Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Carlos Loumiet v. Office of the Comptroller of the Currency

July 12, 2011


The opinion of the court was delivered by: Brown, Circuit Judge:

Argued May 6, 2011

On Petition for Review of an Order of the Department of Treasury

Before: HENDERSON, BROWN and KAVANAUGH, Circuit Judges.

Opinion for the Court filed by Circuit Judge BROWN.

Carlos Loumiet appeals a final decision and order of the Office of the Comptroller of the Currency ("Comptroller") requiring him to bear the costs of his own defense in an underlying administrative proceeding in which he prevailed. We reverse that decision, finding the Comptroller was not "substantially justified" in bringing the underlying administrative proceedings against Loumiet, and therefore Loumiet is entitled to attorney's fees under the Equal Access to Justice Act, 5 U.S.C. § 504. We remand for the Comptroller to calculate the amount of those fees.

In 1998, Hamilton Bank ("Bank") engaged in "adjusted price trades" or "ratio swaps," a type of bank and securities fraud when used to conceal losses in which financial instruments are sold at face value even though the instruments are actually worth far less. In this case, Hamilton invested $22M in Russian debt instruments, which subsequently lost value in the summer of 1998. See United States v. Masferrer, 514 F.3d 1158, 1160 (11th Cir. 2008) (describing the Bank's fraudulent transactions). To conceal the loss, the Bank swapped the Russian debt instruments for other financial instruments. Id. General accounting rules require such swaps to be accounted for as related transactions. Id. By not doing so, the Bank made it appear as if it "managed to sell its Russian assets at face value, thereby hiding their highly discounted sales prices." Id.

The Comptroller discovered the Bank's ratio swaps and, in April 2000, issued a temporary cease-and-desist order requiring the Bank to take remedial measures. The Bank's Audit Committee retained an outside law firm, Greenberg Traurig, LLP ("Greenberg"), to conduct an independent investigation of the alleged fraud. Greenberg, led by Loumiet, who was a partner at the firm at the time, reviewed the pertinent documents, conducted personal interviews of Bank executives, and ultimately issued a report to the Bank's Audit Committee on November 15, 2000 ("November Report"). The November Report found "no convincing evidence" to establish Bank executives "intentionally misled" Deloitte and Touche ("Deloitte"), the Bank's outside accounting auditor, or the Bank's own Audit Committee. See Loumiet, OCC-AA-EC-06-102 (July 20, 2010) (initial EAJA Decision), reprinted in Joint Appendix ("J.A.") 1868.

Nevertheless, the Bank restated its public financial statements, believing the November Report provided a sufficient basis to conclude the swaps should have been accounted for as related transactions.

In January 2001, the Comptroller sent Greenberg a letter in response to the November Report. The letter indicated the Comptroller had taken the statement of an individual who had participated in the swap transactions (i.e. a counter-party) as part of its on-going investigation of the Bank. According to the Comptroller, the statement contradicted the November Report. The Comptroller also notified Greenberg orally of six red flags indicating the Bank had engaged in adjusted price trades. As a result, Greenberg drafted a second report, which it provided to the Bank's Audit Committee in March 2001 ("March Report"). The March Report found the counter- party's statement was consistent with statements made by Bank executives during Greenberg's initial independent investigation. The March Report also concluded the Comptroller's red flags did not alter the previous conclusions of the November Report.

The Comptroller issued its own report alleging wrongdoing at the Bank ("Comptroller Report"). As a result of the OCC Report, the Bank shut down. Three Bank executives entered into consent orders with the Comptroller, barring each from participating in the affairs of a federally insured bank in the future. Greenberg also entered into a consent order, agreeing to pay $750,000 in fines. Finally, the Comptroller closed the Bank and appointed the Federal Deposit Insurance Corporation as its receiver.

Several years later, the Comptroller's Enforcement and Compliance Division ("Division") invoked the Financial Institutions Reform, Recovery, and Enforcement Act ("FIRREA") of 1989, Pub. L. No. 101-73, 102 Stat. 183 (codified in scattered sections of Title 12 of the U.S. Code), and initiated an administrative proceeding against Loumiet. The Division alleged Loumiet was an "institution-affiliated party" ("IAP"), who, in participating in Greenberg's independent investigation of the Bank, had "knowingly or recklessly . . . breach[ed his] fiduciary duty," and as a result "caused . . . a significant adverse effect on" the Bank. 12 U.S.C. § 1813(u)(4). The Division sought to assess a $250,000 monetary penalty against Loumiet, among other sanctions. After a three week bench trial, an Administrative Law Judge ("ALJ") recommended dismissal of the Division's claims ("ALJ FIRREA Decision"). Loumiet OCC-AA-EC- 06-102 (June 17, 2008), reprinted in J.A. 950. The Comptroller reviewed the ALJ's recommendation ("Comptroller FIRREA Decision") and agreed dismissal was appropriate, but "largely rejected" the "reasoning and conclusions" in the ALJ FIRREA Decision. Loumiet, OCC- AA-EC-06-102 at 17 (July 27, 2009), reprinted in J.A. 1043.

Following the Comptroller FIRREA Decision, Loumiet filed an EAJA application seeking attorney's fees for his defense in the agency FIRREA adjudication. An ALJ recommended denying Loumiet's application ("ALJ EAJA Decision"), concluding that the Division's position in the underlying agency proceeding was "substantially justified . . . in both law and fact" and therefore Loumiet was not entitled to attorney's fees. Loumiet, OCC-AA-EC-06-102 at 7 (July 20, 2010). Because neither party sought review by the Comptroller, the ALJ's recommendation became the final decision of the Comptroller. 31 C.F.R. § 6.15. Reviewing that decision for substantial evidence, see 5 U.S.C. § 504(c)(2) (specifying the standard of review); Kuhns v. Bd. of Governors of Fed. Reserve Sys., 930 F.2d 39, 41 (D.C. Cir. 1991) (reviewing agency's EAJA decision for substantial evidence); we reverse and remand for further considerations consistent with this opinion.


The EAJA provides: "An agency that conducts an adversary adjudication shall award, to a prevailing party . . . fees and other expenses incurred by that party in connection with that proceeding, unless the adjudicative officer of the agency finds that the position of the agency was substantially justified or that special circumstances make an award unjust." 5 U.S.C. ยง 504(a)(1). The Comptroller, who bore the burden in the EAJA proceeding before the ALJ of demonstrating the Division's position was substantially justified, see F.J. Vollmer Co., Inc. v. Magaw, 102 F.3d 591, 595 (D.C. Cir. 1996), concedes Loumiet was a "prevailing party" under the EAJA. Thus, Loumiet is entitled to attorney's fees unless the "administrative record, as a whole, ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.