Federal Reserve bans former banker

The Federal Reserve Board has announced it has prohibited Karl K. Klessig from future participation in the banking industry for fraud in his application to acquire control of Golden Pacific Bancorp, Inc., a former bank holding company in Sacramento, California.

Applicants seeking approval to acquire control of Board-regulated institutions must accurately disclose the source of funding for the acquisition. In his application, Klessig falsely represented that he had obtained a loan to finance his purchase of a controlling interest in Golden Pacific Bancorp. Following the Board's discovery of the false representations, Klessig withdrew his application.

The Board's Consent Prohibition Order indicates that Klessig represented to the Board that the transaction would be financed through the proceeds of a private municipal bond issuance and, as supporting documentation, provided a fraudulent loan agreement in which the signature of the representative of the public entity issuing the bonds and extending the loan was forged.