The Federal Deposit Insurance Corporation has terminated the receivership of failed Hamilton Bank, a once-prominent local bank brought down by a hurricane of fraud and deceit.
The termination means the bank’s assets have been fully liquidated, its creditors paid off and all significant legal issues resolved. Termination is the last step in the winding down of failed banks.
Federal regulators shuttered the Miami-based bank in 2002 after discovering that Hamilton was undercapitalized and had poor earnings and a high level of nonperforming loans. It had $1.3 billion in assets at the time of its closing. Regulators also said bank officials had concealed the extent of the institution’s financial troubles. Its stock, which once traded at $40 per share, became almost worthless overnight.
Hamilton’s former chairman, president and chief financial officer were all ultimately convicted of securities fraud for their role in the bank’s collapse. The chairman, Eduardo Masferrer, was sentenced to 30 years in jail. Prosecutors said Masferrer improperly swapped worthless Russian debt for other securities in order to conceal the bank’s growing losses and then collected generous bonuses for himself, based on the company’s falsified earnings reports.
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The bank’s shareholders won an $8.5 million settlement in a class-action lawsuit against Hamilton and its auditors and underwriters in 2005.