IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MISSOURI ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) COMPLAINT

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1 IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MISSOURI PEOPLES BANK OF MONITEAU COUNTY, v. DAVID HAMPTON, Serve at: Highway 179 California, MO and SHERRY HAMPTON Serve at: Highway 179 California, MO and ANGELA L. FLIPPIN, Serve at: Highway 179 Jamestown, MO and RUSSELL PHILBERT, Serve at: 6511 Route M Jefferson City, MO Plaintiff, Defendants. Case No.: Jury trial requested. COMPLAINT COMES NOW Plaintiff Peoples Bank of Moniteau County, by and through its undersigned counsel, and for its cause of action against Defendants David Hampton, Sherry Hampton, Angela L. Flippin, and Russell Philbert, states as follows: Nature of Case 1. This is a civil action brought by the Plaintiff, a state-chartered Missouri bank, Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 1 of 47

2 against the Defendants, who include the former President/Chief Executive Officer, and former Vice President/Chief Operations Officer who embezzled funds, and fraudulently and improperly disbursed funds to themselves and others totaling at least $930, This action is brought pursuant to Section 1030(g of The Computer Fraud and Abuse Act (CFAA, 18 U.S.C. 1030(g; the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C ; for common law fraud; breach of fiduciary duty; money had and received; unjust enrichment; violation of the Missouri Uniform Fraudulent Transfer Act, , et seq. RSMo.; for injunctive relief, for a prejudgment Writ of Attachment pursuant to , et seq. RSMo. as applicable under Federal Rule of Civil Procedure 64; for an accounting; and for appointment of a receiver under the Missouri Commercial Receivership Act, et seq. RSMo. Jurisdiction 3. This Court has jurisdiction over this action pursuant to 18 U.S.C. 1964(a and (c; 18 U.S.C. 1030(g; and 28 U.S.C. 1331, providing jurisdiction over federal questions. The Defendants are residents of, or entities organized and operating in, the State of Missouri, in the Western District of the United States District Court. Venue 4. Venue is proper in the United States District Court, Western District of Missouri pursuant to 28 U.S.C. 1391(b(1 because all defendants reside in this judicial district and are residents of the State of Missouri. 5. Venue is also proper in this judicial district pursuant to 28 U.S.C. 1391(b(2 because a substantial part of the events or omissions giving rise to the claim occurred in this judicial district, and all or a substantial part of the property that is the subject of this action is 2 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 2 of 47

3 situated in this judicial district. Parties 6. Plaintiff Peoples Bank of Moniteau County (hereinafter the Bank" or Plaintiff is a Missouri chartered bank organized and existing under and by virtue of the laws of the State of Missouri and is insured by the Federal Deposit Insurance Corporation (the FDIC. 7. Defendant David Hampton (hereinafter D. Hampton is an individual residing in Moniteau County, Missouri, and was formerly the President/Chief Executive Officer of the Bank. 8. Defendant Sherry Hampton (hereinafter S. Hampton, and together with D. Hampton, collectively, the Hamptons is an individual residing in Moniteau County, Missouri, and is the wife of D. Hampton, and was formerly an employee of the Bank. 9. Defendant Angela L. Flippin (hereinafter Flippin is an individual residing in Moniteau County, Missouri, and was formerly the Vice President and Chief Operations Officer of the Bank. Flippin is the daughter of D. Hampton. 10. Defendant Russell Philbert (hereinafter Philbert is an individual residing in Cole County, Missouri. 11. The Hamptons, Flippin, and Philbert are collectively referred to herein as the Defendants. General Allegations 12. Flippin began employment at the Bank on February 1, 1993 as a computer operator. 13. Within a few years, Flippin was promoted to Vice President and Chief Operations 3 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 3 of 47

