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Lindquist & Vennum v. FDIC

Lindquist & Vennum v. FDIC

United States Court of Appeals for the Eighth Circuit

October 21, 1996, Submitted ; January 8, 1997, Filed

No. 95-3203, No. 95-3226, No. 95-3256, No. 95-3284

Opinion

 [*1412]  PETITIONS FOR REVIEW OF FEDERAL DEPOSIT INSURANCE CORPORATION.

HEANEY, Circuit Judge.

Petitioners seek review of an order of the Federal Deposit Insurance Corporation (FDIC) prohibiting Richard D. Donohoo and Craig R. Mathies from further participation in the banking industry; directing all petitioners to cease and desist from violating the Change in Bank Control Act of 1978 (CBCA), 12 U.S.C. § 1817(j) (1988), and engaging in self-dealing and insider transactions; ordering the individual petitioners to pay civil monetary penalties for statutory and regulatory violations; and ordering petitioners to reimburse Capital Bank for legal fees paid to two law firms on behalf of the individual petitioners. Petitioners describe their activities as an honest effort to save Capital Bank through recapitalization. The FDIC characterizes the effort as a devious attempt to gain control of Capital Bank at the [**2]  expense of the majority shareholders in violation of the CBCA and Regulation O. Petitioners, who claim that the FDIC's determination was based on an improper interpretation of federal law and unsupported by the record, may be treated essentially as two sets of parties: five individuals who played various roles in Capital Bank and the sale of shares in the bank (individual petitioners); and two law firms that advised the individual petitioners in the sale of the Capital Bank shares and represented the bank in a subsequent lawsuit arising from the sale (law firm petitioners). We enforce the portion of the FDIC's decision and order that imposes sanctions on the individual petitioners for unsafe and unsound banking practices and that requires petitioner Rasmussen to pay the outstanding balance and interest on a loan from People's Bank. We modify the order as it applies to reimbursement to Capital Bank for legal fees in the Wenzel Lawsuit, and deny enforcement of the order as it applies the FDIC's cease-and-desist authority to the law firm petitioners.

I. STANDARD OF REVIEW

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103 F.3d 1409 *; 1997 U.S. App. LEXIS 203 **

Lindquist & Vennum, Petitioner, v. Federal Deposit Insurance Corporation, Respondent. Wayne Field, Petitioner, v. Federal Deposit Insurance Corporation, Respondent. Richard D. Donohoo, Craig R. Mathies, Cheryl C. Godbout-Bandal, Petitioners, v. Federal Deposit Insurance Corporation, Respondent. Bruce A. Rasmussen, Bruce A. Rasmussen & Associates, Ltd., Petitioners, v. Federal Deposit Insurance Corporation, Respondent.

Subsequent History:  [**1]  Rehearing and Suggestion for Rehearing En Banc Denied (95-3256, 95-3284) March 21, 1997, Reported at: 1997 U.S. App. LEXIS 5506. Certiorari Denied October 6, 1997, Reported at: 1997 U.S. LEXIS 4774.

Prior History: 92-249c&b.

Disposition: Order as it applies to reimbursement to Capital Bank for legal fees in the Wenzel Lawsuit modified and enforcement of order as it applies the FDIC's cease-and-desist authority to the law firm petitioners denied.

CORE TERMS

law firm, shares, lawsuit, violations, stock, unsound, unsafe, banking, Regulation, practices, loans, substantial evidence, legal fees, cease-and-desist, reimburse, parties, participated, knowingly, civil monetary penalties, act in concert, fiduciary duty, gain control, indemnification, recommendation, guaranties, recklessly, sanctions, investor, issuance, terms

Administrative Law, Judicial Review, Standards of Review, General Overview, Banking Law, Regulators, US Federal Deposit Insurance Corporation, Enforcement Powers, Civil Procedure, Appeals, De Novo Review, Reviewability, Factual Determinations, Agency Adjudication, Presiding Officers, Administrative Law Judges, Commercial Banks, Bank Expansions, Bank Creations & Reorganizations, Business & Corporate Compliance, Contracts Law, Types of Contracts, Guaranty Contracts, Business & Corporate Law, Shareholders, Meetings & Voting, Evidence, Inferences & Presumptions, Criminal Law & Procedure, Defenses, Reliance on Advice of Counsel, Directors & Officers, Conflicts of Interest, Duty of Care, Banking & Finance, Bank Activities, Bank Expenses & Income, Governments, Fiduciaries, Criminal Offenses, Bank Fraud, Penalties, Affiliated Parties, Federal Acts, Financial Institutions Reform, Recovery & Enforcement Act, Sentencing, Fines, Capital Punishment, Mitigating Circumstances, Duty of Loyalty, Indemnification, Agency Relationships, Duties & Liabilities, Indemnity