Ousted Anaheim banker Gerald J. Garner has been plotting his counterattack against federal regulators who seized his American Commerce National Bank and has been trying to rally both shareholders and depositors to join him in suing the government.
His lawyer, Frank P. Barbaro of Santa Ana, said that the bank was in good financial shape and that no one knew anything different. Minority shareholders and clients with deposits exceeding the insured amount of $100,000 for each account holder certainly had no inkling that the institution had problems, as they have known in all previous bank failures, he said.
But at least one major depositor, Old Republic Title Co., isn't buying into Garner's plans.
The San Francisco company, caught with more than $1 million in uninsured deposits, has filed a federal fraud and racketeering lawsuit against Garner and other directors and officers of the failed bank.
The suit, filed in U.S. District Court in Los Angeles, tracks some of the allegations made by the federal Office of the Comptroller of the Currency in taking over the bank on April 30. The FBI also has opened a criminal fraud investigation.
Old Republic accuses Garner and others of deceiving the title company by asserting that the bank was healthy when it was really insolvent. It also says the bank had a high level of bad loans, granted insiders preferential loans, falsified and concealed documents, and faced intense scrutiny from regulators.
The title company needed a healthy bank because each account it opened typically had well over the $100,000 insured limit. In the two years before regulators closed the bank, Old Republic's Orange County office opened nearly two dozen escrow accounts at American Commerce.
Since the takeover, federal regulators have refunded 59 cents on the dollar for all uninsured deposits, lowering Old Republic's claim for damages to $420,000.
Garner could not be reached for comment.