September 20, 2019
By Caity Witucki
Contributing Editor, Fraud Friday
Fraud Friday — Ex-CEO of Farmers Bank Accused of Fraud
Aaron Johnson has stepped down as CEO of Farmers Bank amid allegations of fraud and a cease and desist consent order filed with the FDIC.
The bank neither admits nor denies wrongdoing with the consent order, but is now suing Johnson for allegedly charging personal expenses on a company credit card. In addition to FDIC and state regulatory issues, two Farmers Bank shareholders are also suing Johnson for allegedly using their stock as collateral for loans with other lending institutions.
Aaron Johnson succeeded his father as CEO of Farmers Bank in 2016. Shortly after taking the role, Farmers became the fastest growing bank in Oklahoma. The astonishing growth lead to questions about Johnson’s operation of the bank and the FDIC’s formal investigation.
The FDIC’s Consent Order, which was published on June 28, 2019, outlines restrictions regarding expenses paid on behalf of employees and directors as well as proper lending practices.
After the FDIC began their investigation, Farmers hired an independent accounting firm to investigate suspicious activity on Johnson’s company credit card. Farmers’ lawsuit against Johnson, claims that he made personal charges in the amount of $398,389 that the bank paid on his behalf. According to Farmers, Johnson breached his fiduciary duty as a chief executive officer by utilizing the card for personal expenses and having those charges paid for by the bank.
Johnson is also being sued by two Farmers Bank Shareholders who claim Arron and his father misled them into loaning the bank substantial sums of money. The Shareholders claim $1.5 million in promissory notes were executed on July 24, 2018. Additional allegations regarding fraudulent stock sales are expected to be the subject of a separate lawsuit.
Meanwhile, Farmers Bank is implementing the FDIC consent order and has hired a new CEO and two new independent directors.