FDIC settles suit against Westsound Bank executives
The Federal Deposit Insurance Corp. will collect $1.73 million in its lawsuit against former directors and officers of Bremerton’s Westsound Bank, whose failure cost the agency at least $100 million.
Seattle Times business reporter
The former directors and officers of failed Westsound Bank have settled a liability lawsuit by the Federal Deposit Insurance Corp. for $1.73 million.
The FDIC, which took control of the Bremerton bank in May 2009 and estimated its losses at more than $100 million, filed a lawsuit in federal court in Seattle a year ago, alleging gross negligence and breach of fiduciary duty by former CEO David Johnson; Brett Green, the bank’s former executive vice president of sales and lending; and nine former directors, including board Chairman Louis Weir.
The lawsuit sought at least $15 million in losses to the bank from 34 bad loans.
The defendants admitted no wrongdoing, and their Oklahoma liability insurer, BancInsure, covered the $1.73 million and the costs of their legal defense. The FDIC provided a copy of the settlement agreement.
The agency didn’t waive its authority to take further administrative actions, such as civil monetary penalties, against individual defendants. It also said the agreement does not protect the defendants from claims the Justice Department could bring.
An attorney for Johnson said he had no comment. Attorneys for the directors did not return calls.
Sanjay Bhatt: 206-464-3103 or email@example.com On Twitter @sbhatt