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UNITED STATES OF AMERICA BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON,D.C. 1 In the Matter of Docket No. 04-020-G-I 1 Kenneth M. Matzdofl, ) An Institution-Affiliated Party of 1 1 Garden City Bancshares, Inc., Garden City, Missouri, 1 a Bank Holding Company. 1 Notice of Prohibition Issued Upon Consent Pursuant to Section S(gXA) of the Federal Deposit Insuraoce Act, as Amended ) ) WHEREAS, pursuant to Section 8(g)(l)(A) of the Federal Deposit hurance Act, as amended (the “FDI Act”) (12 U.S.C. 5 1818(g)(l)(A)), the Board of Governors of the Federal Reserve System (the ‘‘Board of Governors”) issues this Consent Notice of Prohibition (the “Consent Notice”) against Kenneth M. Matzdorff (“Matzdorff’), an institution-affiliatedparty, as defmed in Sections 3(u) and 8@)(3) of the FDIAct (12 U.S.C. $5 1813(u) and 1818(b)(3)), ofGarden City Bancshares, Inc., Garden City, Missouri (“Bancshares”), a registered bank holding company, which owns or controls a majority of the voting shares of the Garden City Bank, Garden City, Missouri (the ‘‘Bank”), a State non-member bank insured by the Federal Deposit InsuranceCorporation; WHEREAS, Matzdorff was charged in a criminal complaint in the Unikd States District Court for the EastemDistrict ofNew Yorkwith the following criminal offenses (i) conspiring to conduct or attempting to conduct financial trmactions, affecting interstate and foreign commerce, which in 1 fact hvolvd the proceeds of specified unlawful activity in violation of I8 U.S.C. 9 1341 (mail fraud); 18 U.S.C. $1343 (wire fraud); and 18 U.S.C. $ 1029(a)(5) (cndit card fraud); and (ii) conspiring to conduct or attempting to conduct financial transactions which in fact involved the proceeds of specified unlawful activity, knowing that the property involved in the financial transactionsrepresented the proceeds of some form of unlawful activity, with the intent to promote the carrying on of specifiedunlawful activity, and knowing that the transactions were designed in whole or in part to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful adivity in violation of 18 U.S.C. §$ 1956(h), 1956(a)(l)(A)((i), and 1956(a)(l)(Bf(i)(money laundering); WHEREAS, theviolations of 18 U.S.C. $5 1341,1343, 1029(a)(S) set forth above are each crimes involving dishonesty or breach of trust that are punishable by imprisonment for a term exceeding one year under Federal law within the meaning of Section 8(g)(l)(A)(i) oftheFDIAct (12 U.S.C. 5 1818(g)(l)(A)(i)); WHEREAS, the violations of 18 U.S.C. $8 1956(h), 1956(aXl)(A)(i), and 1956(aXl)(B)(i) set forth above are criminal violations specified in Section 8(g)(l)(A)()(i) oftheFLHAct(12 U.S.C. $ 1818(g)(l)(A)(ii)); WHEREAS, pursuant to Rule 4 of the Federal Rules of Criminal Procedure, the affidavit in support of MatzdorfPs arrest warrant dated July 22,2004 is a complaint within the meaning of Section 8(g)(l)(A) ofthe FDI Act (12 U.S.C. § 1818(g)U)(A)); WHEREAS, Matulorffhas resigned from his positions as an officer and dimtor of the Bank and Bancshares, but conhues to own a majority of the shares of Bancshara; WHEREAS, Maizdorff's continued ownership of a majority of the shares of Bancshares, which controls the Bank, may pose a theat to the interests ofthe Bank's 2 depositors in that Matzdorffs ability to vote tbe shares ofthe Bank and Bancshares may enable him to have undue influence over the directors, management and operations of the Bank; WHEREAS, Matzdofls contioued ownership of a majority of the shares of Bancshares, which contmls the Bank, may threaten to impair public confidence in the Bank and Bancshares in that the criminal charges set forth above have generated adverse publicity in the Bank‘s market area and elsewhere with respect to Matzdofl, his omersXp of the Bank and Bancshares, and his alleged connection to organized crime, and wbile criminal charges are pending against Matzdorff, there is likely to be additional adverse publicity regarding Matrdocffs ownership of the Bank and Bancsham, and his alleged connection to organized crime; and WHEREAS, by affixing his signature hereunder, Matzdorffhas consented to the issuance of this Consent Notice by the Board of Governors, has ageed to comply with each and every provision of this Consent Notice, and has waived any and all rights he might otherwise have pursuant to 12 U.S.C. 5 1818 or 12 C.F.R. Pat 263, or otherwise: (a) to an informal hearing before the Board of Governors pursuant to Section 8(g)(3) of the FDI Act (12 U.S.C. 5 1818(g)(3)), and Section 263.72 of the Rules of Practice for Hearings of the Board of Governors (the “Rules of Practice”) (12 C.F.R. 5 263.72); @) to obtain judicial review of this Consent Notice or any provision hereof; and (c) to challenge or contest in any manner the basis, issuance, validity, effectiveness or enforceability of this Consent Notice or any provision hereof. NOW TBEREFORE, the Board ofGovernors, pursuant to Section 8&)(l)(A) of the FDI Act and Section 263.7 1 of the Rules of Practice, hereby issues this Consed Notice and orders that: 1. Matzdomis hereby prohibited from participating in any manner in the conduct of the affairs of Bancshares. 2. The prohibition set forth above shall remain in effect until the c m i n d charges referred to in the second WHEREAS clause above(or in any supersedingcomplaint, information or indictment containing charges of a similar nature) are finally disposed of or until modified, terminated, suspended, or set aside by the Board of Governors. 3. A copy of th2 Consent Notice shall be served upon Bancshares and the Bank. 4. Any violation of this Consent Notice shall subject Matzdorff to sanctions under Section 8 of the FDI Act (12 7J.S.C 5. 5 1818). All communication regarding this Consent Notice shall be addressed to: a. Richard M. Ashton Associate General Counsel Board of Governors of the Federal Reserve System 20'h & c sts., Nw W a ~ h i n g DC t ~ ~20551 b. Kenneth M. Matzdorff 17074 South Demi Drive Belton, MO 64012 of the Federal Reserve System, Board of Governors of the Federal Reserve System m. rn% kenneth M. Matzdddr