4 Officer of the Bank. 14. Flippin also served as Board Secretary for the Bank. 15. D. Hampton was named as President of the Bank on May 1, D. Hampton s title was later changed to Chief Executive Officer and President, but his responsibilities remained the same. 17. Flippin is D. Hampton s and S. Hampton s daughter. 18. Flippin and Philbert are, or were at all relevant times herein, romantic partners. 19. Flippin s responsibilities at the Bank included human resources, payroll, insurance arrangements and payments, compliance, and information technologies and operations. 20. In these capacities, Flippin had full access to the Bank s accounting and computer systems, which included the ability to post payments, make changes, make journal entries, and process payment reimbursements. 21. Prior to July 2015, Flippin provided the hours and payroll information to the Bank s outside accounting firm, which handled the Bank s payroll. Beginning in July, 2015, Flippin posted the payroll of the Bank internally using a posting sheet provided by the Bank s outside accounting firm. 22. After July, 2015, Flippin continued to have significant input in the payroll cycle, including providing necessary information and direction to the Bank s third-party payroll provider. 23. Flippin had unfettered access and control to the accounting, computer, and human resource systems for the Bank. 24. Flippin s employment with the Bank was terminated on February 17, D. Hampton s employment with the Bank was terminated on February 21, Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 4 of 47

5 Forensic Accounting Report 26. The Bank engaged BKD, LLC ( BKD, an independent accounting firm, to conduct a forensic investigation of the transactions made by the Defendants that give rise to this action. 27. In conducting their investigation, BKD reviewed numerous Bank records, including, but not limited to, bank accounts, loan accounts, time sheets, computers, cell phones, and other records. 28. On May 24, 2017, BKD produced a Forensic Accounting Investigation Report (the Forensic Accounting Report that revealed and reported that the Defendants conducted numerous transactions at the Bank that enabled them to receive improper payments and disbursements, and other unauthorized benefits, including, but not limited to, the transactions summarized below. Unauthorized Compensation Time Disbursements 29. During the time that Flippin and D. Hampton were employed by the Bank, the Bank had a policy of allowing additional compensation ( Comp Time for employees who worked more than 40 hours a week, regardless of whether the employees were salaried or hourly employees. 30. This Comp Time included additional hours worked over 40 hours a week. 31. The Bank s employees were required to track overtime hours on a time sheet form provided by the Bank. Employees recorded their own overtime hours on those time sheets. 32. However, Flippin and D. Hampton, as salaried executive officers of the Bank, were not entitled to Comp Time payments. 33. D. Hampton and Flippin improperly collected unauthorized Comp Time payments 5 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 5 of 47

6 during their employment with the Bank. 34. At the request of state examiners, Flippin provided her timesheets for 2016 and Flippin did not provide time sheets for any other years in which she was employed by the Bank. 36. Additionally, Flippin improperly inflated her Comp Time during her employment with the Bank. 37. Flippin and D. Hampton hid from the Board of Directors of the Bank the fact that they were paying themselves Comp Time by funding the payment of the Comp Time from the Bank s employee benefits insurance account. 38. The Board of Directors of the Bank set the annual salary of Flippin and D. Hampton, but they were unaware that they were receiving unauthorized and inflated Comp Time. 39. The timesheets provided by Flippin and the Bank s records show that Flippin had a pattern of abuse of the Bank s Comp Time system. 40. Despite medical and other issues that kept Flippin away from work for significant stretches of time in 2014, Flippin received Comp Time pay totaling $110, in addition to her authorized salary in Despite passing off a significant amount of work in 2015 and decreasing the number of hours worked, Flippin received Comp Time pay totaling $126, in addition to her authorized salary in Flippin s 2016 timesheet showed Comp Time for practically every day of the year including 8 hours of Comp Time on Christmas Eve (Saturday, and 9 hours of Comp Time on Christmas Day (Sunday. 6 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 6 of 47

