Florida Keys News
Saturday, February 2, 2013
FDIC: Bank board careless

A prominent Marathon Realtor and a former Marathon building contractor are among four former Orion Bank directors named as defendants in a lawsuit filed Tuesday by the Federal Deposit Insurance Corp.

Brian Schmitt, co-owner of Coldwell-Banker Schmitt Real Estate Co., and James Aultman, the retired former owner of Aultman Construction Company of Marathon, are among the directors of the now-defunct bank accused of failing to stop former CEO Jerry Williams from steering the institution into insolvency. Also named as defendants are Earl Holland of Fort Myers and Alan Pratt of Vero Beach. Aultman now lives in Dade City.

The FDIC wants the former directors to pay $53 million in restitution because they failed to "monitor, supervise and restrain" Williams' "reckless growth strategy," according to a 26-page civil complaint filed in U.S. District Court in Fort Myers.

Williams is serving a six-year prison sentence for bank fraud. He orchestrated a complex conspiracy to fraudulently raise capital and falsify bank records in order to mislead state and federal regulators, according to his April 2011 indictment.

Federal regulators seized Orion Bank in November 2009, and IberiaBank assumed operations of all Orion bank branches.

The former directors are represented by Miami-based lawyer Lawrence Kellogg, who did not return two phone messages Friday seeking comment.

Brian Schmitt said Friday that he was ready to clear his name.

"I'm relieved that I'm going to have this opportunity to put this issue to rest," he said. "All the shareholders, directors and employees are victims of Mr. Williams' illegal actions, and I'm glad we're going to have the opportunity to expose the facts."

In August, Williams was ordered to pay $31 million to the FDIC, which incurred the bank's debt after Orion was declared insolvent, according to the complaint. The FDIC alleges Orion's misdeeds cost it $880 million.

"Remarkably, the defendants continued to commit the bank to this strategy even after the real estate market began to decline," the lawsuit states. "In essence, the defendants bet the bank's survival on the proposition that real estate values would never fall, and then doubled down repeatedly once those values were already sinking."

Meanwhile, Williams, with the directors' blessing, made loans in an effort to conceal the bank's poor financial standing, according to the lawsuit.

Brian Schmitt provided The Citizen with a copy of the FDIC's victim impact statement, presented to the court June 1, 2012, that described Williams' misdeeds.

The document essentially paints Williams as the ringleader and the directors as unknowing pawns to his illegal acts.

The FDIC lawsuit alleges the board of directors didn't make an earnest effort to curtail Williams and "mechanically" approved any loan that Williams proposed "without meaningful deliberation or discussion," often after only four minutes of review.

Orion Bank was founded in Marathon in 1977 as First National Bank of Marathon. In 1982, the name was changed to First National Bank of the Florida Keys. Williams became the CEO and president in 1987.

In 1994, its holding company, First Bancorp Inc., opened a new branch in Naples called Gulf Coast National Bank. The charters of both banks were combined in January 2002, and the banks were unified under the new name Orion Bank. All operations were then headquartered in Naples.

alinhardt@keysnews.com

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