Student Loan Suit Nearing a Settlement
A $2.5 billion-asset Chicago bank said it is close to settling with the Department of Justice over allegations that the bank defrauded the student loan program.Corus Bankshares Inc. said in its fourth-quarter earnings release that it has reached "substantial agreement" on a proposed settlement with the Justice Department's Chicago office.
Under the proposal, Corus would pay restitution of $8.4 million - the government sought $63 million in damages and fines - and the Justice Department would not pursue civil or criminal prosecution of Corus employees in connection with the six-year-old investigation.
The settlement requires the approval of the Justice Department's Washington office, which Corus said has objected to parts of the proposal.
The government probe started after Corus discovered that several employees had, from 1988 to 1994, improperly filed insurance claims for thousands of government-guaranteed student loans that were in default.
The employees insisted they had called delinquent borrowers seeking repayment, as federal law requires, before filing the claims. The bank found no evidence that the calls were made, however.
The bank then reported its findings to the Department of Education and fired the employees.
Nonetheless, the government sued in April 1999, seeking $35 million in damages and a $10,000 penalty for each of the more than 2,000 false claims the bank's employees allegedly submitted.
In a related criminal suit, Corus said a former assistant vice president in its student loan department recently pleaded guilty to a criminal misdemeanor for falsifying records.
- Craig Woker
Activist Investor Loses in Thrift Board Bid
Score one for the board of Yonkers (N.Y.) Financial Corp.The $506 million-asset thrift, which has been under pressure from the activist Lawrence B. Seidman, announced that three of its directors - William G. Bachop, Donald R. Angelilli, and Eben T. Walker - were reelected to the board for three-year terms at its annual meeting Friday.
Mr. Seidman, a Parsippany, N.J.-based investor who owns stakes in dozens of thrifts and banks, had nominated himself and colleague Dennis Pollack to the board. Calling themselves the Committee to Enhance Shareholder Value, the duo has been urging the thrift to find a buyer since last May.
Yonkers Financial nominees received more than 63% of the votes; Mr. Seidman's group garnered about 35%.
"We are pleased that stockholders share our vision of the corporation's future rather than those of Mr. Seidman," said Richard Komosinski, president of Yonkers Financial. "We will continue to do everything possible to maximize the value of our franchise."
Yonkers Financial, parent of Yonkers Savings and Loan Association, operates nine branches in the suburbs of New York City.
- Matt Andrejczak
FVNB of Texas to Purchase In-State Bank
FVNB Corp. in Victoria, Tex., has a deal to buy Mid-Coast Savings Bank in Edna, Tex., for an undisclosed sum.Mid-Coast, with $43 million of assets, operates branches in Edna and Ganado, Tex.
The branches would become offices of First Victoria National Bank, an FVNB subsidiary that has a number of farm customers in those communities.
FVNB is a two-bank holding company with $655 million of assets. Its deal for Mid-Coast is expected to close early in the second quarter.
- Alan Kline