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Posted: January 15, 2010 12:01 a.m.

City grant writer has FDIC violation in past

City fully supports his hire

Following the December hiring of Randy C. Conner as a grant writer for the City of Covington, some residents and elected officials have expressed concern about a previous banking violation on Conner’s record.

In 2006, Conner was fined $10,000 by the Federal Deposit Insurance Corporation and signed a consent agreement and removal and prohibition order with the FDIC stating that he would no longer work in the banking industry.

Conner was in commercial banking for 27 years, so the fact that he is no longer legally allowed to be a banker, without prior approval from the FDIC, has struck many in the community as serious offense.

However, after reviewing the details, City Attorney Ed Crudup and Personnel Director Ronnie Cowan, who made the hire, determined that the fine was a civil, administrative matter, not criminal in nature, and they saw nothing about the fine and prohibition that would affect Conner’s new position.

"Ed and I talked, and I asked, ‘Is there any reason why we should not have hired him?’ We decided it was just notification issue; there was nothing monetary nor was there any fraud," Cowan said. "I would like to reassure the public that we’ve done our job. We’ve looked at it and determined there was no wrongdoing that would affect his duties as a grant writer."

The FDIC fine

During his interview process, Conner did disclose that he had a violation with the FDIC. Although the fine was levied in 2006, Conner said the matter actually stemmed from 2002, while he was employed a senior loan officer from with The Community Bank of Loganville.

Although not as common now, Conner said that in years past bankers often made much of their money by partnering in outside business ventures with

clients, not through actual banking. He said this was particularly common at smaller community banks.

Under the terms of the agreement he signed with the FDIC, Conner is not allowed to discuss many of the details surrounding his fine and prohibition from banking. However, he said the fine stemmed from one of these business partnerships while he was employed with The Community Bank.

The FDIC is the body that governs banks and other financial institutions. Under its rules, a bank employee must disclose any outside business dealings to his superiors. Conner said that he thought he had followed the rules by informing his direct superior of his partnership, but he said the FDIC interpreted the law differently.

They said he had violated the law by not directly informing the president of the bank and the bank’s board of directors. Conner said that was the entire basis for the fine. He said he would have fought the fine, but it might have taken up to two years and the legal costs would have exceeded the fine.

"I still don’t agree with their opinion on the matter, but it what it is. I still believe they were good ventures. It was just a matter of interpretation," Conner said. "I believe I was right, but you don’t battle with the federal government."

In addition, although Conner is prohibited from being a banker, he said he agreed to sign the consent order because he was preparing to retire from the banking industry anyway.

Both Cowan and Conner emphasized that just because Conner signed the FDIC order, it did not mean he was admitting guilt. The order states "without admitting or denying any unsafe or unsound banking practices and/or breaches of fiduciary duty, the Respondent consented to the issuance of an order of prohibition from further participation and order to pay a civil money penalty by the FDIC."

The FDIC was not able to provide specific details about the case, nor did it verify or disprove any of Conner’s statements.

"This is a very serious action by the FDIC. This bans an individual from permanently working at an insured depository institution, unless the Consent Order is modified or terminated by the FDIC," said Greg Hernandez, an employee in the FDIC’s Office of Public Affairs.

According to the FDIC’s Enforcement Decision search engine, 39 removal and prohibition orders have been handed out in Georgia since 1991.

Hernandez said the level of enforcement depends on the severity of the infraction.

The wording in the order includes serious phrases, such as "The FDIC considered the matter and determined it had reason to believe that: … The Respondent has recklessly engaged or participated in unsafe or unsound banking practices and/or breaches of fiduciary duty."

However, Cowan said the wording is standard language that the FDIC uses in many of its orders. Hernandez confirmed that the language was standard issue. Cowan said one key for the city is that there was never a hearing about the charges nor were findings ever presented, the case was simply settled.

Conner said the FDIC originally wanted to fine him $125,000, but after discussing the situation with him they lowered the fine to $10,000. However, Conner said he could not prove that he had told his superior, because he had no paper documentation, like a memo.

In his application to the city, Conner said he left The Community Bank because of a "personal conflict with bank president." Again, under the agreement with the FDIC, he was unable to say more.

Background Check

Cowan said the city uses the company Laborchex to conduct background checks on employees. The check, which looks at criminal, driving, education and employment records, came back clear. Cowan all called his references who spoke highly of Conner’s character.

Conner has been in Covington for many years and is well known in the banking community after working at Newton Federal for six years and what was formerly The Bank of Covington for 10 years. Cowan said he also spoke to other community members who knew Conner, and they had were similarly supportive. Some were already aware of Conner’s previous incident.

There were more than 70 applications for the grant writer position, and Cowan said four finalists had significant financial experience. Conner was selected as the best qualified applicant because of his loan writing experience and financial reporting experience. In addition he had taken the initiative to take a grant writing seminar, which aided his application.

Public Concern

Residents who have heard about the fine in Conner’s past have questioned the hire, and since the news became public this weekend, elected officials said they had been inundated with concerned phone calls.

Councilman Keith Dalton received so many calls he set up a meeting between some of the council members, City Manager Steve Horton and Cowan to discuss the hire. Four council members were originally scheduled to come, but that would have constituted a quorum, which would have made the meeting illegal without public notice.

In the end, Dalton, Councilman Chris Smith, Councilwoman Ocie Franklin, Horton and Cowan met Monday afternoon.

"We wanted to ask questions, ‘What’s going on? Why out of 70 candidates was he our top pick?" Dalton said. "One of the big statements that people keep saying to me is that this is a black eye to the city."

After discussing the hire with Cowan and Horton, Dalton said he understood the rationale, and understood that Conner did disclose his infraction during the interview. He said without looking over the other 70 candidates, he couldn’t say whether there was a better candidate.

However, many people believe the city should have hired someone with absolutely no history of unethical behavior Dalton said that many people may have some expertise writing grants, like public safety officials; however, he said he was reassured that Crudup had reviewed the facts.

Cowan said he wanted to assure the public that Conner, like every new employee, is on probation for the first year.

"Our policy is that if any employee, regardless of position, does anything that adversely affects their job and the city, they would be dealt with in the personnel policy," Cowan said. "We want to assure that we are being our responsible in our role as employees to the public and will deal with anything that arises. We are confident with Mr. Conner’s ability."

The Job of Grant Writing

Residents and officials have also raised concerns about Conner handling money. Despite the fact that the city is confident Conner’s fine had nothing to do with financial misdeeds, in order to ease concerns his official title will be changed from financial coordinator to grant writer. Cowan said many other governments officially call their grant writers "financial coordinators," so that’s why the title was originally chosen.

Listed among Conner’s duties are reviewing cash management and reconciling cash accounts, but Cowan said the duties don’t mean he would actually handle money; they are simply administrative tasks. Only the mayor, city manager, city clerk and finance director have the ability to sign checks, and often two of their signatures are needed.

Because Conner was a banker, Cowan hoped that Conner would be able to help write policies and procedures about how to handle accounts. At this time Cowan is reviewing the job description and may make changes.

The original focus and what will continue to be the focus for Conner is to seek out grants, apply for them and monitor grant accounts as money comes in and goes out of them. Conner said there is a lot of intensive writing and reporting that has to be done with grants.

The start of a new year is a busy time for grants. Conner said he is working diligently on about 15 to 20 grant applications, with another four to five grants waiting in the wings.

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