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UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.
_________________________________________
ON CERTIFICATION OF THE DEPARTMENT
OF THE TREASURY--OFFICE OF THE
COMPTROLLER OF THE CURRENCY
In the Matter of a Notice to
Prohibit Further Participation
Against KAYE G. HILL,
)
)
)
)
)
)
)
) DOCKET NO. OCC-AA-EC-00-24
)
)
)
Former Employee,
BARNETT BANK, N.A.
JACKSONVILLE, FLORIDA
)
_________________________________________ )
FINAL DECISION
This is an administrative proceeding pursuant to the Federal Deposit Insurance Act (AFDI
Act@) in which the Office of the Comptroller of the Currency of the United States of America
("OCC") seeks to prohibit the Respondent, Kaye G. Hill ("Respondent"), from further participation
in the affairs of any financial institution because of her conduct as an employee of Barnett Bank,
N.A., Jacksonville, Florida (the ABank@). Under the FDI Act, the OCC may initiate a prohibition
proceeding against a former employee of a national bank, but the Board must make the final
determination whether to issue an order of prohibition.
Upon review of the administrative record, the Board issues this Final Decision adopting
the Recommended Decision ("RD") of Administrative Law Judge Ann Z. Cook (the AALJ@), and
orders the issuance of the attached Order of Prohibition.
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I. STATEMENT OF THE CASE
A. Statutory and Regulatory Framework
Under the FDI Act and the Board's regulations, the ALJ is responsible for conducting
proceedings on a notice of charges. 12 U.S.C. ' 1818(e)(4). The ALJ issues a recommended
decision that is referred to the deciding agency together with any exceptions to those
recommendations filed by the parties. The Board makes the final findings of fact, conclusions of
law, and determination whether to issue an order of prohibition in the case of prohibition orders
sought by the OCC. Id.; 12 C.F.R. ' 263.40.
The FDI Act sets forth the substantive basis upon which a federal banking agency may
issue against a bank official or employee an order of prohibition from further participation in
banking. To issue such an order, the Board must make each of three findings: 1) that the
respondent engaged in identified misconduct, including a violation of law or regulation, an unsafe
or unsound practice or a breach of fiduciary duty; 2) that the conduct had a specified effect,
including financial loss to the institution or gain to the respondent; and 3) that the respondent=s
conduct involved either personal dishonesty or a willful or continuing disregard for the safety or
soundness of the institution. 12 U.S.C. ' 1818(e)(1)(A)-(C).
An enforcement proceeding is initiated by the filing of a notice of charges which is served
on the respondent. Under the OCC's and the Board's regulations, the respondent must file an
answer within 20 days of service of the notice. 12 C.F.R. '' 19.19(a) and 263.19(a). Failure to
file an answer constitutes a waiver of the respondent's right to contest the allegations in the
notice, and a final order may be entered unless good cause is shown for failure to file a timely
answer. 12 C.F.R. '' 19.19(c)(1) and 263.19(c)(1).
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B. Procedural History
On April 6, 2000, the OCC issued a Notice initiating an enforcement action that sought
an order of prohibition due to Respondent's actions in taking $5000 from two customer accounts at
the Bank. The Notice directed Respondent to file an answer within 20 days, and warned that
failure to do so would constitute a waiver of her right to appear and contest the allegations. The
record shows that the Respondent received a copy of the Notice by certified mail. Nonetheless,
Respondent failed to file an answer within the 20-day period. Consequently, on May 22, 2000, the
ALJ issued an Order directing Respondent to show cause for her failure to file an answer.
Respondent did not respond to the Order.
On November 30, 2000, the ALJ issued a Recommended Decision finding Respondent
in default and adopting as her factual findings the allegations in the Notice. On the basis of those
findings, the ALJ recommended that an order of prohibition be entered against the Respondent.
