
[.3] 1. Susan E. Maddocks shall not participate in any manner in any conduct
of the affairs of any insured depository institution, agency or
organization enumerated in section 8(e)(7)(A) of the FDI Act, 12 U.S.C.
4 This case clearly is distinguishable from
Amberg, et al. v. FDIC, 934 F.2d 681 (5th Cir. 1991), and
Oberstar v. FDIC, 987 F.2d 494 (8th Cir. 1992), in which
default judgments were overturned where the courts found that
respondents' failure to comply with the FDIC's Rules was merely
technical and that the respondents had taken steps indicating an
intention to contest the charges against them. Here, no intention to
contest or otherwise comply with the procedural requirements has been
shown by Respondent and, as such, a default order is appropriate.
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§1818(e)(7)(A), without the prior written consent of the FDIC and
the appropriate federal financial institutions regulatory agency as
that term is defined in section 8(e)(7)(D) of the FDI Act, 12 U.S.C.
§1818(e)(7)(D).
[.4] 2. Susan E. Maddocks shall not solicit, procure, transfer, attempt to
transfer, vote, or attempt to vote any proxy, consent or authorization
with respect to any voting rights in any financial institution, agency,
or organization enumerated in section 8(e)(7)(A) of the FDI Act, 12
U.S.C. §1818(e)(7)(A), without the prior written consent of the FDIC
and the appropriate federal financial institutions regulatory agency,
as that term is defined in section 8(e)(7)(D) of the FDI Act, 12 U.S.C.
§1818(e)(7)(D).
3. Susan E. Maddocks shall not violate any voting agreement with
respect to any insured depository institution, agency, or organization
enumerated in section 8(e)(7)(A) of the FDI Act, 12 U.S.C.
§1818(e)(7)(A), without the prior written consent of the FDIC and
the appropriate federal financial institutions regulatory agency, as
that term is defined in section 8(e)(7)(D) of the FDI Act, 12 U.S.C.
§1818(e)(7)(D).
4. Susan E. Maddocks shall not vote for a director, or serve
or act as an institution-affiliated party, as that term is defined in
section 3(u) of the FDI Act, 12 U.S.C.§1813(u), of any insured
depository institution, agency, or organization enumerated in section
8(e)(7)(A) of the FDI Act, 12 U.S.C. §1818(e)(7)(A), without the
prior written consent of the FDIC and the appropriate federal financial
institutions regulatory agency, as that term is defined in section
8(e)(7)(D) of the FDI Act, 12 U.S.C. 1818(e)(7)(D).
5. This ORDER shall be effective thirty (30) days from the date of its
issuance.
ORDER TO PAY CIVIL MONEY PENALTY
The Board, having considered the entire record in this proceeding,
and taking into account the appropriateness of the penalty with respect
to the size of the financial resources and good faith of Respondent,
the gravity of the violations and such other matters as justice may
require, hereby ORDERS and DECREES that:
1. A civil money penalty is assessed against Susan E. Maddocks in the
amount of $15,000 pursuant to 12 U.S.C. §1818(i).
2. This ORDER shall be effective and the penalty shall be final and
payable thirty (30) days from the date of its issuance.
The provisions of these ORDERS will remain effective and in force
except to the extent that, and until such time as, any provision of
these ORDERS shall have been modified, terminated, suspended, or set
aside by the FDIC.
IT IS FURTHER ORDERED that copies of this Decision and Orders shall be
served on Susan E. Maddocks, Enforcement Counsel, the ALJ, and the
Banking Commissioner for the State of Texas.
By direction of the Board of Directors.
Dated at Washington, D.C., this 7th day of October, 2003.