The Texas Banking Commission has stripped a McLennan County businessman of his status as a banker and ordered him to pay $937,000 in fines and restitution as a result of what it called his “unsound conduct” as head of an East Texas bank.
In an order dated March 21, Texas Banking Commissioner Charles G. Cooper prohibits David Wake Mann, of McGregor, from serving as a director, officer or employee of a state bank, holding company of a state bank or any entity licensed by the banking commissioner.
He must now pay $687,000 in restitution for improper expenses and $250,000 in fines for his actions.
The order involves Mann’s involvement as former chairman of the board, former chief executive officer and former director of Citizens State Bank in Woodville, which is in Tyler County in far East Texas, with branches in Marlin and Waco. The order states that his actions involved “personal dishonesty or demonstrate his willful and/or continuing disregard for the safety and soundness of the bank and its related entities.”
The order also involves Mann in his capacity as former board chairman, director and chief executive officer of Security Bancshares Inc., of Waco; former director and former CEO of Bancshares Services Corp., of Waco; as majority limited partner and general partner of Ram Securities Holding, of Waco; sole officer, director and shareholder of Ram Securities Holdings G.P., of Waco; and trustee of the Citizens State Bank 401K stock ownership plan, of Woodville.
Mann did not return phone messages or an email on Tuesday, nor did his attorneys, Chet Fenimore, of Austin, and Manuel Berrelez, of Dallas.
According to the order, Mann sought reimbursement for hundreds of thousands of dollars in expenses that were either for his personal benefit or which provided no benefit to the bank and its related entities. Mann also admitted under oath to making inaccurate statements on his expense reports.
An independent forensic audit found that Mann received a total of $641,870 in reimbursement from the Woodville bank and related entities between 2014-2018 for improper and/or insufficiently documented expenses. Mann was ordered to pay restitution in that amount, as well as to reimburse the bank and its related entities for the cost of the forensic audit.
The commission determined that Mann breached his fiduciary duty, misapplied bank funds, caused false records to be entered into the bank’s books and “engaged in unsafe and unsound conduct, resulting in his personal financial gain and a loss to the bank and its related entities.”
Mann admitted to listing people as having attended dinners with him and his wife in California, Las Vegas and New York when they actually dined alone, according to the order. He also admitted that he obtained $3,300 in reimbursement from the bank for his contribution to a political action committee, for which he later reimbursed the bank.
“The bank’s directors raised concerns regarding (Mann’s) expenses as early as 2014 and established an audit committee to review and approve his expenses,” according to the order. “(Mann) agreed to take the lead in addressing their concerns, but failed to do so and continued to seek and obtain reimbursement for expenses with little to no business purpose.”
When bank directors raised concerns in 2017 about Mann’s “excessive reimbursed donations to Baylor,” Mann reimbursed the bank for $22,036, the order states. However, “the very next day,” Mann requested and obtained reimbursement for that exact amount from the Service Corp. and the Mid-Tier Holding Co.
“The commissioner determines that and has reason to believe (Mann) has intentionally committed or participated in violations of law, unsafe or unsound practices, and/or breaches of fiduciary duty with regard to the affairs of the bank, holding company and Top Tier Holding Co,” the order states.
Harold E. “Trey” Allison III, president of the Citizens State Bank in Woodville, said Mann has not served as president, CEO or director since December. Allison, a 22-year bank employee, was promoted to CEO in December, and Michelle Hill, the bank CFO, was named CEO of the parent bank holding company.
“The board of directors of the bank has complete confidence in Mr. Allison’s and Ms. Hill’s ability to provide leadership to the bank,” Allison said in a statement Tuesday. “The order issued by the Texas Department of Banking is directed to Mr. Mann and is not directed to the bank. The bank remains financially strong and operationally sound. All branch locations, including the Waco branch, will continue to serve the bank’s customers and the communities in which the bank is located.”