On June 25, 2010, Larry Dodge, husband of Fair Board President Kristina Dodge, was charged by the Office of Thrift Supervision (OTC) with actions which harmed American Sterling Bank. In April 2009, American Sterling Bank was taken over by the FDIC and is now operated by Metcalf Bank. Dodge was the majority shareholder of American Sterling.
OTS alleges that false and misleading financial reports were filed from the first quarter of 2007 and continued to December 2008. The charges allege that beginning in 2006, American Sterling had difficulty in meeting the legal definition of "well capitalized" and took actions to appear to make the bank "well capitalized" when it was not. To meet FDIC insurance and other banking law requirement, banks must be able to show they have a certain level of assets available at all times. If banks fall below these requirements, deposits may not be insured and other penalties may kick in.
To purportedly pump up the capital at the bank, $2 million from the California Republican Party and $400,00 from Millenium Gate Receivable (a real estate investment), $706,949 from Mountainview Mortgage and $750,000 from 9800 Muirlands property were reported as capital contributions when they were potentially not. The OTS filing alleges that no money was received by American Sterling from either the California Republican Party, Millenium Gate, Mountainview Mortage or 9800 Muirlands. Larry Dodge, a member of the New Majority, has given millions to the California Republican Party and Gov. Schwarzenegger over the years.
In January 2009, Larry Dodge resigned as an officer and director of American Sterling. On April 17, 2009, the bank went into FDIC receivership.
A hearing will be held in Kansas City, MO, unless Dodge agrees to the charges and pays the fine of $2.5 million. In addition to the fine, Dodge could be prevented from working at or with other insured depository institutions. Dodge's response to the charges was not available.
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