The 'Friends & Family' Plan Gone Wrong: First National Bank of Lindsay CEO Indicted

It is a story that shakes the foundation of community banking. First National Bank of Lindsay, a staple in its Oklahoma community for over a century, has been shuttered. Now, federal prosecutors say the man at the helm is to blame.

Danny Seibel, the former President and CEO of the bank, has been indicted by a federal grand jury on charges of bank fraud, conspiracy, and making false entries. The indictment alleges a brazen scheme of insider abuse that ultimately cost the bank its solvency, and its existence.

The Scheme: "fixing" Overdrafts with Fake Loans

According to the Department of Justice, Seibel didn't just make bad lending decisions; he allegedly treated the bank's vault as a personal piggy bank for his inner circle.

• The "Borrowers": Seibel is accused of issuing loans to personal friends and neighbors who had no intention (or ability) to repay them.

• The Cover-Up: When these accounts inevitably went into the red, Seibel didn't call the loans. Instead, prosecutors allege he "fixed" the overdrafts by issuing new fake loans or transferring the bank’s own capital into the accounts to hide the losses.

• The Deception: To keep the regulators and his own Board of Directors in the dark, Seibel allegedly manipulated the bank’s books, falsifying reports to make the loan portfolio look healthy when it was actually rotting from the inside.

The Cost of Betrayal

The scheme wasn't victimless. In October 2024, the Office of the Comptroller of the Currency (OCC) was forced to close the bank due to "false and deceptive bank records" and a depletion of capital. The FDIC estimates the failure will cost the Deposit Insurance Fund approximately $43 million.

A Warning

The Seibel indictment is a harsh reminder that "insider threat" isn't always malicious theft, sometimes it starts as "helping a friend" and spirals into fraud.

• Trust But Verify: This case highlights the catastrophic failure of internal controls. A CEO should never have the unchecked power to manually override overdrafts and manipulate loan maturity dates without a second set of eyes.

• The Statistical Reality: While cybercrime gets the headlines, insider abuse remains a leading cause of bank failure in the United States. When the call is coming from inside the house, the damage is often fatal before anyone realizes something is wrong.

Outlook

Seibel is facing 30 years in prison and up to $1 million in fines if convicted. The case was filed in the U.S. District Court for the Western District of Oklahoma