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FSLIC v. HYKEL

October 18, 1971

FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, Petitioner,
v.
George J. HYKEL and Havertown Savings and Loan Association, Respondents


John W. Lord, Jr., Chief Judge.


The opinion of the court was delivered by: LORD, JR.

JOHN W. LORD, Jr., Chief Judge.

 This is a proceeding brought under the authority of Section 407(k)(2) of the National Housing Act (hereinafter referred to as Act), as amended 12 U.S.C.A. § 1730(k)(2), by the Federal Savings and Loan Insurance Corporation (hereinafter referred to as Corporation) against George J. Hykel and Havertown Savings and Loan Association (hereinafter referred to as Havertown), a savings and loan association organized and existing under and by virtue of the laws of the Commonwealth of Pennsylvania, to enforce a Notice of Suspension issued by the Corporation, acting through the Federal Home Loan Bank Board, 12 U.S.C.A. § 1725(a), pursuant to Section 407(h) of the Act, 12 U.S.C.A. § 1730(h).

 Petitioner has requested that this Court enter an order:

 1. Directing the officers, directors and employees of respondent Havertown to desist in aiding, abetting or approving any participation by respondent Hykel in any manner in the affairs of Havertown.

 2. Directing respondent Hykel to pay over or return to respondent Havertown any and all money, profits or things of value he may have received by reason of his participation in the affairs of Havertown.

 3. Directing that the United States recover the costs of maintaining this action.

 A hearing was held on August 16, 1971, at which time it was admitted that the facts were not in dispute. A recapitulation of the principal facts will be beneficial in placing this case in its proper perspective.

 On March 5, 1970, George J. Hykel, President and a Director of Havertown, was indicted by the Grand Jury for the Eastern District of Pennsylvania, United States v. George J. Hykel, Criminal No. 70-104, for having acted dishonestly and in breach of his fiduciary duties to Havertown in violation of 18 U.S.C.A. § 371 and 18 U.S.C.A. § 1006. Pursuant to 12 U.S.C.A. § 1730(h), on April 14, 1970, the Corporation issued a Notice of Suspension to Hykel suspending him as President and Director of Havertown pending disposition of the criminal proceedings against him and prohibiting him from "further participation in any manner in the conduct of the affairs of [said] institution." *fn1"

 Hykel challenged his suspension and the constitutionality of Section 407(h). A Three-Judge Court, appointed pursuant to 28 U.S.C.A. §§ 2282 and 2284, dismissed without reaching the merits of Hykel's claim pursuant to 12 U.S.C.A. § 1730(k)(2). Hykel v. Federal Savings and Loan Insurance Corp., 317 F. Supp. 332 (E.D. Pa. 1970).

 On February 24, 1971, Hykel was convicted of violating 18 U.S.C.A. § 1006. His post-trial motions have been denied and he has been sentenced by this Court.

 Beginning in March, 1971, Hykel has acted as a real estate agent on behalf of Havertown and has been authorized to sell or rent real estate acquired by Havertown through foreclosure. Hykel has received commissions for his services. The Notice of Suspension is still in full force and effect.

 The only issue is whether Hykel's activities in acting as a real estate agent on behalf of Havertown are considered "participation in any manner in the conduct of the affairs of the Institution" in ...


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