Deal struck with ex-Orion Bank CEO Jerry Williams in class-action suit

Jerry Williams, the ex-CEO of Orion Bank, second from left, walks into his sentencing at the federal courthouse in Fort Myers on Tuesday June 12, 2012.

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Jerry Williams, the ex-CEO of Orion Bank, second from left, walks into his sentencing at the federal courthouse in Fort Myers on Tuesday June 12, 2012.

Jerry Williams / Federal Home Loan Bank 
 biz / feb 5, 2007 
  
  
 also used for Collier Laureate Story 11/05/2007 Business 
 Collier Laureate 2005 
 Jerry J. Williams

Jerry Williams / Federal Home Loan Bank biz / feb 5, 2007 also used for Collier Laureate Story 11/05/2007 Business Collier Laureate 2005 Jerry J. Williams

— A settlement has been struck in a federal class-action lawsuit brought against the former boss of Orion Bank.

Court records show the case — brought by the bank's former employees who hoped to recover some of their lost money — settled after a mediation hearing Nov. 13.

Jerry Williams, the bank's former CEO, president and chairman, sits in an Alabama prison after pleading guilty for his involvement in a bank fraud conspiracy earlier this year.

Former bank employees who invested millions in the company's now-worthless stock filed the lawsuit in hopes of getting at least some of their investment back.

"The settlement is a confidential agreement," said Thomas Buchanan, one of Williams' attorneys based in Washington, D.C.

The settlement agreement still must be finalized and approved by the court, he said. That could happen within 30 days.

After he was sentenced to six years in prison in June, Williams was ordered to pay more than $31 million in restitution for his crimes, most of which will go to the Federal Deposit Insurance Corp. for its losses on the bank's fraudulent loans. None of the money he's been ordered to pay will go to Orion's former employees, some of whom invested their life savings in the failed Naples bank. They're not entitled to restitution under federal law.

Employees originally sued Orion Bancorp Inc., the bank's holding company, and its directors in 2010, seeking money they lost in a company retirement plan. In the plan, employees invested mostly in Orion stock.

According to the lawsuit, 96 percent of the retirement plan's assets — more than $33 million — were invested in privately held Orion shares. Employees alleged violations of the Employee Retirement Security Act of 1974, which is meant to ensure the soundness and stability of plans to make sure they pay their promised benefits.

Orion's holding company and its other directors were ultimately dropped from the class-action after a judge dismissed most of the claims in the suit last year.

The judge's ruling left Williams as the only defendant and allowed the former employees to only go after the fallen banker for the personal stock he sold to the retirement plan before Orion collapsed in 2009.

After the court's ruling last year, Joseph White, a Boca Raton attorney representing the Orion employees, said the lawsuit had potentially gone from a $35 million case, down to a $1 million one. He could not immediately be reached for comment Thursday about the settlement, which became public this week in court records.

In June 2008, Williams sold 18,182 shares of his personal Orion stock for $55 a piece to the employee retirement plan, for a little over $1 million. Because the plan had no money to buy the shares, the plan had to borrow money, putting it in debt, according to court records.

The settlement of the class-action would end the last legal battle for Williams involving the failed bank.

Bill Bartels, one of the original plaintiffs in the class-action lawsuit who later dropped out of it, said Thursday he had heard nothing about a settlement.

"I'm not overly optimistic," he said. "Things have not been going well so far."

If the settlement was that good, he said, he would have likely heard about it by now from someone involved in the case.

Bartels, Orion's former human resources director, worked for the bank for 12 years and estimates he lost a nest egg once valued at more than $700,000.

In the scheme that sent Williams and his co-conspirators to prison, more than $80 million in loans were made to a borrower, who was over his loan limit, with $15 million returned to the bank for the illegal purchase of stock. The loans were designed to trick regulators and to make the bank appear in better financial shape than it was as it teetered on the edge of collapse.

Former employees allege that even as the bank was failing they were encouraged to invest in the retirement plan and to continue buying company stock.

At the sentencing, Patrick Miller, a former senior vice president for Orion and a plaintiff in the class-action lawsuit, described how he and others invested their life savings in the bank "at the constant demands and intimidation" of Williams.

"Many of us felt our job would be in jeopardy if we did not," he said in court. "Over time he repeatedly misrepresented to us, with deceitful promises and lies, that our investment was safe and managed with high standards of honesty and integrity."

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