J. Preston "Pete" Strom, Jr., P.A. is the former U.S. Attorney for the District of South Carolina. He founded Strom Law Firm, L.L.C., in Columbia, South Carolina in 1996 and is currently the President of the 
SC Bank Practices Prompt Investigation of Investor Losses
July 21st, 2010 . by Pete StromThe Strom Law Firm, LLC is investigating allegations that the Boards of Directors of several South Carolina banks may have breached a duty owed to their investors resulting in hefty financial losses, including worthless stock.
While the FDIC provides protection for the assets of bank customers affected by intervention and/or closure, bank investors and shareholders suffering financial loss must seek legal action to recover for losses, including stock loss.
If members of the Board of Directors engaged in action(s) leading investors to suffer financial loss and/or failed to take action leading stockholders to suffer financial loss, you may have a claim to recover your stock loss. Investors in the following South Carolina banks may have suffered resulting stock losses:
• Bank of Anderson
• Bank of Westminster
• Bank of Meridian
• Community South Bank and Trust
• First Federal of South Carolina
• Independence National Bank
• Plantation Federal Savings Bank
• Williamsburg First National Bank
• First South Bank Corp
• South Carolina Community Bank
• Congaree State Bank
• Carolina First, Greenville
• Tideland Bancshares
• Palmetto Bancshares
• Southern First Bancshares, Inc./Greenville First
• Woodlands Bank
• Beach First Bank
• First National Bank of the South
While the circumstances leading up to federal intervention and/or closure are specific to each bank, the various allegations are serious and include:
• Engaging in certain practices felt to jeopardize the interest of depositors, customers, and shareholders of the bank;
• Practicing unsafe and/or unsound banking practices relating to asset quality, capital adequacy, earnings, management effectiveness and liquidity;
• Dissipation of assets and earnings due to unsafe and unsound practices;
• Business practices which violate applicable law and regulation;
• Operating without effective Board of Directors oversight and effective management supervision to prevent unsafe or unsound banking practices and violations of law and regulations related to the Bank Secrecy Act (BSA)
• Failing to operate safely and soundly in accordance with all applicable laws rules and regulations.
We will be posting further information regarding the underlying allegations and likely effects in the near future. If you own stock in one of the banks listed above, contact the Strom Law Firm, LLC for a free consultation today to discuss the how we may be able to help.
July 28th, 2010 at 7:15 pm
Do not own any stock, but would like to know more about Sandhills
August 17th, 2010 at 7:46 pm
I worked with Beach First and can attest that lending practices were scewed. I have a problem loan myself. The Chief Credit Office, Katie Huntley, knowingly made me a loan to purchase equipment she already had a lien against. I worked approximately 10 feet from her office and she never asked me or any member of Blessinga Bakery if Derek Cox owned the equipment. The following is a synopsis.
I was a previous owner of Dunkin Donuts/Baskin Robbins in Myrtle Beach, SC. We entered into a contract to sale the stores; during the process we discovered an equipment lien filed by Beach First National Bank on behalf of the landlord for our 501 location. The lien was filed on 12-16-04, 6 months prior to the store opening and prior to the execution of the lease. Our opening date was June of 2005.
The landlord, Derek Cox, applied for and was approved by BFNB for a construction loan to build the 501 location (construction loan 1st mtg date of 8-11-04 for $1M). During construction he applied for a working capital line of credit and a SREM was filed in the amount of $250K. Funds were advanced without any restrictions and the money was used for a host of things. At maturity the working capital line of credit for TMM was renewed by the lender and a UCC lien was filed on the equipment that had not been ordered, nor was the building complete.
Dunkin requires you to order the equipment at least 6 months in advance. On January 25, 2005 I secured a loan in the amount of $250K from the same bank, Beach First National Bank and the same loan officer to purchase the equipment for our 501 location. I was told that the bank could not use the equipment as collateral and I’d need to supply some other form of security. I used a piece of commercial property I owned free and clear in Conway as security. I had no idea at that time that a UCC lien existed on the “future equipment” secured by the same bank. The equipment was paid for by a bank check clearly specifying purchase of equipment for 501 location. The invoice from Paramount clearly shows my name as the owner and the store number which corresponds with the check issued for the full purchase price.
For two years we made payments on the equipment. During that time we decided to sell the stores at which time our legal counsel discovered the UCC lien. We continued with closing because the buyers threatened to sue us if we did not. The sales price only covered the outstanding obligations. I was left with a $250K debt I struggle to pay.
I’ve spoken with the loan officer on numerous occasions and she said she had the right to file that lien since the landlord told her he owned the equipment. The invoices are in my name, I have a copy of the check that was made payable to the equipment company signed by that same loan officer and a letter from the equipment company stating that it has never sold equipment to TMM or Derek Cox. At one point she did say she may have used the wrong location on the UCC. Her wrong address has cost me tremendously. I’ve spoken with the President of the bank who is non-committal as well.
During the discovery phase of the sale of the franchise I found a fraudulant lease he had given another bank for $10,000.00 a month on Blessings Bakery. I presented a copy to the Chief Credit Officer as proof of Derek Cox’s dishonesty. Her only comment was that he wouldn’t do anything like that. She made him several more loans after learning of the fraudulent lease which have gone into foreclosure therefore investors lost more money because she failed to adher to her own guidelines and policies she had written for the bank.
August 18th, 2010 at 6:30 pm
Directors do not oversee lending. Loan committees generally advise and have knowledge of large loans however many loans rarely go to loan committe. I think these are the majority of the loans that have been in the headlines.
August 18th, 2010 at 6:36 pm
Buying bank stock is the same as buying any stock……..there are risks assoicated with that purchase. There has been excessive greed and I would imagine there are directors and upper-manangement officials who have profited some how. Generally banks do not allow directors, officers or employees to purchase collateral that has been repossessed or foreclosed on.
August 18th, 2010 at 7:58 pm
I’ve worked in the banking industry for many years and have witnessed the greed of management and directors. The last two years have been an eye opening experience. Management foreclosing, driving the value down, directors forming LLC’s and buying the “reduced” properties. There should be a hot line for employees going stright to FDIC to report this type of greed.