Academic journal article ABA Banking Journal

One for the Little Guys: Banker Wins First Round as Court Stays OCC Lifetime Ban

Academic journal article ABA Banking Journal

One for the Little Guys: Banker Wins First Round as Court Stays OCC Lifetime Ban

Article excerpt

A banker challenging a financial regulator is like David battling Goliath; except that the behemoth regulator usually prevails.

It is a refreshing twist to see a banker topple both the Office of the Comptroller of the Currency (OCC) and the Board of Governors of the Federal Reserve System in Louis A. DeNaples v. OCC. DeNaples challenged the regulators' enforcement of Section 19 of the Federal Deposit Insurance Act, and persuaded the D.C. Circuit Court of Appeals to vacate a lifetime ban from banking imposed by the OCC and the Board.

Section 19 restricts who may participate in the affairs of banks, savings and loans, and holding companies. The statute, which is enforced by several financial regulators, including the Federal Deposit Insurance Corp. and the OCC, bars bankers who have entered "a pretrial diversion or similar program" in connection with certain crimes. The statute does not define what qualifies as a pretrial diversion or similar program, but DeNaples and the prosecutor tried to structure a pretrial agreement that did not trigger the Section 19 prohibition.

DeNaples was the former chairman of First National Community Bank and previously owned a casino in Pennsylvania. In 2008, Pennsylvania charged DeNaples with perjury, alleging that he lied to the Pennsylvania Gaming Control Board about his relationships with suspected members of the Italian mafia. In response, the OCC issued a cease-and-desist order barring DeNaples from banking until the charges were resolved.

DeNaples entered into an "agreement" with the district attorney to have all charges dismissed and his record expunged if DeNaples satisfied certain prerequisites, such as divesting his interest in the casino. …

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