Suit Charges That Lance Kited Checks, Engaged in Questionable Loan Practices

Former federal Budget Director Bert Lance misused the Georgia bank he controls to kite hundreds of thousands of dollars in checks and to engage in questionable lending practices, national bank regulators charged in a civil suit filed Friday.

The suit, filed in the U.S. District Court for the District of Columbia, contends that Lance and the Calhoun National Bank violated federal securities law by failing to disclose to bank stockholders that he had written overdraft checks and used the proceeds of bank loans made to other persons, including his secretary.

The suit by the federal comptroller of the currency seeks no financial penalties, but would bar the practices in the future and require Lance and the bank to amend previously filed federal reports to disclose the actions.

Lance Sued Comptroller

Two weeks ago, Lance sued the comptroller after details of a bank examiner’s report criticizing the same practices were published in the Atlanta Constitution. Lance, who headed the Office of Management and Budget under President Jimmy Carter, was forced to resign his position as head of the Georgia Democratic Party after the critical report was made public.

Lance could not be reached for comment. His son told the Rome News-Tribune Thursday that the charges would not have been filed had the internal report not been leaked to the press.

The suit against Lance alleges that 29 instances of check-kiting occurred between July, 1983, and October, 1984, among six checking accounts controlled either by Lance or his son David, president of the Calhoun bank. Three of the accounts were at the Calhoun bank and three were at banks in Atlanta, Rome and Dalton, Ga. At least 13 of the check-kiting “sequences” involved amounts exceeding $50,000, the lawsuit contends.

Suit’s Allegations

The suit alleges that Lance urged his bank to purchase loans from banks controlled by C. H. Butcher and his brother, convicted bank manipulator Jake Butcher, at a time when Lance owed large amounts of money to the Butcher banks.

The complaint also says that the Calhoun bank dealt with a credit life insurance company from which Lance “unlawfully received funds which rightfully were owned” by the bank, and claims the bank participated in a real estate deal in which Lance “had a material interest.”

Lance was forced out of his Carter Administration budget post after being accused of other unsound banking practices. A federal jury in Atlanta later acquitted him of nine banking-related charges and deadlocked on three others that were later dismissed.