A Civil Aeronautics Board administrative law judge has recommended the agency drop charges against First American Bank of Virginia in a case involving deposits for charter flights.

In a preliminary decision issued Thursday, Judge Elias C. Rodriguez ruled that first American Bank complied with all CAB regulations meant to protect travelers who make advance payments for air charters.

The decision rejected a CAB enforcement division recommendation that First American be fined $500,000 for alleged violations of federal rules in handling accounts of Davis Agency Inc., of Arlington.

Last January, Davis paid a $60,000 fine and agreed to immediately refund more than $250,000 owed to travelers whose charter flights never got off the ground.

Under CAB rules, money paid for charter fares is supposed to be deposited in escrow accounts so it can be refunded if the charter is cancelled.

After complaints from customers about not getting refunds for cancelled flights, CAB examiners filed a civil complaint against both the travel agency and the bank.

The CAB charged that the Davis firm, a major charter agency, collected millions of dollars from thousands of passengers and failed to put the cash into escrow.

The CAB examiners also charged that First American knew or should have known the travel agent was not putting the money into the proper accounts.

The decision, relieving the bank of responsibility for the travel agent's accounts, could have far-ranging implications for all banks that handle charter flight deposits, according to attorneys who have been involved in the case.

In rejecting the charges against the bank, Judge Rodriguez said the agency tried to hold First American to a higher standard of responsibility for policing charter participants' funds than is required by CAB regulations.

"First American performed its depository bank functions in compliance with the specific requirements of the Board's public charter regulations and in conformity with the applicable stands of care imposed by its depository agreements and by banking law," he said.

Rodriguez said that the bank acted "with diligent due and proper dispatch in taking corrective measures upon becoming aware of charter fund misdeposits."