The federal government filed a lawsuit Friday seeking $200 million in damages against former officers and directors of Silverado Banking, Savings and Loan Association, including Neil Bush, the president's son.
The suit, filed in U.S. District Court in Denver, came just days before Bush is scheduled to appear before an administrative law judge to defend himself against charges he violated conflict-of-interest laws while serving as a Silverado director.Federal regulators have accused Bush of failing to disclose conflicts involved in business transactions with two of Silverado's large creditors and preferred stockholders.
Bush has denied the charges, which if proven could result in a cease-and-desist order, a relatively mild rebuke that could still prove a major embarrassment for Bush and the White House. President Bush has said he will not interfere in the case
and has expressed confidence his son had done nothing wrong.
The lawsuit, filed by the Federal Deposit Insurance Corp. that is responsible for covering the losses of insured depositors, accuses the the former officers and directors of the failed Denver thrift of breaching their fiduciary duty and of being grossly negligent in their duties.
"This suit was filed after a careful and thorough investigation conducted over several months," said Douglas Jones, the FDIC's senior deputy general counsel.
"Our conclusion is that Silverado was the victim of sophisticated schemes and abuses by insiders and of gross negligence by its directors and outside professionals," Jones said.
The lawsuit alleges that former Silverado officers made improper loans and investments that were approved by the directors.
Jones said the lawsuit is seeking to recover "every available dollar" for the federal deposit insurance fund and taxpayers. Bailing out the failed thrift is expected to cost taxpayers $1.6 billion.
Silverado collapsed in 1988 and was taken over by government regulators in December of that year, four months after Bush stepped down as a director. Bush, who lives in Denver and is in the oil industry there, joined Silverado's board in 1985.
In addition to Bush, others named as defendants in the suit include Michael Wise, Silverado's former chairman and chief executive officer; Robert Lewis, the thrift's former chief financial officer, Richard Vandapool, former chief operating officer and Russell Murray, former executive vice president.
W. James Metz, who owned 88 percent of Silverado's stock, also was named, along with former board members Florian Barth, Richard Bunchman, Diane Ingels, Marjorie Page and Richard Vitkus.
The Denver law firm of Sherman & Howard, which served as general counsel to Silverado, also was named as a defendant.