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In the Matter of: Bank United F.S.B. (10061) Coral Gables

April 11, 2012


The opinion of the court was delivered by: Howard R. Lloyd United States Magistrate Judge



Michael Orlando moves to quash a subpoena issued by the Federal Deposit Insurance Corporation ("FDIC") in the matter of Bank United F.S.B. (10061) Coral Gables, Florida, pursuant 17 to the Federal Deposit Insurance Act, 12 U.S.C. § 1818(n) and 12 U.S.C. 1821(d)(2)(I). The FDIC 18 initiated an investigation into Bank United F.S.B. ("Bank United") after it failed in mid-2009. In 19

November 2009, the FDIC issued an Order of Investigation to investigate, in part, any third parties 20 who provided residential home loan mortgage application and closing services to Bank United, and 21 to determine (1) "whether claims exist against any person as a result of any actions or failures to act 22 with respect to Bank United," and (2) whether the FDIC should seek to avoid any transfers made by 23 these persons and/or attach the assets of these persons." Dkt. No. 7 p. 3 ("Opp'n"); Goosenberg 24 Decl. Exh. A ("Order of Investigation"). 25

Pursuant to the Order of Investigation, the FDIC issued a subpoena duces tecum*fn1 on Union Bank, for the purpose of investigating "several arguably fraudulent mortgage finance transactions in 27

Case5:11-mc-80223-EJD Document15 Filed04/11/12 Page2 of 8

which purported borrowers were extended credit based on assets in checking and/or savings 2 accounts verified by Crocker Financial." Opp'n, p. 1. The FDIC identified at least two cases in 3 which Bank United extended loans to borrowers whose accounts were verified by an entity called 4

Bank United to purchase real property (the "Graves loan"). The second involved an individual 6 known as "C.P.," who obtained a loan to refinance real property (the "C.P. loan"). Both transactions 7 occurred in mid-2007. Crocker Financial deposited the required escrow funds in both cases, and in 8 the Graves loan, listed itself as remitter, leading the FDIC to suspect that the borrowers were merely 9 strawmen who provided neither accurate account information nor the funds required to consummate 10 the transactions. Orlando admits that Crocker Financial is a fictitious business name and that the

Crocker Financial Bank United account (account number 1470027874) "was opened as his own account," and which he used to "conduct[] a variety of financial transactions." Dkt. No. 1, p. 3 13 Crocker Financial. The first involved an individual named Jeff Graves, who obtained a loan from 5 ("Motion"). It is not clear where Orlando/Crocker Financial's "clients" kept their checking and/or 14 savings account funds, if not in the Crocker Financial account(s) at Union Bank. Orlando argues that 15 the FDIC's only "legitimate" investigation concerns the Graves loan. Id. 16 1470027874; (2) "any and all Crocker Financial Accounts;" and (3) any other accounts owned by 18

Quash, Exh. A, p. 7 ("Subpoena"). For each of these three categories, the subpoena seeks copies of 20 all signature cards, and evidence of all of the following from the period from May 1, 2006 through 21 June 1, 2008: all bank statements, all deposits of $7,500 or more, and all withdrawals of $7,500 or 22 more. Id. 23 grounds that the subpoena is overbroad and seeks the production of privileged and confidential 25 information that goes beyond the scope of the FDIC's investigation. FDIC has opposed the motion. 26

Orlando has replied, and the presiding Judge Davila gave the FDIC permission to file a sur-reply. 27 28

subpoena were two cashier's checks used in the Graves transaction. Once the FDIC realized its mistake re: the account number, it issued the instant subpoena.

The subpoena duces tecum seeks documents and records for (1) Union Bank account number "any and all persons whose name appears on a signature card for" account 1470027874. Motion to 19 Union Bank sent Orlando notice of the subpoena, and Orlando has moved to quash on the Dkt. Nos. 9, 13. Orlando has responded to the sur-reply. Dkt. No. 14. Based on the moving papers 2 and applicable authority, the court rules as follows. 3

U.S.C. § 1821(d)(2) permits the FDIC to issue subpoenas when acting "as conservator, 5 receiver, or exclusive manager and for purposes of carrying out any power, authority, or duty with 6 respect to an insured depository institution (including determining any claim against the institution 7 and determining and realizing upon any asset of any person in the course of collecting money due 8 the institution)." 12 U.S.C. § 1818(n) delineates the subpoena power: the agency conducting the 9 proceeding, examination, or investigation or ...

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