A Tennessee man has been banned from banking for using his influence as a bank officer to gain an edge on a rival group in a real estate deal.
Billy Proffitt, former president of Tennessee State Bancshares in Pigeon Forge, was ordered by the Federal Deposit Insurance Corp. "not to participate in ... the affairs of any insured depository institution."
The agency's 20-page order, issued in October but released last week, adopts the recommendation of Administrative Law Judge Arthur L. Shipe, who ruled in the case last February.
Mr. Proffitt, formerly the majority shareholder of $266 million-asset Tennessee State, asked that a judge hear his case after the FDIC ordered him out of banking in December 1996.
According to the agency's order, the case dates from January 1990, when Charles and Nancy Boling approached Tennessee State Bank for a loan to buy a hotel in bankruptcy. Mr. Proffitt was a silent partner in another group bidding on the hotel.
Mr. Proffitt sat in when the loan committee deliberated on the Bolings' application, and he got a copy of the loan package and the couple's bid proposal. At the auction, Mr. Proffitt's group won the hotel with a bid of $3.405 million-just $5,000 more than the Bolings' loan maximum.
After the auction the Bolings learned that Mr. Proffitt was part of the group that had defeated them.
Angered, they sued the bank, Mr. Proffitt, and bank president Leland T. Bush, claiming a breach of confidence.
The defendants were found guilty in February 1992. The Bolings were awarded $14,825 in compensatory damages and $250,000 each in punitive damages, paid by the bank and Mr. Proffitt.
In his hearing before the administrative law judge, Mr. Proffitt did not dispute the facts of the case, the agency said in its order.
Instead, he argued that he was innocent of wrongdoing.
He claimed others at the bank knew all along that he was part of the group bidding on the hotel.
Calls to Mr. Proffitt's business in Gatlinburg, Tenn., were not returned, and the agency does not comment on cases. Mr. Bush no longer works at Tennessee State Bank. Calls to Jim Friddell, who succeeded him as president, were not returned.