OKLAHOMA CITY – An ex-officer at a Muskogee County bank has been barred by the Federal Deposit Insurance Corp. from “participating in any manner in the conduct of the affairs of any financial institution or organization.”
The FDIC determined that Susan M. Chapman, a former vice president and loan officer at Fort Gibson State Bank, made unauthorized loan advances and misapplied loan proceeds and checks received by the institution.
Proceeds from the advances were “credited to other borrowers’ loans that were past due, deposited into another customer’s account, or a cashier’s check would be issued to an unrelated borrower.”
Chapman, who was living in Cherokee County at the time, neither admitted nor denied the allegations. Nevertheless, her “breaches … caused the bank to suffer” a financial loss so significant that ultimately the institution was sold in order to avoid collapse, court records reflect.
Chapman’s actions “involved personal dishonesty” and she violated her “fiduciary duties owed to the bank,” the FDIC reported.
A consent agreement stipulates that Chapman is prohibited from:
Ÿ working in or for any financial institution or organization.
Ÿ soliciting, procuring, transferring or attempting to transfer, voting or attempting to vote any proxy, consent, or authorization “with respect to any voting rights in any financial institution.”
Ÿ voting for a director or serving or acting as an institution-affiliated party.
The prohibition will remain effective and enforceable until the FDIC and any “appropriate federal financial institutions regulatory agency,” opt to modify, terminate, suspend or set aside the ban.
The FDIC also assessed a $25,000 civil penalty against Chapman, which must be paid “immediately” to the U.S. Treasury.
Although the FDIC reported that, “There is no evidence of personal gain” for Chapman, a lawsuit the bank filed against her and Travelers Casualty and Surety Co. of America disputes that.
Bank secured bond
for up to $2.5 million
to cover malfeasance
Fort Gibson State Bank was a state-chartered bank. To protect the bank and the deposits of its customers, the institution’s holding company, Three Rivers Bancshares, secured a bond that obligated Travelers to cover up to $2.5 million in bank losses “resulting directly from dishonest or fraudulent acts” committed by any bank employee.
According to court documents, Chapman was employed at the Fort Gibson Bank as a loan officer for 19 years: from March 24, 1999, to June 25, 2018. She became an assistant vice president of the bank in 2001 and a vice president in 2014.
In a lawsuit filed in Muskogee County District Court in May 2019, the bank alleged that Chapman “defrauded the bank to enrich herself and customers she preferred” and to “cover up past fraudulent conduct by making fraudulent customer advances to accounts in order to cover up funds she had stolen from other accounts…”
Her “fraudulent conduct” involved “hundreds if not thousands of different transactions” at the bank, affected more than 140 accounts “and persisted for over 15 years,” the lawsuit claimed. Those transactions included:
Ÿ embezzling cash payments made by bank customers for her own or another person’s benefit.
Ÿ advances on customer loans without being asked or authorized by the customers, then using the advanced funds for her own or another person’s benefit and/or to fraudulently credit the advance to another loan in order to conceal prior transactions.
Ÿ diverting bank income for her own or another person’s benefit and/or to pay customer loans.
Ÿ diverting sale proceeds for property that was collateral for bank loans for her own or another person’s benefit and/or to pay other customer loans.
Ÿ forging signatures on cashier’s checks, causing the bank to wrongfully pay money to herself or others. One such alleged incident occurred in 2013 when Chapman “forged the signature of the president of the bank” on a $56,495 cashier’s check, the lawsuit charges. Chapman allegedly made the cashier’s check out to a fake bank customer and applied it to the fake customer’s loan account.
Ÿ falsifying bank customer loan records so the bank would lend money to customers who did not meet the bank’s lending guidelines.
These alleged activities remained concealed until Chapman went on vacation in the summer of 2018. When she returned to work five days later, she was fired.
The next day the bank contacted Travelers to file a report “and begin the claims submission process under the bond.”
Losses calculated
at more than $2.8M
Four months later, after conducting “a forensic audit of Chapman’s malfeasance,” the bank in October 2018 submitted its proof of loss to Travelers, “detailing the various schemes” she allegedly used “to defraud the bank and its customers…” More than 10,000 pages of supporting documentation were attached to the report.
The proof of loss identified $4.7 million in false or unauthorized advances from customer accounts, more than $800,000 in casher’s checks “that were fraudulently obtained by Chapman or an accomplice,” and at least $62,532 in diverted bank income. Fort Gibson State Bank established its losses at more than $2.8 million.
However, Travelers refused to “timely pay” the claim, leaving the bank in “a perilous condition…” With capital reserves “seriously depleted,” federal and state regulators demanded that the bank inject capital “to the tune of $1.2 million” to cover its losses “or face administrative dissolution.”
Travelers demanded more information from the bank on March 11, 2019, even though the insurer “had already investigated the bank’s claim for almost five months…”
Further, the bank charged, Travelers, “knowing that it owed at least $1.27 million” to the bank, “refused to pay any amount” of the claim “and continued to unreasonably and repeatedly request” more information.
Regulators filed “numerous orders” against the bank, which forced the institution to “take out a large loan in an attempt to cover its losses and shore up its capital requirements…”
Ultimately, Three Rivers and Bancshares were compelled to sell the bank to Firstar Financial “at liquidation prices.” The lawsuit complained that “Chapman’s conduct” and Travelers’ dilatory tactics devalued the institution.
Firstar Bank, successor by merger to Fort Gibson State Bank, Fort Gibson Bancshares and Three Rivers Bancshares dismissed their claims against Travelers Casualty and Surety Co. on Dec. 14, 2021. Court records do not indicate whether the claim was ever paid in part or in full.
After scouring records of the Oklahoma State Courts Network and of the three federal courts in this state, Southwest Ledger found nothing to indicate that criminal charges were ever filed in this matter.