Fdic sues former Omni National Bank officers for loan losses

The Federal Deposit Insurance Corp. sued former executives of Omni National Bank to recover losses from community development loans and spending on low-income properties.

The FDIC says violations of banking laws cost the fund $330.6 million, according to a complaint filed March 16 in federal court in Atlanta. The agency accuses 10 former officers of the failed bank of negligence and gross negligence. Jeffrey L. Levine, one of the bank’s cofounders and a defendant, is serving a five-year sentence in federal prison for fraud related to bad mortgage loans at Omni National, a unit of Omni Financial Services Inc.

Officers violated the bank’s loan policies and procedures by using straw borrowers, by exceeding loan-to-value ratio limits and by failing to properly appraise real estate, according to the FDIC complaint.

The FDIC seeks a jury trial and repayment of $37.2 million from bad low-income property loans and “wasteful expenditures” on other low-income real estate property in bank holdings, according to the complaint.

Lawyers for defendant Stephen M. Klein, Omni National’s former chief executive officer, couldn’t immediately be located for comment on the complaint.

Shannon Livengood, a former vice president who is also a defendant, declined to comment.

Federal regulators took over Omni National in 2009 after examiners discovered officers were “disregarding and failing to investigate obvious problems” in the community development lending division, according to the complaint. The bank’s executives also failed to properly account for losses and reserves, the FDIC said.

The case is Federal Deposit Insurance Corporation as Receiver of Omni National Bank v. Klein, 12-cv-00896, U.S. District Court, Northern District of Georgia (Atlanta).