The former executive vice president of the failed Valley Bank in Moline, Ill., has agreed to pay a $5,000 penalty to the Federal Deposit Insurance Corp. after the regulator investigated appraisal fraud at the bank.
James R. Bunn of Bettendorf agreed to the fine “without admitting or denying any unsafe or unsound practices” that the FDIC states he had engaged in at Valley Bank, according to the orders posted on the FDIC website.
In its original notice, the FDIC had claimed that Bunn “was aware of the efforts by the bank’s former chief executive officer Larry C. Henson to hide losses by not utilizing new or updated appraisals where the values identified in such appraisals demonstrated that the bank's collateral was impaired.”
The original order said Bunn and Henson “instructed employees not to place appraisals in files when the values would require the bank to recognize loan losses or impairment.”
In July 2015, the FDIC issued a notice of charges and an order to pay a fine of $10,000, an order that Bunn contested.
The original FDIC notice singled out an example from 2009 in which the bank obtained appraisals for properties that showed a value of $675,000 and $376,000 respectively, when the bank’s book balance was $1,190,360 and $767,158, respectively.
Bunn stated that those properties were in Arkansas. The FDIC said Bunn and Henson “instructed that the two appraisals not be placed in the bank’s credit files for the purpose of concealing the true value of the bank’s ORE (‘other real estate’) properties from the FDIC and from state bank examiners.”
“I have always maintained that I acted appropriately and in the best interest of Valley Bank at all times,” Bunn said in an emailed statement to the Quad-City Times. “As reflected in the orders made public today, I have not admitted to any wrongdoing. Rather, I have decided to resolve this matter and move on by paying a nominal sum.”
Bunn said the parcels were sold for more than the amount of the appraisals that did not go in the files and that the appraisals in question were “immaterial to the failure of Valley Bank.”