NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS OCT 26 2016
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
STEVEN D. HAYNES, No. 14-72487
Petitioner, FDIC-11-3070e; 11-371k
v.
MEMORANDUM*
FEDERAL DEPOSIT INSURANCE
CORPORATION,
Respondent.
Petition to Review a Decision of
the Board of Directors of the Federal Deposit Insurance Corporation
Argued and Submitted August 8, 2016
San Francisco, California
Before: WALLACE and GRABER, Circuit Judges, and LYNN,** Chief District
Judge.
Petitioner Steven D. Haynes seeks review of a prohibition order and penalty
imposed by the Board of Directors of the Federal Deposit Insurance Corporation
(“the Board”). 12 U.S.C. § 1818(h)(2); 5 U.S.C. § 701–706. Upon the
recommendation of an administrative law judge (“ALJ”), the Board, pursuant to
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
** The Honorable Barbara M. G. Lynn, Chief United States District Judge for
the Northern District of Texas, sitting by designation.
12 U.S.C. § 1818(e), prohibited Haynes from participating in the affairs of any
insured depository institution and, pursuant to 12 U.S.C. § 1818(i)(2), imposed a
civil monetary penalty of $75,000. We deny the petition.
The Board’s prohibition order is supported by substantial evidence. See De
La Fuente v. FDIC, 332 F.3d 1208, 1220, 1222 (9th Cir. 2003). The Board may
prohibit an officer from banking if the officer participated in: (1) misconduct; (2)
that had an impermissible effect; and (3) that was accompanied by a culpable state
of mind. 12 U.S.C. § 1818(e)(1).
Haynes’ actions constituted misconduct for two reasons, either of which
would support the Board’s order. See De La Fuente, 332 F.3d at 1225. First,
Haynes engaged in an unsafe or unsound banking practice by disregarding the
borrower’s ability to repay. As the Board found, Haynes disregarded borrowers’
ability to repay by approving inherently risky loans—loans to fund the
construction of single-family homes—without verifying borrowers’ income or
assets or verifying that an alternate repayment source was meaningful and
supported by available assets.
2
Second, substantial evidence supports the Board’s finding that Haynes
breached his fiduciary duties to his employer, Silver State Bank of Henderson,
Nevada (“the Bank”). Bank policy required Haynes to disclose, on a written form,
whether he deviated from Bank policy. Haynes deviated from Bank policy by
failing to verify borrowers’ ability to repay and by not obtaining a meaningful
alternate repayment source before approving construction loans for single-family
homes. Yet Haynes did not disclose any exception on the Bank’s required form.
Although Haynes claims that he disclosed to senior Bank officers that he had
not verified borrowers’ income or assets, the ALJ and the Board found this
claim not to be credible. It is not our role to reweigh the evidence or disregard
such credibility determinations. See De La Fuente, 332 F.3d at 1221 (“As the trier
of fact, the ALJ was in a superior position to evaluate any conflicting testimony
and assess [the petitioner’s] arguments.”).
Substantial evidence also supports the Board’s finding that Haynes’ conduct
had an impermissible effect on the Bank’s financial soundness. 12 U.S.C.
§ 1818(e)(1)(B); De La Fuente, 332 F.3d at 1223. Haynes received commissions
on the loans at issue, and thus received a financial benefit. Additionally, eighteen
3
of the loans defaulted, causing the Bank millions of dollars in losses. It was
reasonably foreseeable that Haynes’ failure to verify borrowers’ ability to repay
increased the Bank’s risk.
There is also substantial evidence that Haynes acted culpably. 12 U.S.C.
§ 1818(e)(1)(C). The Board found that his conduct demonstrated willful and
continuing disregard. “Willful disregard” means “deliberate conduct which
exposed the bank to abnormal risk of loss or harm contrary to prudent banking
practices,” and “[a] continuing disregard” means “conduct which has been
voluntarily engaged in over a period of time with heedless indifference to the
prospective consequences.” De La Fuente, 332 F.3d at 1223–24 (internal quotation
marks omitted); see also Kim v. Office of Thrift Supervision, 40 F.3d 1050, 1054
(9th Cir. 1994).
Applying the standard set forth in De La Fuente, the Board found that
Haynes acted deliberately, in a way that was contrary to prudent banking practices
and posed an abnormal risk of loss to the Bank, which satisfies the standard for
willful disregard, and that Haynes’ conduct was continuing, as he approved the
loans over approximately nine months. Evidence that Haynes, an experienced
4
banker, with responsibility under Bank policies for verifying borrowers’ abilities to
repay, deliberately approved risky loans over approximately nine months, without
verifying borrowers’ income or assets, and without confirming that alternate
payment commitments were meaningful, is sufficient to support the Board’s
finding that Haynes acted culpably. De La Fuente, 332 F.3d at 1223–24 (finding
willful or continuing disregard from a petitioner’s “deliberate actions, over a
period of nine months,” substituting inferior collateral in a way that benefitted the
petitioner, while placing a bank’s assets in danger).
The Board was not required to find personal dishonesty to impose the
penalty it did. The statute lists willful or continuing disregard as an alternative to
personal dishonesty, 12 U.S.C. § 1818(e)(1)(C), and we have recognized that. De
La Fuente, 332 F.3d at 1223 (stating that an individual acts culpably when acting
with either personal dishonesty or willful or continuing disregard). Haynes’
conduct thus satisfies the statutory preconditions, and the Board properly imposed
the prohibition order.
Finally, Haynes challenges the civil penalty imposed on him. A civil
monetary penalty may be imposed against a person for “recklessly engag[ing] in an
5
unsafe or unsound practice,” or breaching a fiduciary duty, when that action is
“part of a pattern of misconduct” or “causes or is likely to cause more than a
minimal loss” to the bank, or “results in pecuniary gain or other benefit” to the
actor. 12 U.S.C. § 1818(i)(2)(B); 12 C.F.R. § 509.103. The Board’s findings,
supported by the record, meet these elements. Further, the ALJ recommended the
amount of the penalty, after considering all mitigating factors, including the ability
to pay. The Board thoroughly reviewed and adopted the ALJ’s recommendation.
Sufficient evidence in the record supports the Board’s decision to adopt the ALJ’s
recommendation imposing the penalty. 12 U.S.C. § 1818(i)(2)(G); 45 Fed. Reg.
59,423 (Sept. 9, 1980).
PETITION DENIED.
6