WASHINGTON - The assets of two former executives of the failed First National Bank of Keystone, W.Va., will remain frozen under an agreement reached Wednesday with the Federal Deposit Insurance Corp.
In a U.S. District court hearing in Charleston, former vice president Terry L. Church and retired president Billie J. Cherry agreed to a freeze extension, pending conclusion of a civil suit filed against them by the FDIC.
The agency sued several former bank officials for $500 million last month, following the bank's Sept. 1 collapse. The suit claims Ms. Church, Ms. Cherry, Keystone Mortgage Corp. president Michael H. Graham, and the late bank president J. Knox McConnell engaged in massive fraud, including embezzling almost $20 million.
The insurance fund's losses from the failure have been estimated at $750 million to $850 million.
The FDIC's suit also alleges five former directors committed "gross negligence" in allowing the fraud to continue for so many years, despite repeated warnings from the Office of the Comptroller of the Currency.
Mr. Graham has agreed to a temporary restraining order regarding his assets until next month, while Mr. McConnell's estate is protesting any asset freeze.
In a separate but related case, Ms. Church and Mr. Graham were convicted in May of obstructing bank examiners, including burying documents at a nearby ranch. They were each sentenced last month to more than four years in prison.