Florida Keys News - Key West Citizen
Monday, April 8, 2013
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Former directors ask for hearing
FDIC asks for $53 million in restitution

Lawyers for a prominent Marathon Realtor, a former Marathon building contractor and two other former Orion Bank directors named as defendants in a lawsuit filed by the Federal Deposit Insurance Corp. fired back at the government for being hypocritical in its allegations.

"In essence, the FDIC blames the directors for not having uncovered the misrepresentations and omissions made to them ... In doing so, the FDIC completely ignores the fact that federal and state regulators such as itself did not uncover the fraud either," states a 22-page motion to dismiss filed in federal court on March 22. "In it's search for a scapegoat, the FDIC refuses to look in the mirror."

The directors requested a one-hour hearing before a judge so they can present oral arguments in addition to the paperwork filed in an effort to have the case tossed out of court.

Attorneys for the FDIC on Tuesday, in turn, requested more time to prepare their argument.

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.

But the directors alleged the FDIC "almost completely ignores the fact that both the directors and the bank's regulators were lied to about those loans," the directors state in their motion to dismiss.

"The FDIC's claim instead relies almost exclusively on speculation and supposition" and "almost completely ignores the fraud committed by Williams," the defense motion states

Williams is currently 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 Iberia Bank assumed operations of all Orion bank branches.

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.

Brian Schmitt previously 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.

Schmitt did return a phone call seeking comment.

The former directors are represented by Miami-based lawyer Lawrence Kellogg, who could not be reached for comment Friday due to a family emergency, an assistant at his office said.

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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