II. DISCUSSION
The OCC's Rules of Practice and Procedure set forth the requirements of an answer and
the consequences of a failure to file an answer to a Notice. Under the Rules, failure to file a timely
answer "constitutes a waiver of [a respondent's] right to appear and contest the allegations in the
Notice." 12 C.F.R. § 19.19(c). If the ALJ finds that no good cause has been shown for the failure
to file, the judge "shall file . . . a recommended decision containing the findings and the relief
sought in the notice." Id. An order based on a failure to file a timely answer is deemed to be
issued by consent. Id.
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In this case, Respondent failed to file an answer despite notice to her of the
consequences of such failure, and also failed to respond to the ALJ's Order to show cause.
Respondent’s failure to file an answer constitutes a default.
Respondent's default requires the Board to consider the allegations in the Notice as
uncontested. The Notice alleges, and the Board finds, that Respondent made an unauthorized
withdrawal of $3000 from one customer account, and closed another, reopening it the same day
with $2000 less in the reopened account. This conduct meets all the criteria for entry of an order
of prohibition under 12 U.S.C. § 1818(e). It is a violation of law and an unsafe or unsound
practice for a bank employee to embezzle customer funds. Respondent’s actions caused gain to
herself as well as loss to the Bank. Finally, Respondent’s actions involved personal dishonesty in
taking property not her own. The requirements for an order of prohibition having been met, the
Board has determined that such an order will issue.
CONCLUSION
For these reasons, the Board orders the issuance of the attached Order of Prohibition.
By Order of the Board of Governors, this
day of _________, 2000.
BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM
_______________________________
Jennifer J. Johnson
Secretary of the Board
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.
_________________________________________
ON CERTIFICATION OF THE DEPARTMENT
OF THE TREASURY--OFFICE OF THE
)
COMPTROLLER OF THE CURRENCY
)
)
)
)
In the Matter of a Notice to
)
Prohibit Further Participation
)
Against KAYE G. HILL,
)
)
Former Employee,
)
BARNETT BANK, N.A.
)
Jacksonville, Florida
)
_________________________________________ )
DOCKET NO. OCC-AA-EC-00-24
ORDER OF PROHIBITION
WHEREAS, pursuant to section 8(e) of the Federal Deposit Insurance Act, as amended,
(the "Act") (12 U.S.C. ' 1818(e)), the Board of Governors of the Federal Reserve System ("the
Board") is of the opinion, for the reasons set forth in the accompanying Final Decision, that a final
Order of Prohibition should issue against KAYE G. HILL (“HILL”),
NOW, THEREFORE, IT IS HEREBY ORDERED, pursuant to section 8(e) of the Federal
Deposit Insurance Act, as amended, (12 U.S.C. ' 1818(e)), that:
1. In the absence of prior written approval by the Board, and by any other Federal
financial institution regulatory agency where necessary pursuant to section 8(e)(7)(B) of the Act
(12 U.S.C. ' 1818(e)(7)(B)), Hill is hereby prohibited:
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(a) from participating in the conduct of the affairs of any bank holding
company, any insured depository institution or any other institution specified in subsection
8(e)(7)(A) of the Act (12 U.S.C. ' 1818(e)(7)(A));
(b) from soliciting, procuring, transferring, attempting to transfer, voting or
attempting to vote any proxy, consent, or authorization with respect to any voting rights in any
institution described in subsection 8(e)(7)(A) of the Act (12 U.S.C. ' 1818(e)(7)(A));
(c) from violating any voting agreement previously approved by the
appropriate Federal banking agency; or
(d) from voting for a director, or from serving or acting as an institutionaffiliated party as defined in section 3(u) of the Act, (12 U.S.C. ' 1813(u)), such as an officer,
director, or employee.
2. This Order, and each provision hereof, is and shall remain fully effective and
enforceable until expressly stayed, modified, terminated or suspended in writing by the Board.
This Order shall become effective at the expiration of thirty days after service is made.
By Order of the Board of Governors, this _____ day of ____________, 2000.
BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM
__________________________________
Jennifer J. Johnson
Secretary of the Board