WASHINGTON -- Bank regulators on Thursday fined a former Connecticut bank attorney more than $630,000 for his role in a 1992 bank failure.
The comptroller of the currency said that Augustus I. Cavallari Jr., former counsel to the failed Summit National Bank, Torrington, Conn., must pay an $83,000 civil money penalty and $554,903, plus interest, in restitution.
In August 1993, the comptroller found that Mr. Cavallari had violated a temporary cease-and-desist order by helping to restructure two insider-related loans, which involved the release of five personal guarantors, all of whom were friends, family, or business associates of Richard D. Barbieri, the bank's organizer and consultant. Under the restructuring, the new guarantor for the loans was a nearly insolvent company owned by Mr. Barbieri and his associates, the OCC explained.
The loans resulted in a $554,903 loss to the bank, contributing to its failure in February 1992.
This is one of the first cases to be brought against an attorney under the "institution-affiliated party" standard created by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. The law widened the range of people who can be held responsible for misconduct while representing financial institutions.
A final decision on whether to ban Mr. Cavallari from banking for life is pending at the Federal Reserve Board.
