Three former IndyMac Bancorp Inc. executives must pay $169 million in damages to federal regulators for making negligent loans to homebuilders as the real estate market was deteriorating, a jury decided.
The federal court jury in Los Angeles issued the verdict against Scott Van Dellen, the former chief executive officer of IndyMac’s Homebuilder Division; Richard Koon, the unit’s former chief lending officer; and Kenneth Shellem, the former chief credit officer. Jurors yesterday found them liable for negligence and breach of fiduciary duty.
The jury awarded the damages to the Federal Deposit Insurance Corp., which brought the lawsuit in 2010.
The FDIC, which took over the failed subprime mortgage lender in 2008, alleged the men caused $500 million in losses at the homebuilders unit by continuing to push for growth in loan production without regard for credit quality and despite being aware a downturn in the real estate market was imminent.
The agency said the executives made loans to homebuilders that weren’t creditworthy or didn’t provide sufficient collateral.
“Today’s verdict is the result of a deliberate effort by the government to scapegoat a few men for the impact that the unforeseen and unprecedented housing collapse in 2007 had at IndyMac,” Kirby Behre, a lawyer for Shellem and Koon, said in an e-mailed statement after yesterday’s verdict.
“Mr. Shellem and Mr. Koon used the utmost care in making loan decisions, and there is no doubt that all of the loans at issue would have been repaid except for the housing crash,” Behre said.
Robert Corbin, a lawyer for Van Dellen, didn’t immediately return a call to his office yesterday after regular business hours seeking comment on the verdict.
The verdict was reported earlier by the Los Angeles Daily Journal.
The case is FDIC v. Van Dellen, 10-04915, U.S. District Court, Central District of California (Los Angeles).
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