7 43. Flippin s 2016 timesheet also showed Comp Time for a day that does not exist September 31st. 44. Flippin s 2016 timesheet showed total Comp Time of 3,322 hours, however, the Bank records show that Flippin paid herself the equivalent of 4,221 hours in Comp Time in 2016, totaling $148, in addition to her authorized salary. 45. In 2017, Flippin was employed by the Bank for approximately six weeks prior to her termination. Flippin s 2017 timesheet showed total Comp Time of 398 hours, however, the Bank s records show that it paid out the equivalent of 443 hours of Comp Time to Flippin in 2017, totaling $16, in addition to her authorized salary. 46. From 2013 through 2016, Flippin s total authorized pay was approximately $275, During the same period, 2013 through 2016, Flippin received improper disbursements related to Comp Time totaling approximately $473,700.00, in addition to her authorized pay. 48. Altogether, for the years 2010 through 2017, Flippin received improper Comp Time disbursements totaling at least $637, Flippin and D. Hampton also made improper Comp Time disbursements to D. Hampton for the years 2010 through Altogether, for the years 2010 through 2017, D. Hampton received improper Comp Time disbursements totaling at least $164, All of the payments were effected by Flippin through her unauthorized and improper access to the Bank s computer systems. 7 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 7 of 47

8 Improper Disbursements Into Flippin s Personal Accounts 52. Starting in March of 2014, Flippin began making disbursements, typically on payroll disbursement dates, that had nothing to do with payroll. 53. On March 14, 2014, Flippin set up recurring transactions for $3, and $1, These amounts were outside of payroll and did not relate to payroll activity. 55. The amounts were set up to be transferred to two separate personal savings accounts, Account #XX00, and Account #XXXX06 (collectively, the Flippin Personal Accounts, respectively. 56. Account #XX00 was a savings account; Philbert and Flippin were the named parties on the account. 57. Account #XXXX06, was also a savings account; Flippin, Mark Flippin, and Kamden Flippin were the named parties on the account. 58. On March 30, 2014, the $3, recurring transactions were cancelled. 59. On April 15, 2014, Flippin edited the recurring $1, transaction, changing the amount to $1, and changing the account it was to be deposited into Account #XX Also on April 15, 2014, Flippin set up an additional $1, disbursement to be deposited into Account #XXXX These $3, in deposits continued as recurring, automatic, semi-monthly disbursements until February In February of 2015, Flippin changed the amount of deposits into the Flippin Personal Accounts to a total of $1, On March 13, 2015, Flippin changed the total amount deposited into the Flippin 8 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 8 of 47

9 Personal Accounts to $2, On March 31, 2015, Flippin changed the total amount deposited into the Flippin Personal Accounts to $3, On April 30, 2015, Flippin changed the total amount deposited into the Flippin Personal Accounts to $3, On May 15, 2015, Flippin changed the total amount deposited into the Flippin Personal Accounts to $4, These recurring, semi-monthly, automatic transactions continued until June 30, 2015, when the Bank began using an outside payroll company rather than its outside accounting firm to handle payroll. 68. All of the recurring semi-monthly payments were effected by Flippin through her unauthorized and improper access to the Bank s computer systems. 69. Flippin and D. Hampton were aware of, and conspired to make, the foregoing unauthorized payments. Improper Reimbursement of Personal Expenses 70. Flippin conducted several improper transactions relating a Bank debit card assigned to Flippin in This Bank debit card was tied to a Bank expense account. 72. In May of 2015, Flippin traveled to Nebraska for business, and claiming that her personal debit card had been compromised, received permission from the Bank to use the Bank s debit card for personal usage for which she indicated that she would reimburse the Bank. 73. These expenses were personal in nature. 74. The Bank s regulators discovered Flippin s unauthorized and improper use of the 9 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 9 of 47

