| In the Matter of
FRANK J. JESS
|
Docket No. 97-11-01-II |
This case is before the National Credit Union Administration (NCUA) Board for a final decision, following Administrative Law Judge (ALJ) Walter M. Alprin's issuance of a Recommended Decision: 1) prohibiting Frank J. Jess (Respondent) from further participation in any manner in the conduct of the affairs of any federally insured depository institution and any other institution, credit union, agency and entity referred to in 12 U.S.C. 1786(g); and 2) imposing a civil money penalty against Respondent in the amount of $100,000 pursuant to
12 U.S.C. 1786(k)(2)(B).
I. Procedural Background
On November 24, 1997, the NCUA Board issued a Notice of Charges
and Hearing for an Order to Prohibit, under 12 U.S.C. 1786(g),
against Respondent Frank J. Jess, former director of the United
Poles Perth Amboy Federal Credit Union (credit union), Perth Amboy,
New Jersey. A Notice of Assessment of Civil Money Penalty was
issued against Respondent at the same time. The Notices charged
that Respondent, while an official of the credit union, collected
fees in violation of NCUA Regulations, engaged in unsafe and unsound
practices, breached his fiduciary duty and exposed the credit
union to abnormal risk of loss. The case was submitted to the
Office of Financial Institution Adjudication and assigned to ALJ
Alprin.
A consolidated hearing on the two Notices was set for April 28,
1998. At the request of both parties, the hearing was continued
until May 20, 1998. On April 27, 1998, an order was issued providing
notice of the change in hearing date and location. Respondent
failed to appear at the hearing on May 20. Section 747.21 of
the NCUA Regulations (12 C.F.R. 747.21) addresses failure to appear
at a hearing:
Failure of a respondent to appear in person at the hearing
or by a duly authorized counsel constitutes a waiver of
respondent's right to a hearing and is deemed an
admission of the facts as alleged and consent to the
relief sought in the notice. Without further proceedings or
notice to the respondent, the administrative law judge shall
file with the NCUA Board a recommended decision
containing the findings and the relief sought in the notice.
On June 17, 1998, the ALJ issued a Recommended Decision based
on Respondent's failure to appear at the hearing. The Recommended
Decision is adopted and incorporated into this Decision and is
found at Appendix A. Pursuant to Section 747.21, the ALJ stated
that Respondent had waived his right to a hearing, deemed the
facts alleged in the Notices to be true and recommended the relief
sought in the Notices. The ALJ recommended prohibiting Respondent
from further participation in any manner in the conduct of the
affairs of any federally insured depository institution and any
other institution, credit union agency and entity referred to
in 12 U.S.C. 1786(g). The ALJ recommended imposing a civil money
penalty against Respondent in the amount of $100,000.
Upon issuance of his recommended decision, the ALJ certified the
record to the NCUA Board. 12 C.F.R. 747.38. The parties were
then given the opportunity to file exceptions to the recommended
decision. 12 C.F.R. 747.39. No exceptions were filed. By letter
dated July 27, 1998, the parties were notified that the proceeding
was submitted to the Board for final decision. 12 C.F.R. 747.40.
II. Factual Background
The facts, as alleged in the two Notices, are deemed to be true.
The Notices are incorporated into this Decision and are found
at Appendix B. Briefly, the facts are as follows. Respondent
was a director of the credit union for approximately twelve years.
He was removed by the credit union's board of directors in February
1993 for failure to attend three consecutive board meetings.
Respondent is also an attorney admitted to practice in the state
of New Jersey, where the credit union is located. Respondent
acted as both loan officer and settlement attorney for several
mortgage loans made by the credit union. Respondent collected
fees from borrowers on several of these mortgage loans. Respondent
was involved with credit union loan originating, processing, underwriting,
and recommendation for approval. Respondent's involvement in
specific lending transactions as well as general lending practices
that resulted in this enforcement action are set forth in the
Notices. As a result of Respondent's actions, the credit union
suffered a loss of $96,865.15.
