A Fairfax County Circuit Court judge has dismissed a negligence suit against seven former directors of a small McLean bank that loaned $2.2 million in a fraudulent wine investment scheme.
Judge James C. Cacheris ruled Friday that the plaintiffs, Odell Rice and Lorraine Law, had failed to establish that any errors of judgement on the part of the directors amounted to negligence.
Mark Sandground, attorney for Rice and Law, said he would appeal the decision. Sandground said the suit was latest case on the issue of individual corporate director liability."
The lawsuit stems from a pyramiding scheme in which approximately 400 persons around the country invested more than $20 million in a bogus wine importing scheme.
The bank became involved in the wine venture when its president, Walter P. Johnson, began approving large amounts of uncollateralized loans to borrowers who wanted to invest in the wine scheme.
The wine scheme collapsed in June 1974 when the Securities and Exchange Commission disclosed the nature of the scheme. Johnson subsequently pleaded guilty to federal charges of embezzlement and misuse of bank funds. Johnson was sentenced last December to six months in prison.
The bank, meanwhile, was forced to write off $423.000 in loans connected with the wine venture.
The suit accused the bank directors of failing to oversee the performance of the bank president properly, therefore making them individually liable to the share holders for the bank's losses.
Named as defendants in the suit dismissed by Judge Cacheris were: J. Michael Burry, Blaise De Sibour, William Howlett, Henry Mackall, George E. Schreiner, Frederick M. Gross and Carl L. Schmitz.