Courtesy of a regular reader comes this cautionary tale; however, I'm not certain who's most in need of exercising caution, the plaintiff or the defendants. I know who I'm rooting for. Hint: not the defendants.
Three years after his exoneration on charges he helped hide illegal bank activity at the shuttered Hamilton Bank, Miami attorney Carlos Loumiet has filed suit against the Office of the Comptroller of the Currency, alleging he was maliciously prosecuted as revenge for whistleblowing about the federal regulatory agency.
Loumiet, a partner at DLA Piper in Miami, is seeking $4 million in damages. The suit was filed in July in Washington federal court. The suit also named OCC investigators Michael Rardin, Lee Straus, Gerard Sexton and Ronald Schneck.
"It's outrageous the way the OCC chased Carlos Loumiet," said his attorney, Andres Rivero of Rivero Mestre in Coral Gables. "We are going to prove they violated his constitutional rights. They tried to punish him because he blew the whistle on them.
"They've done whatever they can to damage his career."
The sad story arose out of the failure of Miami's Hamilton Bank in 2002. Loumiet and his firm, Greenberg Traurig, represented the bank. The bank's CEO was sentenced to 30 years in the slammer for fraud, and the OCC turned on Loumiet, accusing him of turning "a blind eye to irregularities on loan prices to reap hefty legal fees from the bank. In addition to a $250,000 fine, the agency sought to ban Loumiet from representing banks for life, which would have forced him to abandon his specialty and all of his clients."
Loumiet fought back in a full-blown administrative hearing, claiming "the OCC was targeting him because he went over the agency's head to the Treasury Department's inspector general to complain about his concerns about the fairness of the investigation." He also alleged that racial derogatory comments were made by one of the investigators. While the law firm paid less than $1 million to settle the OCC's charges (nuisance value), Loumiet fought them and won.
An administrative law judge ultimately cleared Loumiet of all charges. Then in July 2009, the Comptroller of the Currency issued his final decision dismissing all charges against Loumiet.
A month later, Loumiet sued the OCC under the federal Equal Access to Justice Act to recover legal fees for his defense. In 2011, the U.S. Court of Appeals for the D.C. Circuit reversed an administrative law judge's denial of attorney fees and awarded Loumiet legal fees and expenses of $600,000. Loumiet said he still has not gotten a penny from the OCC despite the appellate opinion.
The new lawsuit targets the OCC under the Federal Tort Claims Act for violations of the First and Fifth Amendments. He cited a U.S. Supreme Court ruling that a prosecution brought by federal agents in retaliation for a citizen's criticism of them violates the citizen's rights to free speech.
He also alleges intentional infliction of emotional distress, invasion of privacy, abuse of process, malicious prosecution, negligent supervision and civil conspiracy. Loumiet alleges his privacy was invaded when the OCC made damaging statements about him to news media and in news releases.
Loumiet is seeking $4 million in damages, the amount he estimates he lost when banks no longer sought his representation after the scandal. He maintained those years would have produced his highest earnings.
It's hard for me to believe that the OCC would have thought they could have steamrolled someone of Loumiet's caliber without it turning into a brawl in which no one would quit until there was blood running in the gutters. While I don't have knowledge of the facts of the case, the "objective" triers of fact in this case have so far sided with Carlos at every stage, including the ALJ, the Comptroller of the Currency, and the U.S. Court of Appeals for the D.C. Circuit. The latter even awarded him hundreds of thousands of dollars in attorneys fees.
If the allegations about the racial comments are true, then you have not only punks involved, but not very bright punks, on the "line level." That happens. We've all run into them on the lower rungs of government work, including abusive police officers who, if they didn't wear a badge and a gun, would be boosting cigarette trucks along I-90 for the Gambino Family. However, before you actually file an enforcement action that seeks to take away a big-firm law partner's livelihood, you'd think the serious nature of these charges and their consequences would have been vetted carefully all the way up the food chain at the OCC. Perhaps they were.
"Mr. Loumiet was warned by another regulatory lawyer who had much greater experience than he in dealing with the OCC divisions involved that these were 'mean, nasty, vindictive' people who would do whatever they could in the future to get back at him," the 70-page complaint said. "Mr. Loumiet thought long and hard about just shutting up and going along."
I've said this before, and I'll repeat myself: with greater power comes greater responsibility. Federal government lawyers possess substantial power, a lot more power than those of us on the outside possess. Simply put, they need to be better people than guys like me (and I'm certain that they think that they are), and they need to exercise more self-restraint than I would as a private citizen, because when they don't, they can cause a lot of damage to actual human beings. I assume they give a damn about that unless, of course, they're nothing more than "mean, nasty, vindictive" people who use the power of the federal government to "pay back" other people. In that case, they deserve a heavy dose of Carlos every day of their lives.
I have this feeling that the OCC has so honked off Carlos that he's not going to be backing off or settling for peanuts no matter how long the OCC's attorneys drag this out (and I expect them to wage scorched earth, as is sometimes their custom in such cases). The named defendants are going to have this litigation hanging over their heads for as long as it lasts. Their depositions will be taken by people who think they just crawled out of a sewer and will treat them accordingly, and it will be about as pleasant as a colonoscopy with razor wire and no anesthetic. Then, when you get to trial, the real fun begins. The OCC put Carlos through the ringer and now he's returning the favor. Karma's a bitch.
Here are three rules I think we all might benefit from following for the next few years:
Rule No. 1: Do not F*** with Carlos!
Rule No. 2: Do NOT f*** with Carlos!
Rule No. 3: Do not f*** with CARLOS!
