I’m not sure I even quite understand the question – what exactly
constitutes a “religious bank” that would be prohibited, while “secular banks”
would be permitted?
Eugene
From: religionlaw-boun...@lists.ucla.edu
[mailto:religionlaw-boun...@lists.ucla.edu] On Behalf Of Paul Finkelman
Sent: Monday, May 10, 2010 11:07 AM
To: Law & Religion issues for Law Academics
Subject: Faith Base Banking
Are there First Amendment issues here? Or more precisely, should there be bank
regulations -- or civil rights regulations -- that preclude religious banks? Or
is this just run-of-the-mill corruption (assuming the indictments lead to
conviction, and the banks are not innocent).
==
The New York Times
May 7, 2010
2 at Faith-Based Bank Are Indicted Over Bribes
By ROBBIE
BROWN<http://topics.nytimes.com/top/reference/timestopics/people/b/robbie_brown/index.html?inline=nyt-per>
ATLANTA — When government regulators here shut down Integrity Bank at the
height of the
recession<http://topics.nytimes.com/top/reference/timestopics/subjects/r/recession_and_depression/index.html?inline=nyt-classifier>,
in August of 2008, the bank was seen as just another failed lender that had
overvalued the real estate market and collapsed.
But a federal indictment unsealed on Friday accused two former vice presidents
at the bank of hastening its downfall by selling fraudulent loans to a hotel
developer in exchange for bribes.
The two executives, Douglas Ballard and Joseph Todd Foster, were charged with
conspiracy, insider trading and bank fraud, according to the indictment. Mr.
Ballard was also charged with bribery. The developer, Guy Mitchell, who
received $80 million in loans, was charged with conspiracy and bribery.
Founded on Christian principles in 2000 in an Atlanta suburb, Integrity used
the motto “In God We Trust.” The bank gave customers free Bibles, and employees
prayed together at meetings. Onetime investors included a Georgia state senator
and the former CNN host Lou
Dobbs<http://topics.nytimes.com/top/reference/timestopics/people/d/lou_dobbs/index.html?inline=nyt-per>.
But in announcing the indictment, the United States attorney Sally Quillian
Yates said Mr. Ballard and Mr. Foster had not lived up to the bank’s name or
mission.
“A number of banks have suffered from the plummeting real estate market, but
this bank was robbed from the inside,” she said.
Mr. Ballard, 40, and Mr. Foster, 42, could not be reached for comment on Friday
and will be arraigned at a later date. Mr. Mitchell, 50, pleaded not guilty at
a federal courthouse in Atlanta.
A lawyer for Mr. Mitchell, Edward Garland, said his client had been a
law-abiding, profitable customer for the bank. “The collapse of the economy
caused the bank failure, not his activity,” Mr. Garland said.
Georgia leads the nation in bank failures, with 38 banks having closed since
2007, according to the Federal Deposit Insurance
Corporation<http://topics.nytimes.com/top/reference/timestopics/organizations/f/federal_deposit_insurance_corp/index.html?inline=nyt-org>.
The state’s woes have generally been blamed on underregulation and
overinvestment in real estate. But the Integrity case is a different matter.
“These indictments are very unusual,” said A. James Elliott, associate dean of
Emory
University<http://topics.nytimes.com/top/reference/timestopics/organizations/e/emory_university/index.html?inline=nyt-org>
School of Law, an expert in banking law.
From 2004 to 2006, Mr. Mitchell, who lives in Coral Gables, Fla., and has
developed hotels, shopping centers and other commercial real estate, received
the $80 million in loans from Integrity, the indictment says. His holdings
include the upscale Casa Madrona Hotel and Spa in Sausalito, Calif., and the
Royal Palm Hotel near Miami.
The indictment charges that he obtained much of the money under false pretenses
and deposited nearly $20 million in a personal checking account, with which he
bought luxury items, including a $1.5 million private island in the Bahamas.
The indictment charges that Mr. Mitchell made few, if any, payments on the
loans. Instead, it says, he took additional loans, and his debt ballooned. In
return for lenience, Mr. Mitchell paid Mr. Ballard more than $230,000 in
bribes, the indictment says. It also accuses the two bank executives of
engaging in insider trading by selling Integrity stock.
“After passing out $80 million to the developer like it was Monopoly money,
both officers dumped their Integrity stock before the failed loans came to
light,” Ms. Yates said.
But Mr. Garland, the defense lawyer, said Mr. Mitchell was in compliance with
banking regulations and merely used a central bank account for both personal
and business expenses, adding, “We expect to show that he is completely
innocent.”
Integrity reported assets of $1.1 billion when it was sold to a unit of the
Regions Financial
Corporation<http://topics.nytimes.com/top/news/business/companies/regions_financial_corporation/index.html?inline=nyt-org>
in 2008. The bank had been a prominent example of faith-based banking in
Georgia, with five locations.
The bank’s founder, Steven M. Skow, a Lutheran, said it gave away 10 percent of
annual profits to churches and faith-based charities, donating $1.7 million in
2007. Mr. Skow said it did not discriminate against non-Christians.
“We weren’t selling religion,” he said. “We just managed the bank on godly
principles, like the golden rule.”
Mr. Skow, who left the bank in 2007 and was not implicated in the indictment,
said he knew nothing about the activities at the heart of the indictment. He
said he had lost $22 million in stock when the bank failed.
Ms. Yates, the United States attorney, said the investigation into Integrity
was continuing.
----
Paul Finkelman
President William McKinley Distinguished Professor of Law
Albany Law School
80 New Scotland Avenue
Albany, NY 12208
518-445-3386 (p)
518-445-3363 (f)
paul.finkel...@albanylaw.edu
www.paulfinkelman.com
--- On Mon, 5/10/10, hamilto...@aol.com <hamilto...@aol.com> wrote:
From: hamilto...@aol.com <hamilto...@aol.com>
Subject: Re: Factual Clarification re CLS
To: religionlaw@lists.ucla.edu
Date: Monday, May 10, 2010, 1:43 PM
David-- I agree with your point here, and would note that it sounds just like
the defense in Loving v. VA.
I reject the notion that it wouldn't discriminate against gay and lesbian
people to say, you're as free as straight people to marry and have sex with a
person of a different sex, and straight people are as forbidden as gay and
lesbian people to have sex with a person of the same sex
The problem I think with mediating any disagreement regarding the policies in
CLS v Martinez is that both sides seemed to shift positioning from court to
court and from brief to brief and then even at oral argument. I think we are
dealing with a moving target basically.
Marci
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