State Issues Warning Letter to Allied Boston Banking to Cease and Desist from Conducting Banking Business in California – Superior Court Issues Preliminary Injunction

Jan 26, 2001

SAN FRANCISCO – The Department of Financial Institutions learned that”Allied Boston Bank” (“Allied”), an off-shore bank licensed by theRepublic of Palau, might be engaged in the banking business at offices located in SanFrancisco. On June 23, 2000, the Department issued a warning letter to Allied, and itsExecutive Vice President, Jack Grover, to cease and desist from conducting bankingbusiness in California without authorization. A warning to bankers regarding Allied wasalso placed in the Department’s June Monthly Bulletin to the state’s financialinstitutions.

“We will continue to do everything in our powerto insure the safety and soundness of the banking industry in California,” saidCalifornia Commissioner Donald R. Meyer.

After further investigation, the matter was referredto the California Attorney General. The Department filed suit in San Francisco SuperiorCourt on October 3, 2000, for violations of Financial Code Sections 3390, 3391, 3392, 1725and 1750; On October 6, 2000, the Superior Court issued a temporary restrainingorder prohibiting Allied from engaging in the banking business, operating a representativeoffice, agency or branch, and from using the word “bank” in its name withoutauthorization from the State Commissioner. After argument at an Order to Show Causehearing, on November 28, 2000, the Superior Court issued the preliminary injunction.

The Department of Financial Institutions isresponsible for regulating the State’s laws relating to state-licensed banks,state-licensed savings and loans, trust companies, state-licensed offices of foreignbanks, issuers of travelers checks and payment instruments (money orders), transmitters ofmoney abroad, state-licensed credit unions, and state-licensed industrial banks. Thedepartment reports to Secretary Maria Contreras-Sweet of the Business, Transportation andHousing Agency and Governor Gray Davis.