Respondent's collection of fees as settlement attorney was in
violation of Section 701.21(c) of the NCUA Regulations. His involvement
in lending practices as set forth in the Notices constituted unsafe
and unsound practices, and was a breach of his fiduciary duty
to the credit union. Further, his actions caused more than a
minimal loss to the credit union and resulted in a his own pecuniary
gain. His actions involve personal dishonesty or demonstrate
his unfitness to participate in the affairs of an insured credit
union.
Section 206(g) of the FCU Act, 12 U.S.C. 1786(g) sets forth the
requirements for the NCUA Board to issue a prohibition from the
participation in the conduct of the affairs of the credit union.
In addition, Section 206(g) of the FCU Act imposes an industry-wide
prohibition upon one who has been prohibited from participating
in the conduct of the affairs of an insured credit union. Respondent's
actions have met the requirements of Section 206(g).
Section 206(k) of the FCU Act, 12 U.S.C. 1786(k) sets for the
requirements the NCUA Board to impose a civil money penalty.
Respondent's actions have met the requirements for a second tier
civil money penalty.
The ALJ concluded that Respondent, in failing to appear at the
scheduled hearing, waived his right to a hearing, admitted of
the alleged facts, and consented to the relief sought in the Notices.
The ALJ recommended the relief sought in the Notices. This Board
affirms the Recommended Decision of the ALJ and issues the following
two orders.
WHEREAS, on November 24, 1997, the National Credit Union Administration
issued a notice to prohibit Frank J. Jess ("Respondent"),
a former director, loan officer, and attorney of United Poles
Perth Amboy Federal Credit Union, from further participation in
the affairs of any federally insured financial institution; and
WHEREAS, Respondent failed to appear for the hearing, pursuant
to Section 206(g)(4) of the FCU Act, 12 USC 1786(g)(4), and Section
747.21 of the NCUA Rules and Regulations (12 C.F.R. 747.21), the
facts alleged are deemed admitted and the relief sought consented
to.
Pursuant to the authority vested in the National Credit Union
Administration Board by Section 206(g) of the FCU Act, 12 USC
1786(g), and in accordance with Part 747 of the NCUA Rules and
Regulations, IT IS HEREBY ORDERED that Respondent is prohibited
from further participation in any manner in the conduct of the
affairs of any federally insured credit union. Under Section
206(g)(7) of the FCU Act, Respondent may not, while such order
is in effect, continue or commence to hold any office in, or participate
in any manner in the conduct of the affairs of any institution
defined in that section. In accordance with Section 206(g)(4)
of the FCU Act, this order shall become effective thirty days
after service upon Respondent.
SO ORDERED, this 22nd day of October, 1998, by the National Credit
Union Administration Board.
_______________________
Becky Baker
Secretary, NCUA Board
WHEREAS, on November 24, 1997, the National Credit Union Administration,
pursuant to its authority in Section 206(k) of the FCU Act, 12
USC 1786(k), issued a notice of assessment of civil money penalty
in the amount of $100,000 (Notice) against Frank J. Jess (Respondent),
a former director, loan officer, and attorney of United Poles
Perth Amboy Federal Credit Union; and
WHEREAS, Respondent requested a hearing on the Notice pursuant
to Section 206(k)(2)(H) of the FCU Act, 12 USC 1786(k)(2)(H),
and failed to appear for the hearing, pursuant to Section 747.21
of the NCUA Rules and Regulations (12 C.F.R. 747.21), the facts
alleged in the Notice are deemed admitted and the relief sought
in the Notice consented to.
IT IS HEREBY ORDERED that Respondent is assessed a civil money
penalty in the amount of $100,000.
So ORDERED, this 22nd day of October, 1998.
