DENVER (AP) — Federal regulators have filed a lawsuit against former executives at United Western Bank, blaming them for more than $76 million in questionable loans that helped push the bank toward collapse.
The six former officers and three ex-directors served on two key loan-approving committees that granted at least 17 business loans between 2006 and 2009. The Federal Deposit Insurance Corp. said those loans were too risky and should not have been granted.
All 17 loans defaulted, according to the lawsuit filed Friday in U.S. District Court in Denver.
Despite emails expressing a growing concern about real estate markets that were just beginning to collapse, officers and board members at the time pressed on with efforts to divest the bank from residential mortgages and move into higher-risk commercial real estate loans, the Denver Post reported Wednesday (http://tinyurl.com/kjaekg9).
The former officers named in the lawsuit are vice president Anthony Codori, chief credit officer Gary Petak, chief financial officer William Snider, senior vice president of credit administration Cindy Sterett, vice president John Umbaugh and CEO Scot Wetzel, who was also the United Western Bank's board chairman.
The former board members named as defendants are James Bullock, Charles Berling and Bernard Darre.
Messages left for the former executives who could be located weren't returned. No attorneys were listed in court records yet.
In all, the officers lent more than $76 million to questionable projects. They included a $15 million deal for a polo-club residential development in Parker; an $11.25 million refinancing deal for a group of four Christian-themed radio stations in Detroit, New Orleans and Phoenix; and a $12 million real estate development loan in Breckenridge.
The Office of Thrift Supervision closed United Western Bank in January 2011, and the FDIC was named its receiver, ending the $2 billion thrift's long struggle to raise capital after several warnings from regulators.
It was assumed by First-Citizens Bank & Trust Co. of Raleigh, N.C., which reopened United Western Bank's eight branches as First-Citizens.
The FDIC has filed 84 such lawsuits since 2009 against more than 600 people, according to the agency's website.
United Western Bank has been embroiled in a number of related lawsuits since its demise, including one in which the former officers sued regulators, claiming the takeover was arbitrary and that the bank wasn't given enough time to recover.
That lawsuit was dismissed, and the bank's holding company, United Western Bancorp, went bankrupt in March 2012 and dropped its appeals in June.
Information from: The Denver Post, http://www.denverpost.com