FDIC seeks millions from Sonoma Valley Bank officers
Switzer, Cutting and Melland targeted
Mel Switzer and Sean Cutting, of the former Sonoma Valley Bank, have been directly targeted by the Federal Deposit and Insurance Corporation (FDIC) for recovery of $12 million in lost depositor assets. A third defendant, Brian Melland, was included to support the government case even though he has no assets to recover.
Already the target of a civil suit from bank investors, Switzer and Cutting were singled out for their roles as principals of the bank and its loan committee.
The FDIC complaint, filed on Aug. 19, 2013, is for Negligence, Gross Negligence, and Breach of Fiduciary Duty, and seeks recovery of losses the bank incurred through 10 commercial real estate loans and one commercial line of credit, all given to a Marin developer with very shaky credentials during the height of the real estate frenzy.
Switzer and Cutting were principal members of the loan committee that approved $33 million in loans to Bijan Madjlessi for a series of projects that failed. The FDIC shut Sonoma Valley Bank down after finding it had loaned more money than it was allowed under federal regulations.
The suit also claims that the loan committee violated the bank’s own rules in making the loans. While not a criminal proceeding, the charges in the suit might form the basis of a future criminal action.
Attorneys for Switzer and Cutting refused to have the case heard by a federal magistrate and are seeking a jury trial. The first hearing, to determine how the parties will proceed, is scheduled for Nov. 21 in U.S. District Court for Northern California before Judge Richard Seeborg.
A copy of the complaint is available online here.