Danny Seibel, the former president and chief executive officer of the First National Bank of Lindsay, was indicted last week by a federal grand jury on multiple charges including bank fraud and making false bank entries.
Issued Dec. 3, the federal indictment (embedded here) comes more than a year after the 120-year-old community bank failed, causing a period of uncertainty for customers as the Office of the Comptroller of the Currency (OCC) announced the bank’s closure on Oct. 18, 2024, and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The FNB of Lindsay’s insured deposits were assumed by First Bank and Trust Company of Duncan, which reopened the bank to customers Oct. 21.
Seibel, 54, faces a total of 18 charges including one count of conspiracy to commit bank fraud, five counts of bank fraud, 10 counts of making false entries in the books and records of a financial institution, one count of obstructing the examination of a financial institution and one count of failure to maintain an anti-money laundering program.
Seibel had been employed with the bank since 1993 and served as president and CEO from early 2007 until his termination in September 2024. He also held other management roles at the bank during that time, including chief financial officer and bank secrecy act officer.
The federal grand jury charges Seibel conspired to commit bank fraud, along with at least two other individuals, identified in the indictment as Borrower 1 and Borrower 2, between February 2020 and September 2024.
The indictment alleges Seibel issued loans to certain bank customers, many of whom were his personal friends and neighbors, that the borrowers either never repaid or for which Seibel never recorded any payments.
“Some of the borrowers were unaware that Seibel was failing to record their loans, posting fake loans to their accounts, or making false entries in [bank] records about their loans and accounts,” according to the indictment.
Others, including Borrowers 1 and 2, were aware of Seibel’s activities and the financial benefits they received as a result, according to the indictment, which alleges those two individuals texted Seibel on several occasions, asking him to “fix” or add funds to their overdrawn accounts by manually adding bank funds to their accounts.
“Seibel falsely stated the purpose of some of the loans that he issued. On several occasions, Seibel disbursed loans to Borrowers 1 and 2 purportedly to purchase or improve real estate, vehicles, or equipment. The proceeds were instead used to repay portions of other loans, gamble, or pay day-to-day expenses,” according to the indictment.
It is alleged Seibel manipulated the bank’s records and falsified various bank reports to falsely overstate the performance of the loans, including by using new loans or transfers of the bank’s own funds to cover overdrafts of outstanding loans.
The indictment alleges that Seibel frequently modified bank records to conceal this activity from the OCC, which was the bank’s federal regulator, as well as from the bank’s board of directors.
The board of directors met monthly to review packets detailing the bank’s loans, overdrawn accounts and past-due accounts and FNBL’s executive loan committee met once every one to two weeks to review proposed loans and bank financial information, according to the indictment. Seibel was responsible for preparing the information to be reviewed by both groups.
The indictment alleges Seibel “failed to disclose the true extent of borrowers’ overdrafts or past-due loans, grossly misstating the amount of loans that FNBL had issued and failed to collect – due to borrower non-payment – by millions of dollars,” and frequently omitted borrowers with large nonperforming balances from the past-due and overdraft reports he provided to the board of directors and executive loan committees.
“For example, Seibel reported to the [executive loan committee] in May 2024 that the bank had a total of $169,973.57 in overdrafts. In reality, FNBL records showed that the bank’s overdrafts totaled $1,363,141.50,” the indictment states.
In August of 2024, when the OCC was conducting an onsite examination at the bank, the indictment alleges Seibel provided OCC staff with a false document that concealed hundreds of changes that Seibel had made to loan data.
According to the indictment, after Seibel learned the OCC had obtained an unaltered copy of the same document, he texted another bank employee, “I think I’m nailed to the wall now I [g]ave them a report that [is not] the same as what they got now and they have both. Nobody’s fault but my own. Also, delete these texts.”
The indictment also alleges that Seibel failed to implement an anti-money laundering program at the bank as required by the Bank Secrecy Act. For example, Seibel allegedly failed to file any suspicious activity reports on his own fraudulent scheme, and he advised bank customers to make cash deposits below $10,000 to avoid relevant reporting requirements.
Seibel, according to the indictment, was placed on leave Sept. 12, 2024, and was terminated just over a week later on Sept. 20.
If convicted, Seibel faces up to 30 years in federal prison, and a fine of up to $1 million.