Ex-Anaheim Banker Agrees to Fine, Ban From Industry

Former Anaheim banker Gerald J. Garner, who battled with regulators through the nine years that his American Commerce National Bank existed, has agreed to a lifetime industry ban and a $167,000 fine to settle accusations that he lied about his bank’s condition and misappropriated funds.

Garner, the defunct bank’s former chairman, didn’t admit any wrongdoing but paid $30,000 and will make monthly payments over the next two years to pay the rest, the Office of the Comptroller of the Currency said Monday.

In addition, his wife, Joan, paid $22,000 and his brother, Daniel, paid $15,000 to settle their cases. His wife was a director and his brother was an executive officer at the bank. The agency had sought $1 million each from Gerald and Joan Garner and $500,000 from Daniel Garner.

Gerald Garner, a disbarred lawyer who represented himself, couldn’t be reached for comment, but a lawyer for his wife claimed victory in the agency’s administrative hearings, which had been held sporadically since June in an office in Orange.

“They had no evidence against any of our people,” said Robert M. Silverman, Joan Garner’s lawyer, who also represents Gerald Garner in other litigation. “You also can infer that their charges were ludicrous.”

Frank Goldman, the comptroller’s office lawyer heading the enforcement case, disagreed. “We already closed the bank, and the $204,000 total represents a substantial fine for what in our opinion was mismanagement of the bank,” he said. “And the [bans] were most important because now they cannot influence other banks over time.”

It was nearly three years ago that the agency, acting for the first time under a 1991 law that allows them so seize financially healthy banks, took control of American Commerce National Bank.

The agency, using unusually strong words at the time, asserted that federal examiners never really knew the condition of the bank because Garner lied to them, concealed records and wasted the bank’s assets. Insider abuses were so pervasive, the agency said, that it no longer could trust Garner or his “weak, abusive and self-serving” officers and directors.

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Garner was accused of receiving financial gains from “illegal loans, illegal reimbursements from the bank and excessive compensation.” The agency also asserted Garner’s conduct “evinces personal dishonesty” because he allegedly manufactured minutes of board meetings, misled authorities, lied about his background and concealed his interests in businesses that received bank loans. Garner denied that he intentionally violated any laws, and described any violations as “technical” ones. He also denied that he received financial gain from the proceeds of loans or reimbursements from the bank.

The comptroller’s office and the Garners tentatively settled the enforcement action Feb. 2, a day after agency lawyers rested their case. Details were worked out over the next three weeks, and a final agreement was reached last week.

All other former bank directors have settled with the comptroller’s office, paying a total of $35,000.

Regulators said the bank’s failure now will cost the nation’s deposit insurance fund $24 million, and Garner is the primary reason.

The Garners still face other legal woes stemming from the April 1993 takeover of American Commerce by regulators.

Their lawyer, Silverman, said he expects the Federal Deposit Insurance Corp., as the bank’s receiver, to file claims against his clients soon. The FDIC sold bank deposits and certain assets to Southern California Bank and is liquidating remaining assets.

In addition, the Federal Bureau of Investigation said Monday that the criminal investigation into the bank’s failure is continuing.

Silverman, however, contends that terms of the settlement with the comptroller’s office should preclude any criminal action. Goldman disagrees, saying the settlement has no bearing on any other case or any other agency’s action.

Meantime, the Garners hope to go to trial in June on their lawsuit against the comptroller’s office on allegations that the agency took their property--the bank--without due process. The suit also alleges that federal bank examiners discriminated against directors and officers because of their Jewish heritage and manipulated American Commerce’s financial figures.

American Commerce and Garner were under the gun almost from the day the bank opened Feb. 29, 1984. Regulators examined it seven times in its first 40 months of operation, nearly twice the audits new banks were subjected to at the time.

Garner, for instance, had failed to tell regulators that his license to practice law had been suspended by the State Bar of New York. He was later disbarred. He also had concealed that he controlled 11.6% of the bank’s initial stock--more than twice the 5% per investor allowed under terms of the initial offering.

Garner also has been portrayed in a series of separate lawsuits and by former associates and employees as a ruthless operator.

He has been named as a defendant in several dozen lawsuits stemming from his position at the bank, as well as his actions as a pension manager, private business operator and chairman of Coast Plaza Doctors Hospital in Norwalk.

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Commerce Case Closed

Gerald J. Garner, whose American Commerce National Bank was taken over by federal regulators in 1993, has reached an agreement to settle accusations that he lied about his bank’s condition and misappropriated funds. Some key dates in the process:

1993

* April 30: Federal regulators, exercising for the first time new powers to seize financially healthy banks, take over American Commerce National Bank, accusing operators of concealing records, lying and wasting the bank’s finances. Chairman Gerald J. Garner, other directors and officers are ousted.

* May 2: American Commerce sold by regulators to Southern California Bank.

* Sept. 3: FBI reveals it has launched its own bank fraud and embezzlement investigation of American Commerce.

* Nov. 18: Garner files suit against regulators seeking $75 million in damages.

1994

* Sept. 22: Regulators file civil suit seeking $1 million from Garner and his wife, Joan, who served as a director. Suit alleges the Garners used the bank to obtain loans and other unwarranted benefits and favorable treatment for companies in which they had interests.

1995

* June 19: Administrative hearing on Garner case opens in Anaheim.

1996

* Feb. 26: Garner fined $167,000 and banned from banking industry for life by federal regulators. Joan Garner pays $22,000 and Gerald Garner’s brother Daniel pays $15,000 to settle regulators’ allegations of fraud and mismanagement.

Source: Times reports; Researched by JANICE L. JONES / Los Angeles Times

Los Angeles Times