Lawsuit settled over Little Saigon bank failure

According to an article published by the Orange County Register on June 6, 2012 http://taxdollars.ocregister.com/2012/06/06/lawsuit-settled-over-little-saigon-bank-failure/156261/ A federal lawsuit alleging fraud at failed First Vietnamese American Bank was quietly settled last week.

The settlement ended a three-way dispute among the bank, key customer AmeriNet LLC and Chatsworth businessman Masih Madani.
A detailed settlement agreement says that the bank’s insurer, Travelers, will pay $750,000 to AmeriNet and $100,000 to the attorneys for former bank officers Benjamin P. Palma-Gil and Robert Flores. The agreement says Travelers already “has paid $595,841.24 in excess of the $50,000 retention for defense fees and costs.”

Madani who has always denied any wrongdoing seems to have been exhonorated by the fact that the bank's insurers paid so much to settle.


The parties dismissed the case with prejudice,meaning it cannot be refiled.  With the dismissal, those accusations go away.

FDIC having consented, FVAB insurance pays to settle case the failed bank brought against innocent customers in 2008 to distract from its lending practices

On Monday, June 4, 2012, Judge Andrew J. Guilford of the United States District Court ordered the dismissal of the case first filed by FVAB back in 2008.  The case much publicized by the Orange County Register http://www.ocregister.com/articles/madani-279476-bank-first.html  was filed by FVAB in 2008 as a diversion and an attempt to blame others for its officers and directors lack of competence, its fail lending practices and failure to comply with banking regulations.  The fact which resulted in the California Department of Financial Institutions takeover of FVAB and appointing FDIC as the receiver of the bank in November of 2010 after a multitude of Cease and Desists and Consent Orders against the bank since it first opened its doors in 2005. 

The settlement agreement which was accepted by the Judge dismissed the consolidated case with prejudice.  The legal team representing FVAB collected more than $700,000 in legal fees from FVAB’s insurance company while losing the case.  At the end FVAB’s insurance company paid the defendants over $1.5 million to settle the case in an effort to avoid potential larger losses.   

The case against all the defendants including Masih Madani, David Kerlin, Terry Roddy, OPUS Financials, and Amerinet was dismissed with prejudice.  Although this is a vindication for the defendants, in reality it is somewhat bitter sweet.  The defendants have been living with the negative publicity hanging over their heads for the last four years.  Even though the defendants were never proven guilty in a court, they were guilty and were punished until proven innocent!  Although the law allows for the defendants to file claims against FVAB for the false accusations, FVAB no longer exists as an entity, so there is no one to go after.

Meanwhile, FVAB officers and directors continued to collect fat paychecks for the more than two years the case was pending before the banks failure. 

The whereabouts of the banks officers and directors are unknown. 

This further proves how broken the American legal system not to mention the banking system are. 

FDIC takes over First Vietnamese American Bank (FVAB)

On Friday, November 5, 2010, First Vietnamese American Bank, Westminster, CA was closed by the California Department of Financial Institutions, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

Read more at:  http://fdic.gov/news/news/press/2010/pr10245.html

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $9.6 million

Could FDIC be delaying its take over of First Vietnamese American Bank (FVAB) in Westminster, California due to the local Vietnamese candidate running for congress?

In the last few years FDIC has taken over many banks with stronger balance sheets than First Vietnamese American Bank (FVAB) in Westminster, California. FVAB reported a loss of $1.951 million in the quarter ending 09/30/2010. This left the bank with $611K in Tier 1 capital; a 1.15% Tier 1 leverage ratio and a 1.57% Tier 1 risk-based capital ratio.

The race in the 47th district in California which includes Westminster, where the bank is located, is super heated. The Republican candidate is Van Tran, a Vietnamese conservative backed by the Tea Party serving in the California state assembly. The Democrat is Loretta Sanchez, Incumbent Democratic Congresswoman for California's 47th District.

