FDIC Sues President of Failed South Coast Bank

The Federal Deposit Insurance Corp. filed a $2-million lawsuit Friday against the founding president of failed South Coast Bank in Costa Mesa, alleging that he approved more than a dozen problem loans and caused the bank to pay nearly twice as much as it should have for its headquarters building.

The FDIC took control of South Coast Bank in April, 1985, after state banking officials declared it insolvent.

Nick Florio, who resigned from the bank on Aug. 15, 1983, could not be reached for comment Friday.

The suit, filed in U.S. District Court, alleges that Florio caused the bank to pay $1.75 million for a building that should have cost only $981,000. Florio now works as a consultant for Sauers Brothers Construction Co. of Costa Mesa, the company that built the building, according to the lawsuit.

In April, 1979, according to the suit, the California Banking Department approved South Coast’s request to build an $859,115 building at the corner of Bear and Baker streets. Florio told the board that he received three bids and that the lowest was from Sauers Brothers, the suit said. The complaint alleges that the bids he submitted to the board were not only false but that Sauers Brothers already had obtained a building permit and had been paid $48,071 before the bank’s board approved the bid.

A Sauers Brothers spokeswoman said the company would have no comment on the allegations.