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A law was passed in 1991 that essentially allowed regulators to seize a seemingly healthy financial institution. In 1993 the law was used for the first time when the American Commerce National Bank was closed, and the accusations have been flowing wildly since then.
Gerald and Joan Garner, a husband-wife team, were the bank’s CEO and one of its directors, respectively. Court documents contain charges that millions of dollars in excess salaries and personal loans were directed to numerous family trusts and businesses controlled by the Garners, their children and other relatives.
The Federal Deposit Insurance Fund (FDIC), the receiver for the bank, states that American Commerce’s failure has cost the FDIC about $24 million. Transactions include major loans that defaulted, personal legal fees for Gerald Garner to defend himself against disbarment proceedings in New York state, 49 separate loans made to Joan Garner, and many other loans made to relatives that were not used for the stated purposes. Additionally, the FDIC charges that at least 23 family trust funds were set up and that the Garners used American Commerce as a personal piggy bank.
Then there was the little matter of Coast Plaza Doctors Hospital, a Norwalk business for which Gerald Garner serves in the capacity of Chairman. During 1993, Coast Plaza’s business account was continually overdrawn, up to $800,000 in a single day. At the time American Commerce closed, Coast Plaza owed the bank $1.2 million. This amount remains outstanding to this day.
The Garners have denied the charges and look forward to their day in court. In the interim, the FBI is investigating the possibility of bank fraud and embezzlement.
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