BOSTON -- A Federal judge has awarded shareholders of a failed savings bank $19.7 million plus interest in damages from two former executives accused of mismanagement.
Lawyers at Berman, DeValerio & Pease, the firm representing the shareholders who brought the charges, said their clients will probably have to seek payment from insurance providers for the bank's directors and officers.
|False and Misleading'
In the ruling, U.S. District Court Judge Joseph L. Tauro said the failed institution, First Service Bank for Savings in Leominster, Mass., made "false and misleading" disclosures in letters to shareholders, quarterly and annual reports, income statements and FDIC filings.
He ruled that the former executives, C. William Wester and Robert Fredo Jr., "recklessly disregarded the falsehood of the bank's public statement's and are therefore liable.
Attorneys for the two men were not available for comment.
First Service, which had about $800 million in assets, failed in early 1989 after posting a loss of more than $50 million in 1988. A portion of its assets were acquired by another bank in the area.
Stepped Down in 1988
Mr. Wester, the chairman president, and chief executive officer, and Mr. Fredo, senior vice president and senior lending officer, resigned in June 1988 after federal and state banking authorities uncovered problems with the thrift's loan portfolio.
The ruling was part of a class action filed in August 1988. The class consists of those who purchased the bank's stock between Dec. 5, 1986, and Aug. 15, 1988.