Peninsula Bank gave millions of dollars to borrowers with serious problems in their past.
There were six land developers with a history of bankruptcies. An attorney suspended three times from the State Bar of Michigan. A home builder who settled four cases of copyright infringement with competitors. And a company controlled by John Yanchek, a Sarasota attorney later imprisoned for illegal property flipping.
Each of these borrowers went into default and didn't repay, costing the Englewood bank nearly $70 million.
Peninsula failed in June 2010 because it ignored warning signs about the economy and made dangerous loans that financed shopping plazas, condominiums and new neighborhoods across Florida,
regulators later concluded.
"Liberal underwriting practices and lax oversight of the lending function also contributed to asset quality problems," they said.
But Peninsula wasn't just careless with its lending.
Customers included an unnamed individual who pleaded guilty to conspiring to launder money, according to state regulators.
Another was Robert Bentley, an investment adviser who pleaded guilty to orchestrating a $380 million Ponzi scheme.
In June 2006, a federal jury found Peninsula guilty of assisting Bentley with his scheme, and it initially ordered the bank to pay $13.1 million in damages. But the judgment was later overturned on appeal.
Peninsula was also generous in its lending to insiders: It had nearly $18 million in such loans on its books in 2009, ranking it among the top five failed banks for the amount of mortgages to officers and directors.
In April, the Federal Deposit Insurance Corp. sued CEO Simon Portnoy and nine fellow officers and directors, alleging gross negligence.
Edward Dougherty, a Tallahassee attorney representing Peninsula's officers and directors, filed a motion to dismiss, saying it was the economy, not mismanagement, that brought the bank down.
Dougherty added that Peninsula received the highest possible ratings from regulators from 2005 through 2007 — an indicator, he said, that "management and board performance were more than satisfactory."