Dive Brief:

• The former CEO and president of failed First National Bank of Lindsay, Danny Seibel, has been indicted by a federal grand jury on charges of bank fraud, the Justice Department said Thursday. 
• Seibel, 54, of Lindsay, Oklahoma, allegedly oversaw the issuance of loans to his friends and neighbors which were never repaid, according to a news release. He then manipulated the bank’s records and falsified bank reports to exaggerate the performance of those loans, the DOJ alleged. 
• Seibel, who served as the bank’s chief executive and president from about February 2007 until he was fired in September 2024, was charged with conspiracy to commit bank fraud, bank fraud, making false entries in the books and records of a financial institution, obstructing the examination of a financial institution and failing to implement an anti-money laundering program, the DOJ said.

Dive Insight:

The Office of the Comptroller of the Currency closed First National Bank of Lindsay in October 2024; it was the second bank failure of 2024. Duncan, Oklahoma-based First Bank & Trust Co. acquired the shuttered bank’s insured deposits. 

The OCC closed $107.8 million-asset First National Bank of Lindsay after “identifying false and deceptive bank records and other information suggesting fraud that revealed depletion of the bank’s capital.” The regulator found the lender was in “an unsafe or unsound condition to transact business.”

When the single-branch bank was closed, the OCC referred the case to the Justice Department.

Seibel had been employed at the bank since 1993. During his time at the helm of the bank, Seibel also held other management roles, including CFO, information technology officer, compliance officer and Bank Secrecy Act officer, according to the indictment. He was also a loan officer and served on the bank’s board and its executive loan committee. 

Some of the borrowers Seibel issued loans to were unaware he wasn’t recording their loans, was posting fake loans to their accounts, or inputting fake entries into bank records regarding their loans and accounts, the indictment said. 

Others, however, were aware of his tactics, and texted Seibel “asking him to ‘fix’ or add funds to their overdrawn accounts by manually adding [bank] funds to their accounts when they needed money,” the indictment alleged. 

One borrower, in October 2023, texted Seibel to ask him to add more money to his trucking company's checking account to cover operating expenses. “Seibel replied, ‘Dude[,] I just covered $70k and now you're $31k over. I'll give you $5k now and that is all[,] you gotta start putting money in,’” the indictment said.

Five months later, the same borrower sought more money from Seibel, who replied, “‘You bring me deposits tomorrow. I am finally totally tapped. Way too far OD. You need to go factor and cover this overdraft . . . . Hey I'm over $500k. I'm tired of taking care of your business and get no damn deposits. I have legal lending limits and overdrafts are part of it. I'm sorry my job ain't worth it.’” 

But later that month, Seibel manually added more than $500,000 to that borrower’s account, which had a negative balance, “when no such deposit had actually been made,” according to the indictment.

Some loans were issued under the guise of real estate or equipment purchasing, when they were actually used to repay other loans, gamble or pay day-to-day expenses, the DOJ alleged. 

In modifying bank reports, Seibel allegedly used new loans or transfers of the bank’s own funds to cover overdrafts of outstanding loans, according to the DOJ. 

The former CEO “frequently manipulated” bank records to hide the activity from the OCC and the bank’s board, the indictment alleged. 

At board meetings, “Seibel failed to disclose the true extent of borrowers' overdrafts or past-due loans, grossly misstating the amount of loans that FNBL had issued and failed to collect – due to borrower non-payment – by millions of dollars,” the indictment said.

In August 2024, when the OCC was conducting a regularly scheduled on-site bank examination, Seibel allegedly provided agency staff with a false document that concealed “hundreds of changes” Seibel had made to loan data, the DOJ said. 

But a “suspiciously high volume of activity” reflected in the document led OCC examiners to ask for a daily maintenance report from June, the indictment said. 

After learning the OCC had obtained an unaltered copy of that report, Seibel “texted another Bank employee, ‘I think I'm nailed to the wall now I [g]ave them a report that [is not] the same as what they got now and they have both. Nobody's fault but my own. Also, delete these texts.’”  

Seibel also failed to implement an anti-money laundering program at the bank and advised bank customers to keep cash deposits below $10,000 to avoid triggering relevant reporting requirements, the DOJ alleged. 

If convicted, Seibel faces up to 30 years in prison and up to $1 million in fines, the DOJ said. The case was filed in U.S. District Court for the Western District of Oklahoma.