________________________
Becky Baker
Secretary, NCUA Board
| In the Matter of
FRANK J. JESS
|
Docket No. 97-11-01-II |
RECOMMENDED DECISION
(Issued June 17, 1998)
On November 24, 1997, the National Credit Union Administration ("NCUA") issued a Notice of Charges and Hearing for an Order to Prohibit and Notice of Assessment of Civil Money Penalty against Frank J. Jess ("Jess" or "Respondent") under 12 U.S.C. § 1786(g) and (k)(2)(B) respectively. For the relevant time period, Respondent was an attorney, director, and loan officer for United Poles Perth Amboy Federal Credit Union in New Jersey ("United" or "Credit Union"). Jess is charged with acting in his own self-interest by participating in both sides of a transaction by making loans in his capacity as loan officer and then settling them as closing attorney. Agency also charges Respondent in part with improperly influencing the approval of loans, receiving fees or commissions in connection with the granting and closings of various loans, engaging in poor underwriting, and making risky loans with uncreditworthy borrowers. Accordingly, the NCUA is seeking to prohibit Jess from further participation and to impose an order assessing a Tier Two Civil Money Penalty in the amount of $100,000. Respondent failed to provide requested information regarding his financial condition though he orally agreed to do so.
The hearing in this matter was originally set for April 28, 1998. At the request of both parties, the hearing was continued to May 20, 1998, in New York City. An order issued April 27, 1998, providing Notice of Change In Hearing Date and Location. Agency Counsel represents that Respondent spoke with him personally by telephone the day before the start of the hearing and Jess confirmed that he had notice of the address of the courtroom and would be present the next day. TR 4 - 5. NCUA Counsel also represented that Respondent intended to consent to the charges in the Notice (TR 5) as Respondent had already advised the undersigned he would in previous telephone conferences. Respondent failed to appear for hearing on May 20, 1998.
Pursuant to 12 C.F.R. § 747.21, failure of Respondent to appear at hearing waives his right to a hearing, is deemed an admission of the alleged facts and constitutes a consent to the relief sought in the notice. Accordingly, the undersigned recommends the relief sought in the Notice against Respondent. By virtue of his failure to appear, the facts in the Notice are deemed to be true. Accordingly, Respondent engaged in unsafe or unsound practices and breached his fiduciary duty with United.
THEREFORE, TAKE NOTICE that the undersigned recommends prohibiting Respondent from further participation in any manner in the conduct of the affairs of any federally insured depository institution and any other institution, credit union, agency and entity referred to in 12 U.S.C. § 1786(g).
THEREFORE, ALSO TAKE NOTICE that the undersigned recommends the issuance of an order imposing a civil money penalty against Respondent in the amount of $100,000 under 12 U.S.C. § 1786(k)(2)(B).
By virtue of his failure to appear and through his express agreement, Respondent has consented to the finding of facts and conclusions of law in the Notice, attached hereto and made a part thereof, and has waived the right to appear at a hearing and contest the charges.
SO ORDERED.
Walter J. Alprin
Administrative Law Judge
Office of Financial Institution
Adjudication
| In the Matter of
FRANK J. JESS
|
Docket No. 97-11-01-II |
PROPOSED ORDER OF PROHIBITION
WHEREAS, on November 24, 1997, the National Credit Union Administration issued a Notice to Prohibit Frank J. Jess ("Respondent"), a former director, loan officer, and attorney of United Poles Perth Amboy Federal Credit Union in New Jersey from further participation in the affairs of any federally insured financial institution;
WHEREAS, Respondent failed to appear for the hearing and the charges are therefore deemed admitted;
WHEREAS, the Board having considered the Recommended Decision of the Administrative Law Judge;
IT IS HEREBY ORDERED, that Respondent be prohibited from further participation in any manner in the conduct of the affairs of any federally insured depository institution and any other institution, credit union, agency and entity referred to in 12 U.S.C. § 1786(g).
So Ordered this day of
, 1998.
Becky Baker
Secretary to the Board
I hereby certify that on June 17, 1998, I caused
a true copy of the above to be served on each of the following
by:
First Class Mail:
Becky Baker
Secretary to the Board of the
National Credit Union Administration
1775 Duke Street, 6th Floor
Alexandria, VA 22314
Federal Express:
Paul T. Sosnowski
Enforcement Counsel
Office of General Counsel
National Credit Union Administration
1775 Duke Street, 6th Floor
Alexandria, VA 22314
Federal Express and Certified Mail
Return Receipt Requested:
Frank J. Jess, Esq.
149 Kerny Avenue
Perth Amboy, New Jersey 08862
Charlene C. Pierce
Secretary to Judge Alprin