| NEW YORK
NEW YORK Dec 7 Three former officers of IndyMac
Bank FSB's homebuilder division were found liable by a jury on
Friday for more than $168 million for negligently lending to
developers who were unlikely to repay millions of dollars in
The Federal Deposit Insurance Corp brought a civil lawsuit
against the officers in 2010 in its capacity as receiver for the
now-defunct IndyMac. The agency alleged that the officers of
"significant departures from safe and sound banking practices"
in an attempt to rev up IndyMac's loan production despite
warnings about an imminent market decline.
Following a 16-day trial in California federal court, jurors
found three former officers - Scott Van Dellen, Richard Koon and
Kenneth Shellem - liable for negligence and breach of fiduciary
duty in connection with 23 loans, according to the verdict
sheet. Jurors found that all three men should pay $168.1 million
A fourth defendant, William Rothman, settled the claims
against him in October for $4.75 million.
FDIC general counsel Richard Osterman said in a statement
that the agency was pleased with the verdict. "While most of our
cases have settled short of trial, we remain committed to
pursuing actions where necessary to maximize recoveries and hold
those responsible for losses to failed financial institutions
accountable," he said.
Attorney Kirby Behre, who represented Shellem and Koon,
called the verdict the "result of a deliberate effort by the
government to scapegoat a few men for the impact that the
unforeseen and unprecedented housing collapse in 2007 had at
IndyMac and many, many other financial institutions."
California-based IndyMac, which specialized in a type of
mortgage that often required minimal documentation from
borrowers, was seized by banking regulators in July 2008 as the
financial crisis gathered steam.
Its failure cost the FDIC, which stands behind bank
deposits, an estimated $12.8 billion.
Lawyers for Van Dellen could not be immediately reached for
comment Friday evening.
The case is FDIC v. Van Dellen et al, in the U.S. District Court
for the Central District of California, no. 10-4915.
(Reporting by Jessica Dye; Editing by Lisa Shumaker)