The United States of America alleges:
1. This action is brought by the United States to enforce
provisions of the Equal Credit Opportunity Act, 15 U.S.C.
§§ 1691-1691f, and Title VIII of the Civil Rights Act of 1968
(the Fair Housing Act), as amended by the Fair Housing Amendments
Act of 1988, 42 U.S.C. §§ 3601-3619.
2. This Court has jurisdiction of this action pursuant to
28 U.S.C. § 1345 and 15 U.S.C. § 1691(h).
3. Defendant, First National Bank of Gordon, Nebraska
(hereinafter "the bank"), is a national bank with its principal
place of business at 134 North Main Street, Gordon, Nebraska.
The bank includes the Pine Ridge Indian Reservation located
in the District of South Dakota within its delineated community
under the Community Reinvestment Act, 12 U.S.C. §§ 2901-2906.
The Pine Ridge Reservation is home to the Oglala Sioux Tribe.
The bank is a primary depository and lending facility for the
residents of the reservation. The bank is wholly owned by Isham
Management Company. Its business includes regularly extending
credit to persons, including persons residing in the Pine Ridge
4. As of September 1995, the bank had approximately
$57,067,000 in deposits, total assets of approximately
$63,770,000, equity capital of $5,849,000 and no branch offices.
5. The bank has offered and extended general consumer
loans to its customers. The majority of the consumer loans were
unsecured personal loans and loans for the purchase of
automobiles. The bank also has provided consumer loans for the
purchase of mobile homes and for home improvements.
6. As a national bank, First National Bank of Gordon is
subject to the regulatory authority of the Office of the
Comptroller of the Currency. In August 1993, the Comptroller of
the Currency began an examination of the lending practices of the
bank to evaluate its compliance with applicable consumer
protection statutes and regulations, including the Equal Credit
Opportunity Act and the Fair Housing Act. This examination
continued through 1994.
7. The Comptroller's examination revealed that at least
since September 1992, the bank had no formal standards or written
criteria for setting the interest rates on its consumer loans.
Rather, loan officers possessed the discretion to set interest
rates on consumer loans within broad parameters bounded by a
minimum interest rate or fee the bank would accept and the
maximum rate permitted by state usury law. Interest rate or
pricing decisions by loan officers were not further reviewed by
other bank officials. This method of pricing consumer loans
continued until at least March 1994. During the period of the
Comptroller's examination, interest rates charged for consumer
loans ranged from 9 percent to 18 percent. During the period of
the Comptroller's examination, interest rates charged for
consumer loans ranged from 9 percent to 18 percent.
8. During the time period reviewed by the Comptroller,
American Indian borrowers were charged higher interest rates for
consumer loans than similarly situated white borrowers and the
bank failed to provide the Comptroller a non-discriminatory
explanation that fully justified the disparity.
9. Based on information gathered in its examination, the
Comptroller determined that he had reason to believe that the
bank had engaged in a pattern or practice of discrimination on
the basis of race in establishing the interest rates or prices
that the bank charged to American Indian borrowers for consumer
loans. Pursuant to 15 U.S.C. § 1691e(g), the Comptroller
referred this matter to the United States Department of Justice
on January 31, 1995, for appropriate enforcement action.
10. The Department of Justice has conducted additional
investigation and analysis of the consumer lending practices of
the bank and agrees that the bank has discriminated unlawfully
against American Indians in extending consumer credit. The
difference in interest rates between the loans made to the bank's
American Indian borrowers and those made to similarly situated
white borrowers could not have occurred by chance and cannot be
fully explained by factors unrelated to race, color, or national
origin such as differences in the borrowers' creditworthiness or
by differences in the size and duration of the loans.
11. The bank has subjected its American Indian customers to
terms and conditions for general consumer loans that resulted in
those customers paying more for their loans than similarly
situated white customers. On information and belief, all persons
subjected to this disparate treatment reside in the state of
12. The bank's policies and practices, as alleged herein,
a. discrimination against applicants with respect to
credit transactions, on the basis of race, color, or
national origin, in violation of the Equal Credit
Opportunity Act, 15 U.S.C. § 1691(a)(1); and
b. discrimination on the basis of race, color, or national
origin in the terms or conditions of residential real
estate-related transactions in violation of Section 805
of the Fair Housing Act, 42 U.S.C. § 3605(a).
13. The bank's policies and practices, as alleged herein,
a. a pattern or practice of resistance to the full
enjoyment of rights secured by the Equal Credit
Opportunity Act, as amended, 15 U.S.C. §§ 1691-1691f;
b. a pattern or practice of resistance to the full
enjoyment of rights secured by the Title VIII of the
Civil Rights Act of 1968, as amended by the Fair
Housing Amendments Act of 1988, 42 U.S.C. §§ 3601-3619;
c. a denial to a group of persons of rights granted
by Title VIII of the Civil Rights Act of 1968, as
amended by the Fair Housing Amendments Act of
1988, 42 U.S.C. §§ 3601-3619, that raises an issue
of general public importance.
14. Persons who have been victims of the bank's discriminatory policies and practices as alleged herein are
aggrieved persons under the Equal Credit Opportunity Act and the
Fair Housing Act and have suffered injury and damages as a result
of the bank's conduct.
15. The discriminatory policies and practices of the bank
as described herein were, and are, intentional and willful, and
have been implemented with reckless disregard for the rights of
American Indian persons.
WHEREFORE, the United States prays that the Court enter an
(1) Declares that the policies and practices of the bank
constitute a violation of the Equal Credit Opportunity Act, 15
U.S.C. §§ 1691-1691f and Title VIII of the Civil Rights Act of
1968, as amended by the Fair Housing Amendments Act of 1988, 42
U.S.C. §§ 3601-3619;
(2) Enjoins the bank, its agents, employees and all other
persons in active concert or participation with the bank, from
discriminating on account of race, color, or national origin in
the making of the bank's consumer loans or in any other aspect of
the bank's lending;
(3) Requires the bank to develop and submit to the Court
for its approval a detailed plan that: (a) remedies the vestiges
of the bank's discriminatory policies and practices; and (b)
ensures that future American Indian applicants are treated in a
nondiscriminatory manner that does not differ from the treatment
afforded to white applicants for credit;
(4) Awards such damages as would fully compensate the
victims of the bank's discriminatory policies and practices for
the injuries caused by the bank;
(5) Awards punitive damages to the victims of the bank's
discriminatory policies and practices; and
(6) Assesses a civil penalty against the bank, in order to
vindicate the public interest.
The United States further prays for such additional relief
as the interests of justice may require.
DEVAL L. PATRICK
Assistant Attorny General
Civil Rights Division
PAUL F. HANCOCK
Chief, Housing and Civil Enforcement Section
KAREN E. SCHREIER
United States Attorney
Assistant U.S. Attorney
District of South Dakota
515 Ninth Street, Room 226
Rapid City, South Dakota 57701
ALEXANDER C. ROSS
THOMAS J. KEARY
U.S. Department of Justice
Civil Rights Division
Housing and Civil Enforcement Section
Post Office Box 65998
Washington, D.C. 20035-5998