Banks and Banking Chairman Named in $14 Million Bank Failure Suit

Montgomery Bank & Trust was closed by the Federal Deposit Insurance Corporation (FDIC) back in 2008-2009’s difficult financial times and now, 11 defendants and former bank directors – including State Representative and Chairman of the Banks and Banking Committee Greg Morris – are facing a hefty lawsuit.

The FDIC’s insurance agency with the help of attorney’s Todd M. Baiad and Lucas D. Bradley filed suit in U.S. District Court in Dublin last week. The lawsuit comes on the heels of the conviction of Aubrey Lee Price, director of the bank and person directly responsible for misappropriated funds who also faked his own death during the crisis. He has already pleaded guilty and will serve 70 years in federal prison.

The defendants are named for failing to comply with an FDIC order, with bank policies, are said to have enabled Price to commit the crimes. The lawsuit alleges  “negligence, gross negligence and breaches of fiduciary duty allowed … Price to misappropriate $14,700,000 … between January 2011 and May 2012.”

If the board had “met their obligations, and adhered to Georgia banking regulations” and the bank’s own investment policy, “Price’s misappropriations would not have occurred and … losses would have been avoided.”

Price controlled an account – PFG, LLC. – and moved bank funds there through 17 wire transfers which were intended for United States Treasury Securities investment purchases. But that never happened.

The lawsuit alleged that Price lost the majority of the misappropriated $14,700,000 in high-volume trading in risky securities. The rest was used to pay off investors and to finance his personal and business expenses. (When the money ran out, he left signs that he had committed suicide and was later declared dead in 2013. Not long after, he was stopped by law enforcement on I-95 in Glynn County.)

The FDIC is now requesting a trial by jury and a monetary judgement for $14,700,000 as well as interest and court costs.

What that means for Morris’ Chairmanship remains to be seen.

3 comments

  1. xdog says:

    Thanks for posting, Jessica. I thought I was the only one here interested in the FDIC’s suit.

    Morris should step down but he won’t. I bet half his constituents and none of his colleagues are at all concerned.

    Here are a couple of relevant pp posts from three years ago:
    http://www.peachpundit.com/2012/07/08/house-banking-committee-chair-joins-his-senate-counterpart-in-the-fdic-spotlight/
    http://www.peachpundit.com/2012/07/12/banking-committee-chairs-resist-calls-to-step-down/

    btw, I hope Bill Dawers is OK and just lost interest in posting. He was always an interesting and informative read.

    • Dave Bearse says:

      Don’t hold you breath on Morris. Jack Murphy remained Senate Banking Chairman for two years after the FDIC went after him.

      +1 on Dawers. Maybe he’s just taking a break.

  2. saltycracker says:

    I miss Calypso…….posters change but arrogant/amoral legislators and other elected involved with banks don’t.

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