Narrative Opinion Summary
In this case, Roque De La Fuente II challenged the Federal Deposit Insurance Corporation's (FDIC) decision to remove him as a director of First International Bank and permanently bar him from involvement with federally regulated banks. The FDIC's action, based on violations of lending regulations and breaches of fiduciary duty, involved multiple loans associated with De La Fuente from 1990 to 1995. The Ninth Circuit reviewed the Board's decision under the Administrative Procedures Act. The court found that De La Fuente controlled loan recipients in violation of Regulation O, and that the Board's determinations regarding Section 23A violations lacked proper notice and hearing. The FDIC's enforcement action was also scrutinized under the five-year statute of limitations set by 28 U.S.C. 2462, leading to the exclusion of certain transactions. Despite De La Fuente's arguments related to regulatory interpretations and equitable tolling, the court upheld the Board's findings on substantial evidence of unsafe practices and breaches of duty, resulting in financial gain for De La Fuente at the bank's expense. The court granted the petition in part, denied it in part, and remanded the case for further proceedings, particularly regarding the appropriateness of De La Fuente's lifetime banking ban.
Legal Issues Addressed
Equitable Estoppelsubscribe to see similar legal issues
Application: De La Fuente's claim of equitable estoppel against the FDIC was denied as he failed to show affirmative misconduct.
Reasoning: The Board correctly determined that the agency could proceed with prosecuting De La Fuente, as he did not demonstrate any affirmative conduct by the agency that exceeded mere negligence during prior investigations.
Regulation O Violationssubscribe to see similar legal issues
Application: De La Fuente's loans and transactions were found to violate Regulation O, as he was determined to have control over the borrowing entities.
Reasoning: The Board determined that De La Fuente 'controlled' all loan recipients in violation of Regulation O, which limits credit to insiders, defined as executive officers, directors, or principal shareholders, including entities they control.
Section 23A of the Federal Reserve Actsubscribe to see similar legal issues
Application: The Board's finding that loans to entities controlled by De La Fuente violated Section 23A was contested due to lack of notice and hearing.
Reasoning: The Board's finding that all but two loans extended to entities controlled by De La Fuente violated Section 23A of the Federal Reserve Act is contested, as De La Fuente was not provided the required notice and hearing prior to that determination.
Statute of Limitations under 28 U.S.C. 2462subscribe to see similar legal issues
Application: The statute limits enforcement actions for civil fines or penalties to five years, affecting the FDIC's consideration of certain loans.
Reasoning: The Board incorrectly failed to apply the five-year limit set forth in 28 U.S.C. 2462, meaning the FDIC action should not have addressed transactions prior to June 11, 1992.
Termination of a Director under 12 U.S.C. 1818(e)subscribe to see similar legal issues
Application: De La Fuente was removed from his position as a director of First International Bank for engaging in unsafe or unsound banking practices and breaches of fiduciary duty.
Reasoning: The Board concluded that De La Fuente's actions violated 12 U.S.C. 1818(e), which requires proving an improper act, an adverse effect on the bank or benefit to the actor, and a culpable state of mind, with the Board's findings supported by substantial evidence.