According to Southern California Public Radio, the demographics of the heavily Hispanic district are changing rapidly with a growing 15% of voters identifying as Vietnamese – a fact that Tran hopes to turn to his advantage. With no clear partisan voting record this district could go either way in next week’s election.

Could FDIC be delaying its take over of First Vietnamese American Bank (FVAB) in Westminster, California due to the local Vietnamese candidate running for congress?

First Vietnamese American Bank in Westminster set new loss record!

According to FDIC https://cdr.ffiec.gov/Public/ViewFacsimileDirect.aspx?ds=call&idType=fdiccert&id=57885&date=09302010  First Vietnamese American Bank (FVAB) in Westminster, California lost a record $1.951 million. This left FVAB with $611K in Tier 1 capital; a 1.15% Tier 1 leverage ratio and a 1.57% Tier 1 risk-based capital ratio.

FDIC declares First Vietnamese American Bank (FVAB) "critically undercapitalized" and ordered to sell shares or agree to a buyout

According to the Orange County Register the Federal Deposit Insurance Corp. has declared Westminster-based First Vietnamese American Bank "critically undercapitalized."

The FDIC ordered the bank to sell shares or agree to a buyout by another bank. The order, dated Sept. 28, was disclosed by the FDIC.

The FDIC order also directed the bank not to accept or renew any "brokered deposits" -- typically large deposits that move to whatever bank pays the highest interest -- and to pay no bonuses or raises to officers and directors without the government's permission. You can read the order http://www.fdic.gov/bank/individual/enforcement/2010-09-69.pdf

First Vietnamese American Bank in Westminster set to be sold to Philippines company

According to a report in the Orange County Business Journal on August 12, 2010 by Chris Casacchia ...
First Vietnamese American Bank in Westminster, which has been struggling with bad loans and regulatory scrutiny, is on the verge of being acquired by a large Philippines company.

The California Department of Financial Institutions late last month approved the sale of First Vietnamese to Charles and Michael Lhuillier, brothers who run one of the largest pawn shop and jewelry operations in the Philippines.

The brothers head MLhuillier Inc., a group of financial services, retail and real estate businesses throughout the Philippines.

The Federal Deposit Insurance Corp. still needs to approve the acquisition, First Vietnamese chief executive Benjamin P. Palma-Gil wrote in e-mail to the Business Journal from Asia. He had no further comment on the deal or the bank’s status.

The application is pending, according to FDIC sources with knowledge of the situation. The agency asks for many documents and supporting materials before making a decision.

The case manager received some of that information today, sources said.

An analysis of second-quarter data First Vietnamese submitted to the FDIC sheds light on the community bank’s problems.

First Vietnamese was one of only six homegrown banks and thrifts in the county that decreased their ratio of capital to credit-risk assets, a key metric for regulators. Banks considered well capitalized have a Tier 1 risk-based ratio of 6% or higher.

First Vietnamese was the only bank of the county’s 27 to fall below the 6% benchmark with a ratio just more than 3%.

First Vietnamese opened with fanfare in 2005 as the first bank to specifically target Vietnamese-Americans and their businesses in Little Saigon, which spans Westminster, Fountain Valley, Huntington Beach, Garden Grove and Santa Ana. The area is home to an estimated 200,000 Vietnamese.

First Vietnamese lost $1.1 million in the second quarter and hasn’t posted a profit since it opened. In May, it was issued a cease and desist order from the FDIC to improve compliance and fair lending practices.

First Vietnamese was among 13 banks and thrifts out of 27 based in the county that lost money in the second quarter.

The bank also scored poorly in a test of its bad loans and real estate verse cash reserves, according to an analysis for the Business Journal by Anaheim-based Findley Reports Inc.

First Vietnamese scored 317% on what’s known as the Texas ratio, a measurement of bank health that compares bad loans to how much shareholders would be owed if the bank failed.

The lower the score, the better.

Any rating more than 100% is considered teetering on failure. Any score at or above the 50% mark is when regulators take notice.

First Vietnamese had the highest Texas ratio in the county. A year earlier it was 47%, but that shot up to 234% at the beginning of this year.