10 debit card. 75. Flippin reached an agreement with the Bank to repay nearly $9,000, plus 10% interest, related to the improper personal transactions. 76. As part of her repayment obligation to the Bank, Flippin made two payments from one of her personal checking accounts on April 7, 2015 for $2, and $ Instead of paying the remaining reimbursements from her own accounts, Flippin improperly and without authorization used the Bank s computer systems to effect a transfer of money between the Bank s general ledger, employee benefits account (the Employee Benefits Account, a Bank seminars account, and a Bank mileage expense account, with no other money coming from personal accounts under Flippin s control or ownership. 78. This scheme amounted to the Bank paying itself for Flippin s personal expenses. 79. On several occasions, Flippin caused the Bank to reimburse her and Philbert s personal checking accounts for personal expenses unrelated to her employment with the Bank. 80. On several occasions, D. Hampton and Flippin caused the Bank to reimburse D. Hampton s personal checking account for personal expenses unrelated to their employment with the Bank. 81. On certain occasions, D. Hampton and Flippin also transferred funds from the Employee Benefits Account to D. Hampton s Account #XXXX80. These included a transfer on May 13, 2016 in the amount of $2,347.45, and a transfer on December 19, 2016 in the amount of $2, Flippin also received various other improper reimbursements for personal expenses unrelated to her employment with the Bank. 83. These payments were effected by Flippin through her unauthorized and improper 10 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 10 of 47

11 access to and use of the Bank s computer systems. 84. Flippin, D. Hampton, and Philbert were aware of, and conspired to conduct and make, the foregoing unauthorized payments and transactions. Improper Repayment of Personal Loan From the Bank 85. In 2010, Flippin obtained a $90, personal loan from the Bank s correspondent Bank, Midwest Independent Bank ( MIB. 86. Funding for the 2010 personal loan came through the Bank s correspondent account with MIB (the Correspondent Account. 87. The funds for the 2010 personal loan were disbursed to Flippin s personal checking accounts on May 17, Flippin made the monthly payments for this personal loan by crediting money to the Correspondent Account. 89. On one or more occasions, Flippin made the payments to the Correspondent Account by improperly transferring money directly from the Bank s Employee Benefits Account. 90. These payments were effected by Flippin through her unauthorized and improper access to and use of the Bank s computer systems. 91. Flippin and D. Hampton were aware of, and conspired to make and conduct, the foregoing unauthorized payments and transactions. Improper Reimbursement and Rebates for Insurance Premiums 92. The Bank, as part of its compensation package, pays 100% of the insurance premiums for its full-time employees. 93. It is the Bank s policy that employees of the Bank are required to pay for 11 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 11 of 47

12 coverage for dependents, if such coverage was elected by the employee. 94. From 2013 through 2016, in violation of the Bank s policy, Flippin caused the Bank to pay for health, dental and vision insurance for Philbert. Although Philbert did perform some work for the Bank, he was not a full-time employee of the Bank, and was never set up through the Bank s payroll as an employee. 95. The Bank paid a total of approximately $24, on Philbert s behalf for health insurance premiums from 2013 to Neither Philbert nor Flippin reimbursed the Bank for the insurance premiums paid on Philbert s behalf. 97. The Bank, in connection with the health insurance it provided to its employees, received rebates related specifically to those employees listed in the plan, which erroneously included Philbert. 98. Philbert, despite not being an employee of the Bank, received rebate checks in connection with the Bank s health insurance coverage in 2014 and Altogether, the above and foregoing improper disbursements into personal accounts, improper Comp Time disbursements, improper reimbursements of personal expenses, improper repayments of personal loans from the Bank, and improper reimbursements and rebates of insurance premiums (collectively, the Unauthorized Payments resulted in Unauthorized Payments totaling $645, to Flippin, $166, to D. Hampton, and $33, to Philbert, for a total of at least $845, in Unauthorized Payments These payments were effected by Flippin through her unauthorized and improper access to and use of the Bank s computer systems Flippin also received various other improper reimbursements for personal 12 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 12 of 47

