Attorney Named in Malpractice Suit
The Federal Deposit Insurance Corp. filed a malpractice suit against Orange County attorney James B. Macdonald Thursday, asserting that the now-defunct Valencia Bank lost millions of dollars because of his poor legal advice.
Macdonald served as general counsel to Valencia Bank between 1980 and 1985, according to the FDIC’S lawsuit, filed in Orange County Superior Court. Macdonald could not be reached for comment.
On Macdonald’s advice, Valencia made illegal and imprudent investments, according to the lawsuit. The FDIC claimed that Valencia lost as much as $5 million as a result.
Valencia was seized and declared insolvent on Feb. 7, 1986. The FDIC remains receiver, but Barclays Bank of California took over Valencia’s $92 million in deposit accounts last year.
Macdonald allegedly failed to advise Valencia that the investment of trust assets required approval of investors, failed to advise that trust investments must be reviewed by a bank committee and failed to establish adequate safeguards against investment in properties “in which officers, employees or agents of the trust department (of Valencia) had an interest,” according to the lawsuit.
The FDIC lawsuit also identified Macdonald as a director of Valencia and chairman of its trust management committee.
The suit sought unspecified damages against Macdonald for alleged malpractice, misrepresentation and failure to carry out fiduciary duties.
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