BSA/AML Examiner School - Case Study Oct 2023

From: EIC@Statebankingagency.org Sent: July 6, 2016 To: Allexamstaff@Statebankingagency.org Subject: AJ&R Bank& Trust examination

Examination Team,

Good afternoon team. I just finished our pre-examination call with AJ&R Bank & Trust Company. President England brought up some important information regarding the examination. Several of the main players in this institution were fired as of June 30, 2016. Chief Financial Officer Bailey Placier, who was the former Chief Executive Officer during the 2014 exam, was terminated due to repeated issues found in her work. Human Resource Officer and Teller Supervisor Lawrence Lance was fired along with Loan Officer and Information Security Officer Fred Murray. Then the prior BSA Officer Amanda Smith was fired due to suspected theft of money out of her teller drawer. It looks like the Board got tired of the issues and cleaned house. Hopefully, this will mean that they are headed in the right direction. I filled out the organizational chart based on this information, which I have attached. President England also stated that James Bright, who has had a long history with being a dominant official at this institution, is still impeding him from doing his job. President England was hired in 2015, and this will be the second examination as President. For those of you that this is their first time at this institution, James Bright is the largest primary shareholder and has a history of being very heavily involved in this institution. Examiners have also found that in the past he has delayed the correction of the deficiencies, identified by both regulators and external auditors, at this institution. Between his wife and himself, the Bright’s control 24% of the outstanding shares. Also, be aware that he has made statements in the past that he “selected” the board members. Although that has not helped him as discontinuity in the Board continues to be a large problem at this institution. There has been noticeable split between members of the Board as it has appeared that they have divided up into two factions. You will notice this when you read the board minutes. One of the factions of the Board supports Bright and the other openly opposes him. Bright fully supported former CFO Placier in the CEO position, even though she was ineffective in that position and did not correct deficiencies in the institution. He disagreed with her recent departure and opposes current President England. If examiners are approached by Director Bright, they should always have another examiner present.

For Training Purposes Only

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