On April 27, 2006, the United States government filed a lawsuit in the U.S. District Court for the Northern District of Mississippi against First National Bank of Pontotoc (the "Bank") and its former Vice-President, under Equal Credit Opportunity Act (ECOA). The U.S. sought damages, declaratory and injunctive relief, alleging that the defendants engaged in a practice or pattern of gender discrimination against female borrowers, female applicants for credit, and female account holders. Specifically, the U.S. alleged that the Vice-President sexually harassed the aforementioned women, and the Bank was liable for his actions. According to the DOJ press release, the Vice-President's actions included offensive comments, unwanted sexual touching, and demanding sexual favors from female customers over a period of years until his employment ended in May of 2004.
On July 6, 2006, the Vice-President filed a motion to dismiss. On November 3, 2006, the Court (Judge Glen H. Davidson) dismissed the motion.
On July 11, 2007, the U.S. filed an amended complaint, adding allegations of gender discrimination under the Fair Housing Act, 42 U.S.C. §§ 3601 et seq. In other respects, the complaint reiterated the original allegations. On July 25, 2007, the Bank filed a cross-claim against its former Vice-President, denying liability for the latter's actions and seeking compensation from him to the Bank for any liability imposed on the Bank.
The parties entered into settlement negotiations and reached an agreement. On November 7, 2007, the Court entered the parties' consent decree. The decree contained general injunctions on gender discrimination in: 1) application for credit: 2) residential real-estate related transaction; 3) terms or conditions of residential real-estate transactions. If the Vice-President resumed engagement in residential real-estate transaction, he had to provide notice to the plaintiff and go through a fair lending laws training, with focus on sex discrimination and harassment. The Bank agreed to institute anti-discrimination policies, including posting notices in media, and a complaints procedure for sexual harassment. The Bank also agreed to provide fair lending training to its present and future employees, focused on sexual harassment. The Bank agreed to pay $130,000.00 in damages to victims of sexual harassment and the Vice-President agreed to pay $120,000.00, with up to $50,000.00 for additional victims. The Bank had to pay $5,000.00 and the Vice-President $45,000.00 in civil penalty to the United States. The Bank also agreed to provide reports to the plaintiff pertaining to the consent decree. The decree remained in effect for five years and the Court retained jurisdiction over the decree for its duration.
On September 24, 2008, the Court (Judge Michael P. Mills) approved the joint stipulation of parties on disbursement of funds, and ordered payment of $50,000.00 by the Bank to 29 women with varying amounts. Zhandos Kuderin - 07/31/2014