13 expenses unrelated to her employment with the Bank The Unauthorized Payments are summarized in the Forensic Accounting Report. Additional Improper Disbursements to D. Hampton 103. D. Hampton also received unauthorized reimbursements from the Bank for personal expenses (the D. Hampton Reimbursements unrelated to his employment In January of 2017, D. Hampton received reimbursement from the Bank into his personal account for laptops in the amount of $3, D. Hampton failed to provide any documentation for the laptops and the Bank does not have any newly purchased laptops in its possession D. Hampton also received reimbursement to his personal account for the purchase of a tent in the amount of $ D. Hampton failed to provide any documentation for the tent and the Bank does not have the tent in its possession Altogether the D. Hampton Reimbursements totaled $4, These payments were effected by Flippin and D. Hampton through their unauthorized and improper access to and use of the Bank s computer systems. Additional Unauthorized Health Insurance-Related Disbursements 110. In addition to the above improper disbursements and D. Hampton Reimbursements, Flippin and D. Hampton received unauthorized payments (the Premium Savings Payments related to the Bank s health insurance policy From 2007 through 2015, the Bank had a policy of paying employees one-half of the Bank s savings in health insurance premiums if the employee elected not to receive coverage under the Bank s health insurance plan (the Reimbursement Policy. 13 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 13 of 47

14 112. The Bank terminated the Reimbursement Policy in From 2013 to 2015, Flippin received payments under the Reimbursement Policy despite electing to be covered under the Bank s health insurance plan and failing to qualify for the Reimbursement Policy Although the Bank terminated the Reimbursement Policy in 2015, Flippin continued to receive payments from the Bank under the now terminated policy from 2015 to In all, Flippin received $29, in unauthorized payments from the Bank under the Reimbursement Policy From January of 2007 through June of 2010, D. Hampton, despite electing to receive health insurance under the Bank s plan and not qualifying for the Reimbursement Policy, received payments totaling $32, Further, although the Reimbursement Policy was terminated in 2015, D. Hampton received improper and unauthorized payments from the Bank totaling $18, between 2015 and 2017, under the Reimbursement Policy The Premium Savings Payments totaled at least $80, Altogether, the Unauthorized Payments, D. Hampton Reimbursements, and Premium Savings Payments (collectively, the Improper Disbursements totaled at least $930, Improper Disbursements to S. Hampton 120. Flippin and D. Hampton also made improper disbursements to S. Hampton S. Hampton was an account holder on at least four (4 savings, checking, and loan accounts with D. Hampton, each of which received improper disbursements, and from which she 14 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 14 of 47

15 benefitted S. Hampton also received unauthorized direct payments made at various times by Flippin or D. Hampton from Bank funds, including, but not limited to, a disbursement made by D. Hampton of $ on August 3, Upon information and belief, S. Hampton received regular unauthorized direct payments made at various times by Flippin or D. Hampton, based on statements made by Flippin in text messages to S. Hampton S. Hampton was aware of these unauthorized direct payments Flippin, D. Hampton, and S. Hampton were aware of, and conspired to make, the foregoing unauthorized payments These payments were effected by Flippin and D. Hampton through their unauthorized and improper access to and use of the Bank s computer systems. Computer Fraud and Fraudulent Alteration of Data 127. On at least one occasion, Flippin intentionally altered the transaction detail for Account #XXXX80 of D. Hampton and S. Hampton for the time period July 1, 2016 through February 6, 2017 by printing the bank statement for that Account to a PDF file, transferring the document to a Word document, and then changing the transaction entries to show fewer transactions and lower amounts deposited than had actually occurred The differences between the actual Account entries and the fraudulently altered Account entries included the following: The original version had 42 total transactions and the revised version contained 24 total transactions. The original version had a total of $26, deposited during the statement period; the revised version contained a total of $17, Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 15 of 47

