Regulators Seek $1 Million Each From 2 Bankers

Federal regulators are seeking $1 million each from former Anaheim bankers Gerald and Joan Garner for actions the regulators say led to the April, 1993, failure of American Commerce National Bank, according to legal documents obtained Thursday.

The civil penalty sought by the Office of the Comptroller of the Currency is in addition to the agency’s effort to ban the Garners and five other directors and officers from the financial industry for life.

The federal agency, in an amended notice of charges, accuses the Garners of using the bank as their private piggy bank to obtain loans, high salaries and bonuses, other unwarranted benefits and favored banking treatment for companies in which they had interests.

Gerald Garner, the bank’s former chairman, broke his long public silence Thursday to question the adequacy of the case against him, his wife, who was a director and treasurer, and his brother, Daniel Garner, who was the bank’s executive vice president.

“They’ve reduced the accusations in the new notice almost in half,” Garner said. “They withdrew the charges against the entire operations end of the bank. They settled out of court with the loan department with no penalty or fine. And they made a nominal settlement with most of the directors.”

Agency papers, however, contend that, except for settlements with three directors and two officers and the dismissal of one case against an officer, the charges not only remain the same but have been augmented.

The new accusations against Garner, a disbarred lawyer, involve allegedly improper dealings between the bank and a law firm in which he had an interest and a bank loan to a physician used to pay off Garner’s liability in a private lawsuit.

Besides the Garners, others still facing agency action are former directors Duffern Helsing, a Santa Ana lawyer, and Dr. Galal Gough and Dr. Stanley Kaller, who live in Orange County and work in Norwalk, and William Kavanagh, a senior lending officer.

The comptroller is seeking civil penalties of $500,000 from Daniel Garner, $250,000 from Helsing and $150,000 each from Gough and Kaller. It has not yet sought a penalty from Kavanagh.

A hearing on the charges is scheduled for Jan. 18 before one of the agency’s administrative law judges. It is expected to be held in Santa Ana.

The federal takeover of American Commerce was the first under recent laws that allow regulators to close banks that are still solvent if they believe the operations to be unsafe and unsound. The bank appeared to be financially healthy, but regulators now say it was in debt.

In addition to the comptroller’s action, the FBI has begun a criminal bank fraud and embezzlement investigation, and the Federal Deposit Insurance Corp., which insures deposits and acts as the receiver for American Commerce, is conducting its own probe.