Three years after his exoneration on charges he helped hide illegal bank activity at the shuttered Hamilton Bank, Miami attorney Carlos Loumiet has filed suit against the Office of the Comptroller of the Currency, alleging he was maliciously prosecuted as revenge for whistleblowing about the federal regulatory agency.
Loumiet, a partner at DLA Piper in Miami, is seeking $4 million in damages. The suit was filed in July in Washington federal court. The suit also named OCC investigators Michael Rardin, Lee Straus, Gerard Sexton and Ronald Schneck.
“It’s outrageous the way the OCC chased Carlos Loumiet,” said his attorney, Andres Rivero of Rivero Mestre in Coral Gables. “We are going to prove they violated his constitutional rights. They tried to punish him because he blew the whistle on them.
“They’ve done whatever they can to damage his career.”
The OCC and the other defendants have not filed a response in court. An OCC spokesman said the agency does not comment on pending litigation.
The OCC, which regulated Hamilton, charged Loumiet with covering up crimes at the Miami bank in an ostensibly independent investigation before the bank was shut down for fraud. The OCC closed Hamilton Bank in 2002 in one of the largest bank failures in Miami history. Federally insured losses cost the Federal Deposit Insurance Corp. $127 million, and shareholders lost all of their holdings.
In 2007, former Hamilton Bank chief Eduardo A. Masferrer was sentenced to 30 years in prison for a fraud scheme that falsely inflated the bank’s earnings to bolster its stock and pay himself a large bonus.
Loumiet and his former law firm, Greenberg Traurig, represented Hamilton Bank.
The OCC accused Loumiet of turning a blind eye to irregularities on loan prices to reap hefty legal fees from the bank. In addition to a $250,000 fine, the agency sought to ban Loumiet from representing banks for life, which would have forced him to abandon his specialty and all of his clients.
Claims of targeting
But Loumiet, in a three-week civil regulatory trial in 2008, vigorously fought the claims, saying he was only one of a team of lawyers at Greenberg Traurig and the firm did not earn much from representing the bank, about $1.16 million. He claimed the OCC was targeting him because he went over the agency’s head to the Treasury Department’s inspector general to complain about his concerns about the fairness of the investigation.
Loumiet alleged an investigator made derogatory comments about Hispanics, saying Cubans caused the investigator to leave Miami. The bank was the nation’s second largest Hispanic-controlled bank. Of its 270 employees, 250 were Hispanic or black.
“Unfortunately, the OCC has had a troubled relationship with the Hispanic community in our country for many years,” said Loumiet’s lawsuit, which noted the OCC has never had a senior Hispanic official in its 150-year history. “The history of American banking is littered with the carcasses of Latino-owned or controlled national banks closed by the OCC, many in South Florida, in numbers way disproportionate to the total number of such banks that have existed when compared to the corresponding numbers for national banks generally.”
Greenberg settled FDIC charges against the firm for $7.6 million, and the firm paid $925,000 to settle OCC charges.
An administrative law judge ultimately cleared Loumiet of all charges. Then in July 2009, the Comptroller of the Currency issued his final decision dismissing all charges against Loumiet.
A month later, Loumiet sued the OCC under the federal Equal Access to Justice Act to recover legal fees for his defense. In 2011, the U.S. Court of Appeals for the D.C.
Circuit reversed an administrative law judge’s denial of attorney fees and awarded Loumiet legal fees and expenses of $600,000. Loumiet said he still has not gotten a penny from the OCC despite the appellate opinion.
The new lawsuit targets the OCC under the Federal Tort Claims Act for violations of the First and Fifth Amendments. He cited a U.S. Supreme Court ruling that a prosecution brought by federal agents in retaliation for a citizen’s criticism of them violates the citizen’s rights to free speech.
He also alleges intentional infliction of emotional distress, invasion of privacy, abuse of process, malicious prosecution, negligent supervision and civil conspiracy. Loumiet alleges his privacy was invaded when the OCC made damaging statements about him to news media and in news releases.
Loumiet is seeking $4 million in damages, the amount he estimates he lost when banks no longer sought his representation after the scandal. He maintained those years would have produced his highest earnings.
‘Shutting up and going along’
“Mr. Loumiet was warned by another regulatory lawyer who had much greater experience than he in dealing with the OCC divisions involved that these were ‘mean, nasty, vindictive’ people who would do whatever they could in the future to get back at him,” the 70-page complaint said. “Mr. Loumiet thought long and hard about just shutting up and going along.”
Ken Thomas, a Miami banking consultant and professor, said the OCC and FDIC have gained a reputation for being overly aggressive and “making a lot of mistakes” when it comes to community banks. They are viewed as proceeding much more delicately with large banks like JPMorgan Chase, he said.
“As much as we like to think of our regulators as being on a pedestal, we’ve seen in the last several years several mistakes they’ve made, in some cases egregious mistakes,” he said. “We will see more and more cases like that.”
Although unfamiliar with the OCC case, Thomas said Loumiet had a “pristine” reputation before the OCC investigation.
“He was a very prominent bank lawyer and did a lot of community development work,” Thomas said. “He’s done a lot for the community. This is much more than just a disgruntled plaintiff.”
But Loumiet has faced criticism previously for his representation of former Texas financier R. Allen Stanford, who is serving a 110-year prison sentence for running an $8 billion Ponzi scheme through his Antigua-based Stanford International Bank.
Loumiet served on a Stanford-funded task force that rewrote Antigua’s banking laws to allow investment money to flow in from Florida with little scrutiny.