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Fed proposes ban of 2 Farmers State Bank employees from the financial industry

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Fed proposes ban of 2 Farmers State Bank employees from the financial industry

The Federal Reserve Board intends to ban Pine Bluffs, Wyo.-based Farmers State Bank CEO Frank Smith and employee Mark Kiolbasa from participating in the financial industry for misappropriating Lander, Wyo.-based Central Bank and Trust's confidential and proprietary information.

On Sept. 22, 2014, Kiolbasa started to work as a loan officer at Farmers State Bank and allegedly took several proprietary forms from Central Bank and Trust with him. Shortly after starting work there, many loans he managed back in Central Bank and Trust began to move to Farmers State Bank. Smith allegedly provided Kiolbasa confidential Central Bank and Trust information to facilitate the process.

Central Bank and Trust on Sept. 29, 2016, filed a lawsuit against Farmers State Bank, Smith, Kiolbasa and the board of directors alleging that Smith and Kiolbasa misappropriated trade secrets. The presiding court on April 2 awarded Central Bank and Trust nearly $1.2 million in damages against Smith and around $1.0 million in damages against Kiolbasa.

The Federal Reserve Board estimates that the misappropriation of information caused more than $1 million in financial damages to Central Bank and Trust and at least $156,421 in legal fees connected to the lawsuit. The board accused Smith and Kiolbasa of engaging in unsafe banking practices and breaches of fiduciary duties.

A hearing will be held in 2019 at the U.S. District Court of Wyoming to determine whether the order handed out by the Federal Reserve board should be issued.