16 The ending balance was the same between both versions. However, as noted above, this indicated more funds were available to withdraw (and were withdrawn by D. Hampton. Items listed as Credit memo on the original version were changed to Deposit on the revised version Flippin s fraudulent alteration of these bank statements concealed the actual number of transactions and the actual amount of deposits and withdrawals by D. Hampton and S. Hampton with regard to Account #XXXX Flippin provided these fraudulently altered bank statements to Missouri state bank examiners, but did not advise them that she had fraudulently altered the statements Flippin, D. Hampton, S. Hampton, and Philbert were aware of, and conspired to make and conduct the Improper Disbursements Flippin, D. Hampton, S. Hampton, and Philbert concealed the Improper Disbursements and transactions from the Bank These Improper Disbursements were effected by Flippin through her unauthorized and improper access to and use of the Bank s computer systems The Bank was unaware of the Improper Disbursements. All of the above and foregoing actions of the Defendants are collectively referred to herein as the Fraudulent Actions. Count I (COMPUTER FRAUD AND ABUSE ACT 18 U.S.C. 1030(G COMES NOW Plaintiff, by and through its undersigned counsel, and for its cause of action on Count I against Defendants D. Hampton, Flippin, and Philbert, states as follows: 135. Plaintiff herewith re-alleges and incorporates paragraphs 1 through 134, above, as though fully set forth herein. 16 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 16 of 47

17 136. The Computer Fraud and Abuse Act ( CFAA, 18 U.S.C is a cybersecurity law that outlaws conduct that uses computer systems to cause a loss or damage to others Section 1030(a(4 of the CFAA provides that it is a crime for any person to knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value Subsection 1030(b of the CFAA also makes it a crime to attempt or conspire to commit any of these offenses Computers used by or for a financial institution are included as a protected computer under Section 1030(e(2(A of the CFAA The Bank is a financial institution as defined and protected under Section 1030(e(4(A of the CFAA because it is an institution, with deposits insured by the Federal Deposit Insurance Corporation Section 1030(g of the CFAA provides in relevant part that (any person who suffers damage or loss by reason of a violation of this section may maintain a civil action against the violator to obtain compensatory damages and injunctive relief or other equitable relief Under Section 1030(e(12, the Bank is a person entitled to bring a civil action under the CFAA for the recovery of any loss caused by the Defendants Section 1030(e(11, in relevant part, defines loss broadly to include any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred Flippin s and D. Hampton s actions in accessing the Bank s computers enabled 17 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 17 of 47

18 them to conduct the Fraudulent Actions and make the Improper Disbursements The Defendants Fraudulent Actions in connection with the Improper Disbursements are and were a violation of the CFAA and constitute a felony under state and federal law As a direct and proximate result of the Fraudulent Actions of the Defendants in connection with the Improper Disbursements, the Bank suffered direct monetary losses totaling at least $930, (the Direct Losses 147. As a direct and proximate result of the Fraudulent Actions of the Defendants in connection with the Improper Disbursements, the Bank also suffered consequential damages that are recoverable under Section 1030(e(11 of the CFAA, including, but not limited to the following (collectively, the Consequential Losses : a. The cost of responding to and investigating the Defendants fraudulent and unauthorized actions in connection with the Improper Disbursements; b. The cost and fees incurred in conducting a damage assessment, including, but not limited to, the BKD forensic accounting; c. The adverse effects on the Bank s reputation, standing, and ratings by and among federal and state regulators as a result of the Improper Disbursements; d. The loss of capital that would have otherwise been available to the Bank for lending purposes; e. Attorneys fees and related costs in connection with the response to and investigation the Defendants Fraudulent Actions in connection with the Improper Disbursements; f. The cost of restoring the data and information that were fraudulently 18 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 18 of 47

