Jury Enters $168.8 Million Verdict Against Former IndyMac Executives

Jury Enters $168.8 Million Verdict Against Former IndyMac Executives

LOS ANGELES - (Mealey's) A jury in a California federal court on Dec. 7 entered a $168.8 million verdict against three former officers of the failed IndyMac Bank F.S.B., finding that the individuals had been negligent and breached their fiduciary duties with respect to 23 loans at issue in the suit, brought by the Federal Deposit Insurance Corp. as the receiver for IndyMac (Federal Deposit Insurance Corp., as receiver for IndyMac Bank, F.S.B., v. Scott Van Dellen, et al., No. 10-4915, C.D. Calif.).

The jury in the U.S. District Court for the Central District of California found against former IndyMac Homebuilder Division (HBD) President and CEO Scott Van Dellen, Chief Lending Officer Richard Koon and Chief Compliance Officer Kenneth Shellem.

The FDIC filed its complaint on July 2, 2010, alleging that the defendants were negligent and breached their fiduciary duty in providing risky home builder loans to nonpublic regional builders.

'Disregarded Credit Policies'

According to the FDIC, the defendants "repeatedly disregarded HBD's credit policies and approved loans to borrowers who were not credit worthy and/or for projects that provided insufficient collateral" and "continued to follow a strategy of growth at the tail-end of the longest appreciating real estate market in over four decades."

The jury found Van Dellen liable for all 23 loans, Shellem liable for 18 of the loans and Koon liable for 14 of the loans.

At the time of its 2008 closing, IndyMac had assets of about $32 billion, making it the fifth-largest American bank failure.

The complaint also named as a defendant former HBD Chief Lending Officer William Rothman, who subsequently settled with the FDIC and was dismissed from the suit on Nov. 1.

Attorneys

The FDIC is represented by David Joseph Farkas, David Graeler, Jennifer L. Meeker and Thomas D. Long of Nossaman in Los Angeles and Patrick J. Richard and Veronica L. Harris of Nossaman in San Francisco.

Van Dellen is represented by Amir Kaltgrad, Damian J. Martinez, Jessica L. Tulk, Michael W. Fitzgerald and Robert L. Corbin of Athey & Martinez in Los Angeles, Eric L. Dobberteen of Clark and Trevithick in Los Angeles and Kirby D. Behre of Paul Hastings Janofsky & Walker in Los Angeles.

Koon and Shellem are represented by Behre and by Erin E. Klisch, Igor Victor Timofeyev, Lauren Briggerman and Mary Elizabeth M. Hadley of Paul Hastings in Washington, D.C., and Jenifer Q. Doan, John S. Durrant and Joshua G. Hamilton of Paul Hastings in Los Angeles.

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