Glen Burnie bank feud persists after the coup

March 14, 1995|By Kris Antonelli and TaNoah V. Sterling | Kris Antonelli and TaNoah V. Sterling,Sun Staff Writers Sun Staff writer John Rivera contributed to this article.

The Bank of Glen Burnie is under new management, but try telling that to the old management.

In a dispute that has pitted neighbor against neighbor and former business partners against each other, majority stockholders in the community bank have engineered a coup that ousted the institution's president and 11 of its 12 officers.

They allege that the bank president's actions prompted a multimillion-dollar racial discrimination lawsuit filed by one of its customers.

Since the vote last Thursday at a meeting attended by about 400 stockholders, the old management has refused to concede defeat.

Locks were changed by the recently deposed officers. The newcomers threatened to have the sheriff toss out the losers. There are allegations of file-shredding.

An Anne Arundel Circuit Court judge will attempt to sort it all out Thursday.

"There doesn't appear to be any deep-rooted financial issues," said former state Del. Victor A. Sulin, a bank stockholder.

"It's almost like a family squabble."

Shirley Palmer, who has been the bank president's secretary for three years, said the dispute is straining personal ties that go back years.

"A lot of people are concerned," she said.

"This is a small town, and everyone knows everyone else and are friends with people on both sides of this."

The squabble is a Chamber of Commerce nightmare.

Stockholders include a local car dealer, a dry cleaner, a lumber company owner, a fuel distributor and a sign maker.

Susan Demyan, one of the newly elected directors, said she has known people such as Henry L. Hein, the ousted chairman of the board, since she was little.

"I mean, Henry Hein was a pallbearer at my father's funeral," she said. "We grew up with these people. It's very difficult."

The coup leaders

The coup was led by three majority stockholders: John E. Demyan, F. William Kuethe Jr. and Ethel M. Webster.

Mr. Kuethe is the son of Fred W. Kuethe, who was the bank's first president from 1949 to 1968. Mr. Demyan, a cousin of Susan Demyan, is the son of the bank's second president, John Demyan Jr., who served from 1968 until 1987.

Detractors of the president, Jan W. Clark, paint a picture that resembles Henry F. Potter, the autocratic financier of the movie "It's a Wonderful Life."

The new management claims that Mr. Clark was a micro-manager who did not delegate authority and hovered over subordinates to scrutinize their work. They say Mr. Clark changed auditors over their objections.

The suit

But what appears to have sparked the revolt at the state's 28th-largest bank was a racial discrimination suit filed this month that the members of the new management say has exposed the bank to possible financial difficulties.

Prabhakar J. Kharod, a doctor who emigrated to the United States from India more than 20 years ago, sued March 3 in federal court, charging that the bank had defaulted on his construction loan because his Pasadena neighbors did not want him to live there.

The suit charges that influential community members pressured the bank's officers to call in the loan when Mr. Kharod had fallen less than 45 days behind on a payment.

"If you look at the suit, it's pretty serious," said Susan Demyan.

"You can't be misled by that stuff. It's a pretty big exposure to the bank."

Mr. Kuethe said Mr. Clark "has exposed the bank to a very serious race discrimination suit. That alone is grounds for removal."

Mr. Clark, 59, defended his record, saying the bank's profits have risen under his leadership. The price of bank stock had risen from $33.50 a share in January 1992 to $36 at the end of last month, he said.

"So it would be difficult to say mismanagement when you look at the bank's figures," he said yesterday.

In a letter to stockholders dated Feb. 15, Mr. Clark and the deposed directors defended their actions in calling in Mr. Kharod's loan, saying it "appeared to have saved the bank from a risk of loss in the range of $1 million."

State Bank Commissioner Margie H. Muller said her agency will not get involved in the dispute because there is no evidence that banking regulations are being violated.

"The bank is safe and sound," said Ms. Muller, who fielded two telephone calls from concerned depositors yesterday.

"This is a stockholder matter which will probably be decided in court, unless they come to some settlement."

Judge Robert H. Heller Jr. will rule Thursday on a request by Mr. Kuethe, who has been appointed bank president by the new board, for a court order to remove the old board and its officers.

"The problem is that Jan is still the president, or at least thinks he is still the president," Mr. Kuethe said. "Right now everything is in limbo, and it's not good for the bank not to know who is in charge."

'Outrageous' behavior

John C. Eldridge, a judge of the state Court of Appeals and a bank stockholder, called the behavior of the ousted bank officers "outrageous."

"It's like in a political election and the incumbents won't let the newly elected officers in. The fact is [the new board members] won the election fair and square, and they should be running the bank," he said.

"What the old directors and president have done since [the election] perhaps confirms the wisdom of the majority," Judge Eldridge said.

But Warren L. Moser, a Pasadena resident who holds 250 shares, said he prefers the wisdom of the ousted members.

"If they don't prevail," he said, "my stock will be up for sale."

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