The Federal Reserve has banned a former bank executive in Illinois for approving loans based on inflated appraisals.

James Burns, who served as chief lending officer at Heritage State Bank in Lawrenceville from 1999 until its acquisition by nearby First National Bank of Carmi in 2020, approved four loans based on appraisals that were altered to reflect inflated property values, according to the Fed.

Separately, Burns failed to make sure that at least 25 loans or loan renewals were appraised by licensed appraisers and ignored inconsistencies in the appraisals. The appraisals valued collateral at levels significantly higher than when the same properties were re-appraised by FNBC post-merger.

When FNBC foreclosed on some of the affected loans, its collateral sale “yielded substantially less than the original appraisal value, causing a loss to FNBC,” according to the Fed.

“Burns’ conduct constituted violations of law or regulation, breaches of fiduciary duty, or unsafe or unsound banking practices, and involved his personal dishonesty or demonstrated his willful or continuing disregard for the Bank’s safety and soundness,” the Fed said.

Burns consented to the Fed order and agreed to comply with its provisions.

FNBC has been renamed First Bank. A call to its main line went unanswered Tuesday morning, and a request for comment by CEO Nikki Roser was not immediately answered.