First American Bank fires Kane County as banking customer, citing security concerns

GENEVA – With more than $40 million on deposit, Kane County’s primary bank fired the county as a customer, warning Treasurer Chris Lauzen he has until Nov. 30 to find a new bank, according to an Oct. 6. letter.

The letter, from First American Bank, follows an earlier letter from bank officials Aug. 24 that cited concerns with the county’s banking activities.

Lawrence Zydowsky, the bank’s executive vice president and chief credit officer, signed both letters.

“Our bankers have noted a pattern of activity concerning the county’s accounts, which indicate that the county’s banking activity may be at risk,” Zydowsky’s August letter to Lauzen and Board Chair Corinne Pierog said. “Account safety requires that both First American and the county adopt appropriate policies and practices with respect to the compliance obligations for the county’s bank accounts.”

The letter accused the county of violating sections of an agreement under which the bank provides services covering security, loss prevention and confidentiality.

The bank directed Lauzen to follow seven initiatives related to data security and the bank’s online cash management system and gave him a deadline to implement them on or before Sept. 30.

Lauzen ignored the bank’s directives and decided to find another bank, records show.

“First American has successfully provided banking services for Kane County for many years. We consider this a treasured relationship,” Zydowsky wrote in a follow-up letter Oct. 6. “However, seeing that we have not received any formal response to our concerns, we request that you find a new bank.”

Zydowsky would not comment, stating the bank does not discuss communications with its customers.

In an email, Lauzen wrote that he told First American in September that he was taking an assessment of the county’s banking services through a request for proposals.

“I have circulated a ‘working draft’ of that RFP among stakeholders and experts who are helping in the process. ... We are inviting all banks who are interested in bidding on our profitable business to participate. Our selection will be made in the next six to seven weeks,” Lauzen’s email said.

Pierog said the timing of Lauzen’s request for proposals for a new bank “is reactive to the letter received from First American Bank.”

“Let’s hope that the treasurer moves forward in a responsible manner to make sure that all of the new accounts are in place before the bank transfer occurs at the end of November,” Pierog said.

‘Self-serving and inaccurate’

The first letter from First American Bank stirred Lauzen’s ire.

In a Sept. 8 email from Lauzen to Kane County State’s Attorney Jamie Mosser, Lauzen accused Zydowsky of making “several self-serving and inaccurate statements.”

“There is not one piece of correspondence with specific recommendations or examples of what he referred to in our conversations as ‘… controls that MIGHT not be in place’ [his words],” according to Lauzen’s email.

Lauzen’s email also accuses Zydowsky of “showing off” to his colleagues, “throwing some kind of weight around and acting as if he is ‘entitled’ to the county’s business.”

In a Sept. 11 email titled “No Good Deed Will Be Left Unpunished” sent to all county board members, Lauzen wrote that First American and previous investment brokers “are not happy with me because their ‘gravy train’ at Kane County taxpayers’ expense has been ground to a halt.”

“Everything bad and good that occurs in the Treasury is ultimately my responsibility,” Lauzen said in his email. “State statutes give to county treasurers exclusive authority to select and supervise banking relationships. As long as Kane County taxpayers elect me to this position, I will strenuously represent their financial interests, rather than kowtow to bankers and brokers. Attempts to intimidate me to protect their profits will not succeed.”

No fraud, malfeasance

Pierog forwarded the Aug. 24 letter from First American to Mosser for review.

In a Sept. 26 letter to Pierog and county board members, Mosser wrote that regardless of how either side described the situation, “this office finds that the issues currently raised by the bank do not arise to more than administrative ones that should be addressed to and handled by the treasurer, who has internal control over the operations of his office.”

Mosser wrote the bank’s concerns are not related to “fraud or malfeasance or the loss of county money.”

“This office thus will not be looking further into this issue at this time,” Mosser’s letter said.