Former Head of Heritage Bank Sues FDIC
Charging that federal regulators have reneged on a 1983 immunity agreement, Douglas Patty, the ousted chairman of failed Heritage Bank, has filed a $54-million damage suit against the Federal Deposit Insurance Corp. in U.S. District Court in Los Angeles.
Patty claims that the FDIC, which sued him and other former officials of Anaheim-based Heritage earlier this year for negligence and breach of fiduciary duty, violated an agreement under which he agreed to leave Heritage in return for a promise that no further civil action would be taken against him by the FDIC over the bank’s then-growing financial problems.
Henry Rossbacher, an attorney representing the FDIC, said, however, that the 2-year-old deal with Patty was arranged by the agency’s regulatory division as an enforcement action to remove him from the positions that he held at the financially troubled bank.
In the FDIC’s March 15 suit against Patty and other Heritage officers, the FDIC bank liquidation division “is suing as the bank’s receiver (which is) a different legal entity,” Rossbacher said in a telephone interview Wednesday.
He declined to comment on the specific allegations in Patty’s suit.
An angry Patty said Wednesday that he does not buy that reasoning.
“I entered into an agreement with the FDIC in good faith. I agreed to step down,” he said. “If they would have been honest and up-front with me and told me that if the bank was closed that they planned to sue me with a different hat on, they would have had to come with the U.S. Army to get me out of that bank. I would have never resigned.”
Kenneth Ziskin, a Los Angeles banking attorney, said he does not believe that the FDIC’s action will have a chilling effect on bankers’ willingness to go along with regulatory orders.
“I don’t think this is the type of arrangement that is often found. . . . I don’t think it will be offered again,” he said.
Patty’s attorney, Steven Stanwyck, said his client is fighting the FDIC because he believed that he had settled all of his disputes with the agency when he signed the 1983 agreement.
“He resigned and in essence gave the FDIC everything they wanted without making them prove anything because he thought it would save the bank,” Stanwyck said. “After the agreement was made up, they said, ‘Mr. Patty, this is the end of the whole ordeal. . . . We hold you totally harmless,’ ” Patty said. “Little did I know that it was their plan to close that bank all along. . . . I’m going to fight to the very end.”