2 banks shuffle senior ranks

New CEO at BCSB in fallout from loss

October 31, 2006|By Laura Smitherman | Laura Smitherman,Sun reporter

Baltimore County Savings Bank announced yesterday that Joseph J. Bouffard will take over as chief executive of the community financial institution roiled by a $10.7 million loss from an alleged check-kiting scheme and the resignation of its previous CEO.

Bouffard, who has resigned as CEO of Patapsco Bancorp Inc., is expected to assume his new post in early December. He replaces Gary C. Loraditch, who resigned in July, one month after the bank revealed that it had been victimized by an alleged scheme that also hit Carrollton Bancorp, another Baltimore-area community bank, and Global Express Money Orders Inc. of Silver Spring.

In a separate announcement, Patapsco Bancorp said Chief Financial Officer Michael J. Dee will replace Bouffard, who had been with the Dundalk-based bank since 1995.

The shuffling of executives is the latest development stemming from the alleged scheme in which A&B Check Cashing has been implicated by the victims, state regulators and court officials. The chain has shut down its 20 check-cashing stores around Baltimore, and filed for bankruptcy protection in June. One of its owners, Alec Satisky, committed suicide at the company's headquarters.

In general, check kiting involves writing a bad check on one account, depositing it into another account, and then writing a second check to cover the first.

In court papers, the U.S. Trustee's Office, an agency of the Justice Department that monitors parties in bankruptcy cases, said bank statements and checks appear to show that co-owner Brian Satisky and his brother Alec moved millions of dollars' worth of checks between accounts daily.

The FBI has confirmed that it is investigating the kiting allegations. Brian Satisky has refused to comment.

Bouffard has a long history in Baltimore banking, having served as a vice president at the Bank of Baltimore and its successor, First Fidelity Bank, and before that as president of Municipal Savings Bank in Towson. He also has been on the boards of the Maryland Bankers Association, a trade group, and of the Dundalk Community College Foundation.

"We have long been aware of his deep roots in the Baltimore banking community," Henry V. Kahl, board chairman at Baltimore County Savings, said in a statement. "We believe that Joe's leadership skills and operating philosophy are consistent with our vision for the future."

Bouffard said in the statement: "To be able to manage a local community bank, in a market with which I am very familiar, is a formula for success."

Baltimore County Savings, founded in 1955, has 18 branches throughout the metropolitan area. David M. Meadows, general counsel at the bank's parent company BCSB Bankcorp Inc., had been acting as interim chief executive while the board searched for Loraditch's replacement.

Under a separation agreement, the bank agreed to pay Loraditch a lump sum of nearly $276,000. Loraditch agreed to forfeit any restricted stock and stock options that had not vested or become exercisable, and to inform the bank in the event he receives a subpoena or other legal paper that might call for the disclosure of confidential information. Both parties agreed not to make derogatory comments about each other.

At first, the bank revealed only the after-tax loss of $6.9 million, the equivalent of seven years' worth of profits. Since then it also has disclosed the higher before-tax loss. Bank officials have said they will aggressively pursue recovery from A&B and that the bank remains "well-capitalized."


Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.