Emma C. Chappell, one of the nation's most prominent and highly regarded African-American bankers, has been ousted from the institution she founded and is being sued by it for fraud.

United Bank of Philadelphia alleges in court papers that Ms. Chappell fraudulently obtained an office building and leased it back to the bank at excessive rates. Ms. Chappell was fired as the eight-year-old bank's chairman, president, chief executive officer, and chief lending officer in May.

Documents filed in the U.S. District Court for the eastern district of Pennsylvania allege that Ms. Chappell, 59, arranged a sweetheart lease between $110 million-asset United and her new company, EEC Properties LLC, for its headquarters in downtown Philadelphia.

United claims that Ms. Chappell locked the bank into a lease for the entire 25,000-square-foot building, when it only needed 10,000 to 15,000 square feet. The bank also said it is paying EEC $13 per foot in a market where the going rate is $10.

Ms. Chappell could only be approved for a loan if she leased the building to a single tenant at above-market rates, according to the bank's lawsuit. EEC Properties receives more than $26,000 a month in rent from United Bank for the office building on which mortgage payments are about $16,000.

The lawsuit claims Ms. Chappell bought the building after telling United's board that the Federal Reserve would not let the bank buy the building itself because it was losing money. The complaint claims the Fed never made such a decision.

Ms. Chappell's "actions, inaction, and misconduct were motivated by her selfish desire to contrive significant financial benefits for her and her family at the expense of United Bank and its shareholders while she was leading United Bank into a troubled financial condition, including the loss of millions of dollars," the bank said in court documents.

United Bank, which has lost more than $5 million since it was founded in 1992, said it had its most profitable month ever in June. The bank is trying to cancel its lease with Ms. Chappell's company and is seeking compensatory damages of at least $1 million, as well as punitive damages.

Ms. Chappell declined to comment, but in a statement last week she defended her record at United Bank. "I poured my heart into creating and growing a bank that served the African-American community and I am very proud of my effort and the efforts of everyone who works there," according to the statement.

Ms. Chappell is widely known in the banking business, is a frequent speaker at industry conferences, and has received numerous community leadership awards.

As the founder of the bank, which serves African-, Asian- and Hispanic-American communities in the Philadelphia area, Ms. Chappell has been recognized by the Philadelphia police department, the West Philadelphia Economic Development Corp., and the local chapter of National Association for the Advancement of Colored People.

She was named one of the country's top-100 black business and professional women by Dollars and Sense magazine and outstanding businesswoman of the year in 1993 by the Texas Association of Minority Enterprises.

"She's done a lot in Philadelphia for a lot of people and has really attempted to make more opportunities available for both African-Americans and women," said Dina Curtis, president of the American League of Financial Institutions, which represents minority-owned savings banks and associations.

Norma Hart, the executive director of the National Bankers Association, said Ms. Chappell volunteered her "assistance and wisdom" to the group when she served last year as a regional vice president for the organization, which represents minority-owned banks.

"She is a very successful person," Mr. Hart said. "There are not many women who are presidents of a bank."

Still, Ms. Chappell is faulted for getting United into trouble with regulators. The bank has had numerous run-ins with federal and state regulators since 1996, according to court documents.

Its most recent agreement with the Fed and the Pennsylvania Department of Banking in February 1999 required the bank to strengthen management and internal controls.

The board replaced Ms. Chappell as president with Evelyn F. Smalls, 54, who had been a senior vice president heading up the compliance and human resources departments. Ms. Smalls refused to comment on the lawsuit.

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