Order No. 2004-015
In The Matter Of:
Walter C. Rainbolt, Jr.
Before The Banking Commissioner of Texas
Austin, Travis County, Texas
Agreed Order Prohibiting Participation in the Affairs of a State Bank or Other Department Regulated Entity
On this day, the matter of Walter C. Rainbolt, Jr., of Joaquin, Texas ("Respondent") was submitted to me, Randall S. James, Banking Commissioner of the State of Texas ("Commissioner"), for consideration and action.
The Respondent and the Department of Banking (the "Department") jointly agree to this Agreed Order Prohibiting Participation in the Affairs of a State Bank or Other Department Regulated Entity ("Order") whereby the Commissioner is requested to dispose of this matter pursuant to the provisions of TEX. GOV'T CODE ANN. ' 2001.056. The parties agree that the Commissioner may make the following Findings and Conclusions of Law and enter this Order.
- On May 22, 2003, the Commissioner issued an Order Prohibiting Participation in the Affairs of a State Bank against the Respondent.
- By letter dated June 11, 2003, Respondent requested a hearing on the Order Prohibiting Participation in the Affairs of a State Bank. A hearing was set for June 30, 2003.
- By letter dated June 24, 2003, Respondent requested a continuance of the hearing. On June 26, 2003, with the concurrence of the Department, the administrative law judge signed an order granting the continuance.
- Respondent has acknowledged his rights to notice of hearing, a public hearing, a proposal for decision, a review of this matter by the Commissioner, and judicial review of this matter as provided for in TEX. GOV'T CODE ANN. ' 2001.171. et. seq., and TEX. FIN. CODE, Chapter 35, and has expressly waived each and every one of said rights.
- Respondent worked for Texas State Bank, Joaquin, Texas (the "Bank") for 16 years.
- At the time of Respondent's resignation on September 13, 2001, he was the Bank's President.
- On September 7, 2001, Respondent had his wife, Missy Rainbolt, execute a loan application for her cousin Robin Smith. The amount of the loan ("Loan") was $10,000.00 and the purpose of the Loan was for the purchase of land. The Loan was collateralized with a second lien note on a 2000 Chevrolet Tahoe that was owned by Robin Smith. Missy Rainbolt, at Respondent's direction, signed Robin Smith's name on the application for the Loan knowing that Robin Smith had not authorized her to sign the application and that Robin Smith had no knowledge of the Loan. Upon receipt of the completed paperwork, Respondent authorized the Loan.
- On September 7, 2001, the Bank funded the Loan and issued a $10,000.00 check to the order of Robin Smith.
- Respondent admitted to the facts stated in paragraph 7 and 8 of the Findings in this Order in the United States District Court, Eastern District of Texas, Lufkin Division, which found the Respondent guilty on January 22, 2004, of one count of bank fraud (18 U.S.C. §1344).
Based upon the foregoing Findings, the Commissioner makes the following Conclusions of Law:
- The Commissioner has jurisdiction over this matter pursuant to TEX. FIN. CODE Chapter 35 and TEX. GOV'T CODE ANN. § 2001.056.
- Respondent has knowingly and voluntarily waived the procedural requirements necessary to the entry of this Order, including the notice of hearing, a public hearing, a proposal for decision, further review of this Order by the Commissioner, and judicial review as provided for in TEX. GOV'T CODE ANN. § 2001.171, et. seq., and TEX. FIN. CODE, Chapter 35.
- Respondent subjected himself to removal and prohibition from further participation in the affairs of a state bank under Texas Finance Code § 35.003 when he intentionally committed or participated in the commission of conducting business at the Bank in an unsafe and unsound manner in violation of Texas Finance Code § 35.002(a)(4) by:
- having Missy Rainbolt forge Robin Smith's signature on Loan documents; and
- causing bank personnel to pay the proceeds of the Loan to the order of Robin Smith;
- Respondent acted with personal dishonesty and willful disregard for the safety and soundness of the Bank in violation of Texas Finance Code § 35.003(a)(3)(A) by having Missy Rainbolt forge Robin Smith's signature on the loan documents;
- Respondent's actions constitute sufficient grounds for the Commissioner to issue an order, under §35.003 of the Code, prohibiting Respondent from further participation in the affairs of a state bank (as defined by Texas Finance Code §31.002(50)) or other entity regulated by the department.
- An order prohibiting Respondent from further participation in the affairs of a state bank or other department regulated industry is necessary and in the best interest of the Bank, its depositors, creditors, and shareholders or participants, all state banks, and all business regulated by the Department.
It is, therefore, ORDERED, ADJUDGED and DECREED that, with respect to a state bank, trust company, or other entity chartered, registered or licensed by the banking commissioner under the laws of this state, including an interstate branch, trust office, or representative office in this state of an out-of-state state bank, trust company, or foreign bank, Walter C. Rainbolt, Jr., is prohibited from:
- serving as a director, officer, or employee;
- directly or indirectly participating in any manner in the conduct of its affairs;
- soliciting, procuring, transferring, attempting to transfer, voting, or attempting to vote any proxy, consent, or authorization with respect to any voting rights; or
- directly or indirectly voting for a director, or serving or acting as a state bank-affiliated party.
IV. Effective Date
This Order against Respondent Walter C. Rainbolt, Jr., is perpetual and effective on the date it is signed by the Banking Commissioner of the State of Texas.
Signed on this 27th day of May, 2004.
/s/ Randall S. James
Randall S. James
Banking Commissioner of the State of Texas
Agreed And Approved As To Form:
J. Mark Mann
Attorney for Respondent
Wellborn, Houston, Adkison
Sadler & Hill, L.L.P.
P.O. Box 1109
300 W. Main Street
Henderson, Texas 75653-1109
Shannon Phillips Jr.,
Assistant General Counsel
Texas Department of Banking
2601 North Lamar Boulevard, Suite 300
Austin, Texas 78705-4294
On this 25th day of May, 2004, Walter C. Rainbolt, Jr., certified that the facts contained in the foregoing Agreed Order Prohibiting Participation in The Affairs of a State Bank or Other Department Regulated Entity are true and correct and acknowledges that he has the right to notice of a hearing, a public hearing, a proposal for decision, a review by the Texas Banking Commissioner of the matters that are the subject of the Agreed Order Prohibiting Participation in The Affairs of a State Bank or Other Department Regulated Entity, and judicial review of the Order as provided for in TEX. GOV'T CODE ANN. ' 2001.171 et seq., and TEX. FIN. CODE ANN., Chapter 35 and expressly waives those rights. FURTHER, WALTER C. RAINBOLT, JR., AGREES TO AND APPROVES THE FORM AND SUBSTANCE OF THIS ORDER.
Walter C. Rainbolt, Jr.