Miami's best-known banking family has been deemed unfit to run the bank founded by its patriarch.

An administrative law judge at the Florida Department of Banking and Finance ruled Friday that three members of the Abel Holtz family lack the "character, reputation, experience, and financial responsibility" to control and operate Capital Bancorp, one of Miami's largest independent banks.

Mr. Holtz, engulfed in controversy for four years, turned the bank over to the group in 1994 before pleading guilty to lying to a federal grand jury.

The ruling, a victory for minority shareholders in Capital, sets the stage for a protracted legal fight for control of the $1.7 billion-asset company, which was founded in 1974.

It's also another black eye for a family that rose to social and financial prominence in Miami after fleeing Castro's Cuba in 1961. Abel Holtz even has a street named after him in his adopted hometown.

The administrative law judge took aim at the capabilities of Daniel Holtz, currently chairman and chief executive officer of Capital Bancorp; Fana Holtz, who owns 36.8% of the company and is vice chairman; and Javier Holtz, senior vice president of Capital Bancorp and chief credit officer of Capital Bank. Daniel and Javier are sons of Abel Holtz, and Fana is Abel's wife.

The issue of who will control the bank was put into the state's hands after Fana, Daniel, and Javier filed a formal change in control application with state banking regulators in October 1995. The family, including Abel Holtz, owns 56.7% of Capital Bancorp's outstanding shares.

Four shareholders objected to the transfer on grounds that the family wasn't capable of running the bank.

"As a practical matter, I think the Holtz regime is over," said Eugene Stearns, an attorney representing four dissident shareholders who are challenging the Holtz family's control of the bank.

But an attorney representing Capital Bancorp said the administrative law judge did not reach an accurate conclusion in her report.

"This is only round one and only the first step in a very long process," said D. Jean Veta, a partner at Covington & Burling in Washington, D.C. "I'm surprised and respectfully disagree with the (judge's) final conclusions. I don't think the specific findings in her report justify the negative conclusion she reached in the end."

Ms. Veta pointed to sections of the 40-page ruling that discuss how the bank has improved under the leadership of the Holtz family without Abel Holtz.

Daniel Holtz, Capital Bancorp's chairman, was credited in the report for spearheading strategies that improved the bank's liquidity and capital ratios, while reducing the bank's credit risk in the bank's factoring subsidiary.

But the report also paints a picture of an insular family willing to put their own interests ahead of the bank and allow Abel Holtz to influence control of the bank.

For example, the report said the Holtzes appointed nonindependent directors to an audit committee. And Abel Holtz was "unable to distance himself" from the bank's affairs even though federal regulators ruled last December that he could not remain involved with the bank's affairs.

He was involved in the February 1995 solicitation of proxies that led to a restructuring of the board after he was supposed to have given up control of the company.

The administrative law judge's decision has been turned over to the Florida Comptroller, who will then make a decision on the fate of the Holtz family's role in Capital Bancorp.

Federal regulators have already acted in trying to keep Abel Holtz away from the bank.

In December, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. banned Mr. Holtz from having any contact with the company or from discussing its business with his family.

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