UPDATE: This story includes comments from a spokesman for Anthony Gressak III.
The former interim CEO of a small Southern California bank has been barred from working in the banking industry and fined $75,000 after he allegedly obtained pandemic relief funds fraudulently, among other misdeeds.
Anthony R. Gressak III resigned in 2022 as interim CEO of Irvine, California-based Nano Banc, which he co-founded, and where he'd also served as a director and chief credit officer.
The Federal Reserve on Tuesday announced penalties against both Gressak and another former Nano Banc director, James T. Chung.
The allegations against the two men tie together some of the various regulatory problems that the $958 million-asset bank has faced since 2021.
The Fed said that Gressak, who was the partial owner of a group of corporate entities that received roughly $15.5 million under the Coronavirus Aid, Relief and Economic Security Act of 2020, participated in making materially false representations in the applications for those funds, and that he accepted a portion of the money for personal expenses.
The central bank also alleged that Gressak acted improperly in some of his dealings involving Nano Banc.
For example, Gressak concealed from both the Fed and the bank's board that he received nearly $195,000 in commissions in connection with the company's roughly $37 million capital raise in 2020, according to the central bank.
The Fed said that Gressak and the bank's other founders formulated a plan that would provide them a commission on the 2020 capital raise, even though the subscription agreement with investors indicated that the bank's executives would receive no commissions.
Under the Fed's consent order with Chung, he is also barred from participating in the banking industry. The Fed alleges that Chung, like Gressak, fraudulently obtained pandemic relief funds.
Chung and Gressak neither admitted nor denied the Fed's allegations, but they agreed to comply with the orders and waived their rights to challenge them.
Chung could not immediately be reached for comment. A spokesman for Gressak said that the onetime Nano Banc executive has moved on from banking and wanted to put his interactions with the Fed behind him.
"He made decisions based on the advice of highly reputable outside regulatory counsel and executives approved by regulators," Gressak's spokesman said in a written statement. "He is looking forward to his future endeavors and working alongside effective colleagues to build great companies."
Gressak's spokesman also defended his client's record at Nano Banc, which he said included a transformation of the company into a "profitable and well-capitalized enterprise that had strong liquidity, and a balance sheet of performing loans."
In July 2024, Nano Banc named a new president and CEO, Mary Lynn Lenz, and a new board chair, Lynn McKenzie-Tallerico.
Lenz said Tuesday in a written statement: "Over the last several years, Nano Banc has transitioned leadership, creating a talented team of integrity, accountability and transparency."
Nano Banc, which was founded as a fintech company aiming to eliminate fraud from the wire transfer business, became a bank in 2018 by acquiring Commerce Bank of Temecula Valley.
The bank landed in hot water in early 2021, when both
Months later, the California DFPI issued a cease-and-desist order alleging that Nano Banc
Then in January 2022, the Fed hit Nano Banc with
The timing of those events line up with the allegations unveiled by the Fed on Tuesday. The Fed said that Gressak became the bank's acting interim CEO in 2021 before resigning in February 2022 as both an officer and director.
One of the Fed's allegations is that Gressak participated in the approval of a payroll advance to a bank employee in 2020, allowing the employee to inflate his income when seeking a loan.
In September 2022, Gressak entered into a consent order with the California DFPI over