19 manipulated and altered by the Defendants in the commission of their Fraudulent Actions in connection with the Improper Disbursements; and g. The lost time and cost of wages and salaries of Bank employees who were required to investigate and respond to the Defendants actions in connection with the Improper Disbursements. WHEREFORE, the Bank prays this honorable Court for a judgment against Defendants D. Hampton, Flippin, and Philbert, jointly and severally, in the total sum of at least $930,815.80, together with interest thereon at the judgment rate, and together with attorneys' fees and costs of collection such as are on account with the undersigned counsel for the Bank at the time of entry of judgment hereon; and for such other and further relief as the Court deems just and proper. Count II (RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT 18 U.S.C COMES NOW Plaintiff, by and through its undersigned counsel, and for its cause of action on Count II against Defendants D. Hampton, S. Hampton, Flippin, and Philbert, states as follows: 148. Plaintiff herewith re-alleges and incorporates paragraphs 1 through 147, above, as though fully set forth herein The Racketeer Influenced and Corrupt Organizations Act, RICO, 18 U.S.C ( RICO permits claimants in a civil action to recover treble damages for any person injured in his business or property by reason of a violation of section U.S.C. 1964(c Section 1962(c of RICO makes it unlawful for any person employed by or associated with any enterprise to conduct or participate, directly or indirectly, in the conduct of such enterprise s affairs through a pattern of racketeering activity. 19 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 19 of 47

20 151. RICO defines a pattern of racketeering activity as requiring at least two acts of racketeering activity within ten years. 18 U.S.C. 1961(5. Racketeering activity is defined in 18 U.S.C. 1961(1(B to include wire fraud in violation of 18 U.S.C. 1343, and money laundering in violation of 18 U.S.C The wire fraud statute, 18 U.S.C prohibits anyone from devising any scheme to defraud to obtain money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire for the purpose of executing such scheme The money laundering statute, 18 U.S.C prohibits conducting a financial transaction with the proceeds of specified unlawful activity knowing that the transaction is designed in whole or in part to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity RICO defines enterprise as any individual, partnership, corporation, or other legal entity. 18 U.S.C. 1961( At all relevant times, the Defendants associated in fact with each other as a family and with others so as to constitute an Enterprise ( RICO Enterprise within the meaning of 18 U.S.C. 1961(4 and 1962(c At all times relevant, the RICO Enterprise was engaged in, and its activities affected, interstate and foreign commerce that involved Bank transactions that were processed through interstate, and were subject to federal regulatory authorities outside of the State of Missouri The RICO Enterprise had as its common purpose the making of the Improper Disbursements to themselves and each other for their own benefit, separate and apart from their 20 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 20 of 47

21 association with each other at the Bank The RICO Enterprise had an ascertainable structure which functioned separate and apart from the Fraudulent Actions. If the predicate acts ceased, the relationship of the Defendants would remain intact The Defendants associated with the RICO Enterprise through their personal involvement in the underlying racketeering offenses as well as through the continuous concealment and promotion of the RICO Enterprise s activities and their Fraudulent Actions In furtherance of the RICO Enterprise, the Hamptons, Flippin, and Philbert, committed numerous overt and predicate acts that included their Fraudulent Actions that were a violation of federal and state laws, including, but not limited to, 18 U.S. Code 656 (theft, embezzlement, or misapplication by bank officer or employee; Section 1030(a(4 of the CFAA (committing a fraud by knowingly accessing a protected computer without authorization or exceeding authorized access; Section RSMo. (misapplication of funds of a financial institution by officer or employee; and Section RSMo. (stealing The principal purpose of the racketeering conspiracy was to generate money for each other and pay their own unauthorized expenses through the operation of the RICO Enterprise and various criminal activities, including wire fraud and money laundering The Hamptons, Flippin, and Philbert, and others agreed to engage in a pattern of racketeering activity using various locations including, but not limited to, the Bank s offices located in Moniteau County, Missouri, to further the objectives of the RICO Enterprise The Hamptons, Flippin, and Philbert, knowingly conducted or participated, directly or indirectly, in the conduct of the affairs of the RICO Enterprise within the meaning of 18 U.S.C. 1962(c. 21 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 21 of 47

