A bankruptcy trustee has sued the former officers and directors of defunct Park Bank of St. Petersburg, one day before the fourth anniversary of the bank's collapse. The suit was filed Tuesday in Hillsborough County circuit court in Tampa by bankruptcy trustee William Brandt, representing Florida Park Banks Inc. Florida Park Banks is a holding company that owned Park Bank and filed for Chapter 11 bankruptcy court protection from creditors' claims in 1987.
In many ways, the suit parallels actions filed by former Park Bank shareholders and the Federal Deposit Insurance Corp. (FDIC), which sought $30-million from the directors. Those suits were simultaneously settled out of court last summer and details were never made public.
The new suit charges the officers and directors with negligence and breach of duty to the holding company and asks the court for unspecified damages.
The suit recites the history of the troubled bank, which on St. Valentine's Day, 1986, became the biggest banking failure in Florida history. The FDIC took control of the bank, selling off about $300-million in assets to Chase Bank of Florida, N.A., while absorbing another $300-million in bad loans and foreclosed real estate.
The failure of the bank rippled through the Pinellas banking and real estate community, leading to problems for other financial institutions and developers who participated in Park Bank deals.
By now, the story of Park Bank is well known and the suits add few new details. According to the suit, Park Bank grew "without proper controls, asset quality standards, or prudent lending policies and practices." Loans were made to floundering developers, which then received additional financing when they could not meet repayment schedules, according to the suit. Investors in Park Bank stock were encouraged to take out loans from Park Bank covering 100 percent of their investment. In addition, there was widespread insider lending and business dealings with consultants who had financial interests in Park Bank.
These practices allegedly continued despite repeated warnings from bank examiners.
John E. Kearney, former chairman of Park Bank and a defendant in the new suits, said he did not know if he or other officers were covered by directors' and officers' liability insurance.
Also named as defendants in the suit are former chairman Richard O. Jacobs and former directors W. Frank Byars, Peter E. Dawson, Philip W. Vineyard, Vernon F. Vineyard, Wilfred M. Zemp and Lloyd E. Williams.
Also named as defendants were former senior lending officers Jim W. Mathews and Arthur Johnson III. Mathews and Johnson were convicted in federal court last year on charges that they misapplied $1.4-million in bank funds.
Another defendant is G.B.H.B. Inc., the liquidating trust for the law firm Jacobs, Robbins, Gaynor, Burton, Hampp, Burns, Bronstein and Shasteen, formerly Park Bank's law firm and at one time the biggest in Pinellas County.
The other defendants are Kearney-controlled companies including J.K. Financial Group Inc., Financial Development Corp. of St. Petersburg, J.K. Financial Corp., and J.K. Consulting Co.