Myrtle Beach area architect sues Horry County State Bank over employee theft

dwren@thesunnews.comSeptember 26, 2013 

— Mozingo & Wallace Architects LLC filed a negligence lawsuit against Horry County State Bank this week, accusing the bank of failing to safeguard the architecture firm’s checking account by allowing unauthorized withdrawals and electronic transfers, according to court documents.

The lawsuit, which seeks unspecified actual and punitive damages, claims the Loris-based bank failed to stop one of the architecture firm’s employees from cashing checks that had been signed with a rubber stamp instead of the owner’s personal signature. The firm has never authorized the use of a rubber stamp for check signatures, according to court documents.

The lawsuit does not name the architecture firm’s employee, but in a separate court action, Debor Guear – the firm’s former bookkeeper – has been charged with financial identity fraud and felony obtaining more than $10,000 under false pretenses. Guear is free on $50,000 bond while she awaits trial. She allegedly stole money from the firm’s bank account over a six- to seven-year period, according to court records.

The civil lawsuit also accuses the bank of processing unauthorized electronic transactions initiated by the architecture firm’s employee and failing to notify federal officials of suspicious activity in the firm’s checking account as required by law.

Derrick Mozingo, a principal in the firm, could not be reached for comment Thursday.

Horry County State Bank has not yet filed a response to the lawsuit. Jimmy Clarkson, the bank’s president and chief executive officer, said he has not seen the lawsuit, “but if those are the allegations, I’m confident we’ll be exonerated pretty quickly.”

No court date has been set for either the civil or criminal cases.

Clarkson also said he expects the bank to file its first quarterly financial report since the third quarter of 2012 by the end of this year. The financially troubled bank has not been able to file quarterly reports because it is revaluing its real estate holdings and the appropriateness of its loan loss reserves.

The bank has been told by the Federal Reserve and the Federal Deposit Insurance Corp. that it needs to raise its capital holdings, and revaluing those real estate assets as this area starts to emerge from the financial crash could help to do that. The bank’s real estate holdings were affected by the economic downturn and are a primary reason Horry County State Bank has been operating under the scrutiny of federal banking regulators.

The bank had hoped to raise capital through a stock offering last year, but investors were not interested in purchasing any shares.

In addition to the financial issues, the bank remains under investigation by the S.C. Attorney General’s office for possible violations of state securities laws. Clarkson revealed the investigation in the bank’s third-quarter report filed last year, and said the U.S. Attorney’s office in Columbia also had asked for documents related to the bank’s sale of subordinated debt notes in 2010 to investors. Mark Powell, a spokesman for the state attorney general’s office, said Thursday that agency’s investigation is continuing. It is not clear whether the federal investigation is ongoing.

The investigations appear to be related to a trio of civil lawsuits filed against the bank last year. Two of those lawsuits involve the bank’s sale of the subordinated debt notes while the third – a proposed class-action lawsuit – involves the bank’s sale of company stock.

The lawsuits allege that Horry County State Bank did not properly disclose its financial problems to potential investors, as required by state and federal law. The subordinated debt notes were sold just months before the Federal Deposit Insurance Corp. ordered the bank to raise capital or face a possible shutdown. The lawsuits related to the subordinated debts are in arbitration while the proposed class-action lawsuit is pending.

Contact David Wren at 626-0281

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