- Associated Press - Monday, September 22, 2014

NORFOLK, Va. (AP) - A lawyer, his Norfolk law firm and their insurance company have settled allegations of gross negligence and conflicts of interest stemming from the collapse of the Bank of the Commonwealth.

Under the settlement, attorney Richard Tavss of Virginia Beach, the law firm Tavss Fletcher, and Minnesota Lawyers Mutual Insurance Co agreed to pay a $1 million penalty to banking regulators.

The Federal Deposit Insurance Corp. released a copy of the settlement agreement last week after the penalty was paid, The Virginian-Pilot (https://bit.ly/1rgf9dX) reported.

Tavss denied the allegations in court filings. He and his lawyers have declined to comment.

The FDIC had alleged that Tavss and the law firm closed on loans to used-car magnate Charlie Falk while knowing that the bank’s board of directors hadn’t approved them. Falk later defaulted on the loans.

The FDIC also had alleged grossly negligent acts on other bank loans that Tavss and one of his law partners, A.T. Mayo, were involved in.

The FDIC said that Tavss and his law firm collected nearly $2 million in legal fees from the bank in the two years prior to its collapse in 2011.

Tavss was a longtime board director at the bank’s parent company, Commonwealth Bankshares, and served as its chairman after Edward J. Woodard Jr. was forced to step down as president, CEO and board chairman.

Woodard, his son T. Brandon Woodard and Stephen Fields are serving prison sentenced following their convictions in May 2013 on charges of conspiring to defraud the bank out of $71 million before it collapsed.

On Monday, the FDIC filed a lawsuit against Woodard, Tavss, and eight other members of the bank’s board seeking at least $11 million in damages, the newspaper reported.

So far, the bank’s failure has cost the FDIC $$302 million, according to the most recent balance sheet summary posted on the FDIC’s website.

The FDIC also has recovered $540,000 from Virginia Beach real estate appraiser Bruce Hatfield and his insurance company. Hatfield was accused of questionable appraisals leading up the bank’s failure. He denied any wrongdoing.

Richmond accountant James Poti accepted a two-year prohibition from practicing before the Securities and Exchange Commission as a result of inadequate audit work he performed for the bank in 2008, according to SEC filings.

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Information from: The Virginian-Pilot, https://pilotonline.com

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