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Updated Tuesday, November 20, 2012 at 05:16 PM

FDIC settles suit against Westsound Bank executives

By Sanjay Bhatt
Seattle Times business reporter

The former directors and officers of failed Westsound Bank have settled a liability lawsuit by the Federal Deposit Insurance Corp. for $1.73 million.

The FDIC, which took control of the Bremerton bank in May 2009 and estimated its losses at more than $100 million, filed a lawsuit in federal court in Seattle a year ago, alleging gross negligence and breach of fiduciary duty by former CEO David Johnson; Brett Green, the bank’s former executive vice president of sales and lending; and nine former directors, including board chairman Louis Weir. The lawsuit sought at least $15 million in losses to the bank from 34 bad loans.

The defendants admitted no wrongdoing in the settlement, and their Oklahoma liability insurer, BancInsure, covered the $1.73 million and the costs of their legal defense. A copy of the settlement agreement was provided by the FDIC.

The FDIC didn’t waive its authority to take further administrative actions, such as civil monetary penalties, against individual defendants. The FDIC also said the agreement does not protect the defendants from claims that could be brought by the Justice Department.

An attorney for Johnson said he had no comment. Attorneys for the directors did not return calls.

Sanjay Bhatt: 206-464-3103 or sbhatt@seattletimes.com On Twitter @sbhatt


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