Posted by AzBlueMeanie:
Mark Nicholas at politicalbase.com is one of the few reporters covering this developing news story. Last week Andrew McCain, son of Senator John McCain, suddenly resigned from the board of directors of Silver State Bancorp and Silver State Bank.
Nicholas reports that his departure was quickly followed by the sudden resignation of Corey L. Johnson as President and Chief Executive Officer of Silver State Bancorp and as Chief Executive Officer of Silver State Bank, the Company’s wholly-owned bank subsidiary. The Company also announced the resignation of Silver State Bancorp’s and Silver State Bank’s Chairman of the Board, Bryan S. Norby. Political Base – Connecting the Dots of Money, Media & Politics
The bank announced a management reorganization, Silver State Bancorp Announces Management Reorganization – MarketWatch, and announced devastating second quarter losses significantly steeper than anticipated. Silver State Bancorp Reports 2008 Second Quarter Financial Results – MarketWatch
As Mark Nicholas notes, there is still no answer why McCain’s son quit the board of this failing bank. Mark Nickolas’ Blog: Still No Answer Why McCain’s Son Quit Board Of Failing Bank Nicholas provides a useful timeline of events and then speculates:
So, what accounts for the mysterious departure from the bank by McCain and his refusal — as well as the bank’s — to comment on why he left? After all, he is the son of the Republican nominee for president during the middle of the biggest banking crisis in 20 years and he served on the board and audit committee of a bank that is clearly failing.
Did Andrew McCain run from the bank knowing it was on the verge of failure and did not want to be seen as an officer of another bank failure in the middle of his father’s presidential bid? Did he leave after discovering financial irregularities as a result of his position on the Audit Committee? Was he involved in any improprieties? Did it involve Douglas French’s sudden resignation in mid May, over whom McCain would have had responsibility? Why has Silver State’s share price tumbled 85 percent (to just $1.28 today) since McCain joined the bank’s board in April?
We simply don’t know.
Nicholas also offers a tantalizing clue as to what may be a possible reason for the troubles of the bank:
But there’s another major issue that I’ve discovered that is hovering over Silver State, and that has to do the April 7 and July 1 timeline entries above concerning CMKM Diamonds (a massive stock fraud scandal that even The New York Times has spent time covering). It may have nothing to do with McCain’s departure or it may have everything to do with it. His sudden exit leaves many questions like these unanswered.
Nicholas cites an unconfirmed report from Mark Faulking (unknown to me) who reported that:
But a little diamond mining company from Canada that turned out to be the biggest penny stock fraud in history might become a major problem for McCain’s campaign as well. Insiders with CMKX defrauded over 50,000 shareholders of in excess of $250 million. A large portion of that money was run through a single Silver State Bank branch in Las Vegas. In all, former CMKX CEO Urban Casavant and reputed mastermind John Edwards (no, not that John Edwards) opened over 100 bank accounts at Silver State, and ran tens of millions of dollars through the bank.
…The scam finally came crashing down in late 2005 when the SEC finally delisted CMKX…and recently filed charges against eleven individuals and three companies in the CMKX case…Silver State Bank has not been charged in the CMKM Diamonds case, although they did fire an employee named Patricia DeCosta, who approved most of the transactions…
…The fact remains that Silver State Bank never filed a single Suspicious Activities Report (SARS) while 50,000 CMKX shareholders lost their entire investments.
Andrew McCain served on Silver State Bank’s Audit Committee. This would have been among his duties and responsibilities. He may be called upon to answer for the bank.
Mark Nicholas noted that the bank was to hold a conference call at 9:00 a.m. on Monday, August 4, 2008 to discuss the management reorganization and second quarter losses. He has not yet posted an update on the conference call at his web site www.politicalbase.com.