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The FDIC on May 20 filed suit against eight former officers and directors of Vantus Bank, more than three years after the agency sent its initial demand letter.
The agency's demands, both then and now, largely pertain to investments in trust preferred CDOs by the Sioux City, Iowa-based bank, which failed Sept. 4, 2009.
The FDIC on May 7, 2010, demanded $82 million from 10 individuals connected to Vantus Bank, resulting from their alleged negligence, gross negligence and/or breaches of fiduciary duty. The May 20 lawsuit, as filed in the U.S. District Court for the Northern District of Iowa, seeks to recover more than $58 million in alleged damages.
The defendants "fundamentally changed Vantus' investment policy to an aggressive growth strategy without adopting procedures to ensure that Vantus was engaging in prudent risk management practices," the FDIC alleged in the complaint. The agency accused the bank of allocating 120% of its capital to purchase "high-risk" TruPS CDOs between October 2006 and March 2007.
The suit charges former Vantus President and CEO Michael Dosland and Controller and CFO Michael Moderski of contravening the bank's investment policy and disregarding federal guidelines in purchasing TruPS CDOs with "little...