In one of the more unusual lawsuits facing bank directors, a former thrift chairman once banned from banking by federal regulators is suing directors of a New Jersey thrift for libel.
In a suit filed in New Jersey Superior Court, Lawrence B. Seidman accused IBS Financial Corp. chairman Joseph M. Ochman Sr. and other directors of mailing a Nov. 17 letter to stockholders containing what Mr. Seidman calls slanderous comments about him.
Attorneys for IBS have filed a motion to dismiss the suit, claiming that Mr. Seidman failed to state what comments in the documents defamed him. Mr. Ochman said he wouldn't rule out a countersuit.
"The company and the board of directors individually believe that the lawsuit is frivolous and without merit and we intend to defend this action," Mr. Ochman said.
Mr. Seidman and several other shareholders have waged a proxy fight to elect two directors who would support an immediate sale of Cherry Hill- based IBS to take advantage of the current merger activity.
Shareholders voted Dec. 15, at the annual meeting, but the results of the voting won't be released until Jan. 5.
Mr. Seidman has also criticized the performance of the $730 million- asset thrift. And he claims that Mr. Ochman's $1.5 million total compensation, including stock options, is too high.
"We're not going away," said Mr. Seidman, who wouldn't comment on his lawsuit or the nature of his libel complaint. "As any shareholder, we're interested in maximizing shareholder value. If he can do it, we'll applaud him. If he can't, he should look to bring in new blood to do it."
The Nov. 17 letter, faxed to the American Banker by Mr. Seidman, was sent out to IBS stockholders in response to proxy materials submitted by Mr. Seidman.
In the letter, Mr. Ochman tells shareholders about Mr. Seidman's relationship with the Office of Thrift Supervision and Edison-based Crestmont Federal Savings and Loan Association, which was bought by Chatham-based Summit Bancorp in 1994.
Mr. Ochman says in the letter that the OTS removed Mr. Seidman from his chairmanship of Crestmont and implies that Mr. Seidman might face additional action by the OTS. In fact, no further action by the agency is pending, an OTS spokesman said.
The letter claims that several weeks earlier, Mr. Seidman had "tried to force the company to engage him under a very lucrative contract" as a part- time consultant, and that when IBS refused he decided to seek the board seats to promote increased commercial lending or a sale.
Mr. Ochman wrote that the board opposed the commercial lending because of the "high degree of risk" and felt a sale was "not in the best interest of all stockholders."
"Your board of directors believes that Mr. Seidman is acting in his own personal interests and not in the interests of all stockholders," he wrote. "We don't believe your company needs the likes of the Seidman Group on its board of directors."
Mr. Seidman was banned from banking by the OTS in December 1992, after the agency concluded that he had benefited from his position at Crestmont and had tried to block an OTS investigation. He was also fined.
The ban was overturned in September 1994 by an appeals court that felt the penalty was not justified by the evidence. The OTS came back on Nov. 8 of this year with a cease-and-desist order barring him from interfering with investigations and ordering a fine of about $21,000.
