Top Story Compliance Related

The Federal Reserve Banks made public eight Community Reinvestment Act compliance evaluations in December 2023. Six of those evaluations were rated "Satisfactory." We congratulate two banks that earned ratings of "Outstanding" on their evaluations (links are to the public portion of the evaluations):

• Dokotah Bank, Aberdeen, South Dakota
• Heartland Bank, Whitehall, Ohio

The Federal Trade Commission has announced it has joined the State of Connecticut in filing a complaint against auto dealer Chase Nissan LLC d/b/a Manchester City Nissan, its owner, and key employees, for systematically deceiving consumers about the price of certified used cars, add-ons, and government fees.

The complaint alleges that the dealership, in addition to deceiving consumers, regularly charges them junk fees for certification, add-on products, and inflated government charges without the consumers’ consent, sometimes costing them thousands of dollars in unwanted and unauthorized charges.

Connecticut also alleges that all these practices are deceptive or unfair under Connecticut law.

The FDIC has released a list of 68 banks whose evaluations of compliance with the Community Reinvestment Act were recently made public. We congratulate four banks on the list whose evaluations were rated Outstanding:

• West Bank, West Des Moines, Iowa
• Pioneer Bank, Albany, New York
• Montecito Bank & Trust, Santa Barbara, California
• Genesis Bank, Newport Beach, California

First Trust and Savings Bank, Coralville, Iowa, received a "Needs to Improve" rating. The remaining 63 banks' evaluations were rated Satisfactory.

The CFPB emailed a reminder yesterday that it opened the filing period for HMDA data collected in 2023 on January 1, 2024. Submissions will be considered timely if received on or before Friday, March 1, 2024.

Yesterday, the Securities and Exchange Commission announced that it obtained an asset freeze and other emergency relief concerning an alleged $93 million real estate investment fraud perpetrated by Miami-based developer Rishi Kapoor. The SEC also charged Location Ventures LLC, Urbin LLC, and 20 other related entities in connection with the fraud scheme.

According to the SEC’s complaint, from approximately January 2018, until at least March 2023, Kapoor and certain of the defendant entities solicited investors by, among other things, making several material misrepresentations and omissions regarding Kapoor, Location Ventures, Urbin, and their real estate developments. The false statements allegedly included misrepresenting Kapoor’s compensation; his cash contribution to the capitalization of Location Ventures; the corporate governance of Location Ventures and Urbin; the use of investor funds; and Kapoor’s background. The SEC’s investigation uncovered that Kapoor allegedly misappropriated at least $4.3 million of investor funds and improperly commingled approximately $60 million of investor capital between Location Ventures, Urbin, and some of the other charged entities. The complaint also alleges that Kapoor caused some entities to pay excessive fees and to represent higher returns to investors by significantly understating cost estimates.

The complaint charges Kapoor, Location Ventures, Urbin, and the 20 related entities with violating provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The SEC seeks permanent injunctions, civil monetary penalties, an officer-and-director bar against Kapoor, and disgorgement of ill-gotten gains with prejudgment interest against Kapoor and certain of the charged entities.

The CFPB yesterday posted a Bureau Blog article on "Holding debt collectors responsible for false statements," to announce that the Bureau has filed an amicus brief in the U.S. Court of Appeals for the First Circuit to help ensure consumers can hold debt collectors responsible when they make false representations.

In this case — Carrasquillo v. CICA Collection Agency — an individual filed for bankruptcy, so collection efforts against the person should generally have stopped. However, a debt collector still sent the person a letter to collect on the debt and said that the consumer could be sued if they didn’t pay it. Because of the bankruptcy rules, that statement was false—the consumer couldn’t actually be sued. The individual sued to hold the debt collector accountable for the misrepresentation, but the debt collector pleaded ignorance. The debt collector claimed that they were only responsible under the law when they intended to say something false.

As the CFPB’s amicus brief explains, a debt collector can be liable under the Fair Debt Collection Practices Act even if they claim that they did not know that their statement was false. A debt collector will not be held responsible in a lawsuit brought by an individual if they can show that they didn’t intend to make the false representation and that they had effective procedures in place designed to prevent the mistake. But debt collectors cannot just stick their heads in the sand and claim ignorance. This interpretation has been upheld by numerous courts, and it is what Congress clearly intended. The brief also explains that consumers generally do not lose the law’s important protections when they file for bankruptcy.

The OCC has released CRA evaluations for 25 OCC-supervised institutions whose evaluations became public in December 2023.

Of the evaluations listed, 18 are rated satisfactory, and the following seven are rated outstanding:

• BMO Harris Bank, NA, Chicago, Illinois
• Catalyst Bank, Opelousas, Louisiana
• Citizens National Bank of Albion, Albion, Illinois
• First National Bank Colorado, Las Animas, Colorado
• Geddes FS & LA, Syracuse, New York
• Lone Star National Bank, Pharr, Texas
• Sunrise Banks, NA, Saint Paul, Minnesota

FinCEN yesterday announced it has begun to accept Beneficial Ownership Information reports. Existing reporting companies have until January 1, 2025, to register. Reporting companies newly created or registered in 2024 have 90 days after receiving actual or public notice that their company's creation or registration is effective.

The FDIC has released a list of enforcement actions it took in November 2023.

• Horicon Bank, Horicon, Wisconsin, was assessed a $23,000 civil money penalty for engaging in a pattern or practice of violations of the Flood Disaster Protect Act and FDIC regulations.
• Removal and Prohibition Orders were issued against:
  • Sheree Leanne Carter, formerly a teller at Rockland Trust Company, Rockland, Massachusetts, after the FDIC found, and Carter neither admitted nor denied that over a span of 16 years she stole funds from the bank by taking cash from her teller drawer and cash intended for the bank's ATMs. manipulated the bank's systems and records to create fictitious transactions before audits and to cancel those transactions after the audits were completed, to avoid detection and conceal her embezzlement for personal gain of approximately $430,000.
  • Lladira Hernandez, formerly a client success representative at Central Valley Community Bank, Fresco, California, after the FDIC determined, and Hernandez neither admitted nor denied that, between May and August 2022, she initiated unauthorized ACH debits from four separate customers; and also fraudulently created an online banking profile for a customer, linked her own accounts to it and, after
    resigning from the bank, initiated unauthorized transfers.
  • William J. Burnell, formerly the chief credit officer of NBC Bank, New Orleans, Louisiana, after the FDIC determined, and he neither admitted nor denied, that during 2015 and 2016 he approved loans to borrowers that he knew were not creditworthy. An earlier Order for Assessment of a Civil Money Penalty against him was terminated.
• Cease and Desist Consent Orders were issued to Peoples Bank, Munster, Indiana; Commenity Servicing, LLC, Columbus, Ohio; First Fed Bank, Port Angeles, Washington; Liberty Bank, Inc., Salt Lake City, Utah, and; Brighton Bank, Brighton, Tennessee.

OFAC has designated one individual and three entities responsible for facilitating the flow of Iranian financial assistance to Houthi forces and their destabilizing activities. Among those designated are the head of the Currency Exchangers Association in Sana’a, and three exchange houses in Yemen and Türkiye. These persons have facilitated the transfer of millions of dollars to the Houthis at the direction of U.S.-designated Sa’id al-Jamal, who is affiliated with Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF).

For the names and identification information of the designated parties, see the December 28, 2023, BankersOnline OFAC Update.

• Treasury Department press release