FDIC Is Seeking to Triple Damages in Heritage Suit
The Federal Deposit Insurance Corp. is seeking to triple the amount of damages that it can collect from former officers and directors of the failed Heritage Bank of Anaheim.
In an amended complaint filed in Orange County Superior Court late Thursday, the FDIC requested at least $150 million in damages from Heritage’s principals. The latest complaint also named additional defendants--including the 85-year-old mother of Heritage’s ousted chairman, Douglas Patty--and added charges of fraud and attorney malpractice.
The agency’s original suit, filed on March 15, asked for $54 million in damages, alleging negligence and breach of fiduciary duty on the part of Patty and others.
“The amended complaint was filed as a result of the continuing investigation into the circumstances we believe led to the failure of Heritage Bank,” said Richard Osborn, an attorney representing the FDIC. “As a result of that investigation, we concluded that there is cause to believe that certain additional people are liable, and we have discovered sources of damages that were not previously alleged.”
Heritage, which had four offices and $161 million in deposits, was declared insolvent and closed by regulators in March, 1984, after a two-year struggle with mounting problem real estate loans.
The newly named defendants in the complaint include Orange Coast Savings & Loan Assn., where Patty was a director; several companies allegedly controlled by Patty; a number of law firms that represented Heritage, including the Los Angeles firm of Cohen & Ziskin and Knecht & Donahue of Newport Beach, and Patty’s mother, Alice.
Asked why Mrs. Patty had been named, the FDIC attorney simply referred to the language in the filing, which states that she is “a person who engaged in numerous transactions with Heritage Bank during the course of which Douglas Patty often acted for his mother pursuant to power of attorney. Alice Patty was also a stockholder of Heritage Bank.”
“I will not be scared off by their going into court on new, so-called charges,” Douglas Patty said Friday. “Suing my corporations and my 85-year-old mother who lives in Leisure World is just totally ridiculous. The FDIC is afraid that I am going to beat them on the lawsuit, and they want to have other avenues to try and get back at me.”
Patty filed a $54-million suit against the FDIC earlier this month, claiming that the agency violated a 1983 agreement under which he left Heritage in return for a promise of no further civil action by the FDIC in connection with the bank’s then-growing financial problems.
Several defendants also were dropped from the FDIC’s suit. They include Gene T. Moffett, Heritage’s auditor; Michael A. Coughlin, its senior vice president for construction and real estate loans, and Robert E. Sasseen, a loan officer.
Osborn, the FDIC’s attorney, would not say why they were dropped from the lawsuit.