WASHINGTON — A Utah bank linked to an alleged Internet payment scam and an online gambling case was seized by the state late Friday, on a night when regulators also closed a bank in Nebraska.
The Utah Department of Financial Institutions shuttered the $198 million-asset SunFirst Bank in Saint George, Utah, and appointed the Federal Deposit Insurance Corp. as the receiver. Meanwhile, the FDIC also was called in to clean up the $106 million-asset Mid City Bank Inc. in Omaha. The two failures together — which brought the year's failure toll to 87 — were estimated to cost the FDIC about $62 million.
The failure of SunFirst Bank followed legal action against a Utah philanthropist tied to the bank who, according to published reports, faces a Federal Trade Commission lawsuit alleging he and others took part in an Internet payment-processing scheme that charged consumers for products they did not purchase.
According to the reports, the defendant, Jeremy Johnson, is also linked to John Campos, who was SunFirst's vice chairman and has been indicted for alleged involvement in illegal processing of online gambling payments.
The FDIC sold most of SunFirst's operations to Cache Valley Bank in Logan, Utah, but the failed bank's apparent legal problems may also affect the resolution. While Cache Valley agreed to assume most of SunFirst's $169 million in deposits, the FDIC said it will retain about $15 million "in deposits that may be subject to external litigation involving SunFirst Bank." The agency said certain accounts had already been frozen before the failure.
The failed bank's three branches will reopen starting Saturday as part of the acquiring bank. Cache Valley also agreed to acquire just over $177 million of SunFirst's assets. A loss-sharing deal between the FDIC and the acquirer will cover nearly $129 million of those assets. The failure, which is Utah's first this year, was estimated to cost the FDIC $49.7 million.
Meanwhile, Purdum State Bank in Purdum, Neb., agreed to assume all of Mid City's $105 in deposits. To coincide with the deal, as soon as it reopens Mid City's five branches for normal business hours, the buyer is planning to change its name to Premier Bank. The new bank will also take on essentially all of the failed bank's assets. The failure, the first in Nebraska this year, was estimated to cost the FDIC $12.7 million.
