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Former California banker banned and fined

Carson, CA
Fine Amount: 
Issued by: 

The OCC has issued a consent order for removal and prohibition and for a civil money penalty of $175,000 against Daniel Roberts, former Chairman, President and CEO of Merchants Bank of California, N.A., having found that:

  • Between 2011 and 2014, Roberts caused the Bank’s risk profile to increase by recruiting higher-risk businesses as clients without ensuring the Bank had a commensurate Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) program to manage such risk. Roberts knew, or should have known, the Bank was ill-equipped to monitor and control the risk associated with this substantial growth in higher-risk activity, given the Bank’s continued noncompliance with a 2010 Consent Order and violation of 12 C.F.R. § 21.21.
  • In September 2013, Roberts, through a company he owned and controlled, entered into an agreement to negotiate checks on behalf of a currency dealer through his company’s accounts at the Bank in exchange for a percentage of the gross deposits. The Bank had previously declined to enter into an account relationship with the currency dealer. Between November 2013 and the conclusion of the relationship in May 2014, Roberts’s company negotiated over $13 million worth of checks on behalf of the currency dealer through its accounts at the Bank. Roberts, by negotiating the currency dealer’s checks through his company’s accounts, allowed the currency dealer to circumvent the Bank’s account opening procedures, including Customer Due Diligence and Enhanced Due Diligence procedures of the Bank. Roberts failed to provide the BSA Department with updated and accurate due diligence information regarding anticipated account activity.
  • Roberts caused the Chief Financial Officer (“CFO”) of his company, who was also a Bank employee, to make inaccurate statements to the company’s independent certified public accountant. These inaccurate statements resulted in Roberts’s company supplying inaccurate financial records to the Bank in support of its open line of credit at the Bank.
  • Roberts, between 1999 and 2014, entered into lending relationships with Bank directors and a Bank customer, both in his personal capacity and through entities he owned and controlled. The Bank’s Code of Ethics policy explicitly prohibited each of the aforementioned lending relationships. Roberts failed to disclose these lending relationships to the Bank’s Board of Directors (“Board”) as a whole, which compromised the Board’s decision-making process and increased the risk of insider abuse, uncontrolled conflicts of interest, and biased decision making by the Board.
  • Roberts directed a former Bank employee to create inaccurate bank records in furtherance of Roberts’s business pursuits. The former Bank employee prepared multiple letters on Bank letterhead, representing himself as a Bank employee vouching for the financial strength of Roberts’s companies, and making representations about the management of these entities. The letters contained material inaccuracies about Roberts’s companies’ relationship with the Bank and material misrepresentations related to the former employee’s position at the Bank.
  • This is the second enforcement action by the OCC against Robertsas Chairman of the Board, President, and CEO. On June 27, 2012, the OCC entered into a Consent Order with Roberts for a civil money penalty and personal cease and desist order (OCC Order No. 2012-131). Roberts caused, brought about, participated in, counseled, or aided or abetted the Bank’s violations of 12 U.S.C. § 84 (Lending Limits), 12 U.S.C. § 371c-1 (Restrictions on transactions with affiliates), 12 C.F.R. Part 32 (Lending limits), and 12 C.F.R. Part 215 (Regulation O), and engaged in unsafe or unsound practices.

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