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Construction Law Today

FDIC Sues Former Heritage Community Bankers in Chicago

Posted in FDIC & Bank Failures

Logo and storefront of Heritage Community BankThe FDIC (as receiver for the failed Heritage Community Bank) recently sued the bank’s former Chairman and Chief Executive Officer along with ten other former bank officers and directors. 

Bank Failure Video

In a post last fall, CLT brought you a 60 Minutes video segment on how the FDIC takes over an insolvent bank.  That segment gives an intimate glimpse into the lead-up to, and closing of, the Heritage Community Bank, including footage of the bank’s former Chairman and CEO as the closing unfolded.

FDIC Professional Liability Complaint

The FDIC’s complaint (PDF) seeks more than $10 million in damages, alleging that the the bank’s former Chairman and CEO, along with the ten other officers and directors, were negligent, grossly negligent, and breached fiduciary duties they respectively owed to the bank.  The allegations focus on:

  • Mismanagement of commercial real estate and construction loans
  • Dividend payments to shareholders, and incentives payments to senior management, even after the bank was already to serious financial trouble