GREELEY, Colo.—About 60 investors who sued former leaders of the failed New Frontier Bank for more than $6.5 million in losses plan to drop their lawsuit.
Real estate agent Carol D. Miller, who spearheaded the suit, said the decision came after the Federal Deposit Insurance Corp. told plaintiffs they were unlikely to recoup any money.
Miller and the other investors filed a civil lawsuit in December against former bank President Larry Seastrom, six former board members and two other former bank officers, alleging they ignored warnings from regulators about unsound banking practices, profited from sweetheart deals, traded loans for investments in the bank and concentrated loans in volatile cyclical industries susceptible to market changes.
Insurance liability coverage for the Greeley bank’s former directors and officers lapsed when the bank went into receivership in April, so any potential award would have come from their personal assets. The FDIC is first in line to recover those assets.
A report for the FDIC said it cost the deposit insurance fund $668.9 million to cover the bank’s deposits. The bank had $1.8 billion in assets when it closed. The assets are being sold off.
The FDIC declined comment on any ongoing investigations into the bank’s demise.
New Frontier had branches in Greeley, Windsor and Longmont. It was the region’s largest agricultural lender, loaning an estimated $700 million to northern Colorado farmers.
Miller also was on New Frontier’s board but left in 2004.
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Information from: Fort Collins Coloradoan,
