WASHINGTON A former Minnesota and South Dakota bank executive has agreed to pay a $300,000 penalty to Office of the Comptroller of the Currency.
The agency had accused Michael R. Morgan of making loans to businesses in which he had an interest and then hiding the loans from regulators through fund transfers. In a consent order released Wednesday he neither admitted nor denied wrongdoing.
For much of the 1990s, Mr. Morgan was president of First National Bank and Trust in Pipestone, Minn., and vice president of First National Bank in Garretson (now First National Bank in Brookings) in South Dakota. He was also a director of both banks, which are subsidiaries of $709 million-asset Fishback Financial Co. in Brookings.
The OCC said that he failed to disclose to the banks boards his investment in businesses that received loans from the banks between 1996 and 1998. Mr. Morgan used proceeds from at least one loan to pay off personal debts, the agency said.
He then allegedly shifted these loans back and forth between Garretson and Pipestone just before OCC examinations to create a false impression that these business were generating sufficient funds to repay their debt, the consent order said. As a result, Pipestone suffered losses of about $756,000, the agency said.