22 164. Furthermore, these Defendants were employed by or associated with the RICO Enterprise within the meaning of 18 U.S.C. 1962(c The Hamptons, Flippin, and Philbert, directed and managed the RICO Enterprise s activities, as more fully alleged throughout this Complaint, through a pattern of racketeering activity within the meaning of 18 U.S.C. 1961(1, 1961(5, and 1962(c The Hamptons, Flippin, and Philbert, conducted and participated in the RICO Enterprise s affairs through a pattern of racketeering activity within the meaning of 18 U.S.C. 1961(1, 1961(5, and 1962(c In the course of conducting and participating in their fraudulent schemes and RICO Enterprise, these Defendants executed numerous predicate acts of racketeering activity, including the Fraudulent Actions, which are indictable under provisions of the U.S. criminal code enumerated in 18 U.S.C. Section 1961(1(B, as more specifically alleged herein As described throughout this Complaint, these Defendants engaged in a pattern of related and continuous predicate acts over a substantial period of time The unitary scheme began sometime in or around 2010 and continued until Flippin and D. Hampton were terminated in February of The predicate acts demonstrated a variety of unlawful activities, including the Fraudulent Actions, each conducted in furtherance of the RICO Enterprise and the common purpose to defraud Plaintiff and other victims and obtain in excess of one million dollars The predicate acts also had the same or similar results, participants, victims, and methods of commission. The predicate acts are related and are not isolated events The predicate acts all had the purpose of diverting and misappropriating monies from the Bank. 22 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 22 of 47

23 173. The predicate acts were committed or caused to be committed by these Defendants, and were interrelated in that they involved using the Bank s funds Further, on information and belief, these Defendants misappropriation repeatedly involved diversion of funds for their personal benefit, and concealing their payments, distributions, diversions of funds, and withdrawals at the Bank, to conceal the theft and embezzlement of the Bank s funds pursuant to their scheme By virtue of the Hamptons, Flippin s, and Philbert s violation of 18 U.S.C. Section 1962(c, the Bank has sustained substantial injury and losses The Fraudulent Actions of the Hamptons, Flippin, and Philbert in violation of RICO were the actual, direct, and proximate cause of the Bank s damages, which would not have occurred without their conduct The Hamptons, Flippin, and Philbert profited from their Fraudulent Actions and used some proceeds to further their RICO Enterprise The Hamptons, Flippin, and Philbert as alleged throughout the Complaint, knowingly conducted or participated, directly or indirectly, in the conduct of the affairs of the RICO Enterprise within the meaning of 18 U.S.C. 1962(c by conducting the Fraudulent Actions, and by participating in the transfer of the Bank s funds, making the Improper Disbursements, preparing false bank records intended to conceal their illegal use and transfer of funds, and knowingly accepting payments of funds for their own benefit and profit The Hamptons, Flippin, and Philbert knowingly conducted or participated, directly or indirectly, in the conduct of the affairs of the RICO Enterprise and the Fraudulent Actions within the meaning of 18 U.S.C. 1962(c At all relevant times herein, the Bank was unaware of the Fraudulent Actions of 23 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 23 of 47

24 these Defendants As a direct and proximate result of the Fraudulent Actions of the Defendants in connection with the Improper Disbursements, the Bank suffered the Direct Losses and the Consequential Losses, among other damages and losses. WHEREFORE, the Bank prays this honorable Court for a judgment against Defendants D. Hampton, Flippin, and Philbert, jointly and severally, in the total sum of at least $930,815.80, plus threefold the damages sustained and attorneys' fees and costs of collection such at the time of entry of judgment hereon pursuant to 18 U.S. Code 1964, together with interest thereon; and for such other and further relief as the Court deems just and proper. Count III (FRAUD AND FRAUDULENT CONCEALMENT COMES NOW Plaintiff, by and through its undersigned counsel, and for its cause of action on Count III against Defendants D. Hampton, S. Hampton, Flippin, and Philbert, states as follows: 182. Plaintiff herewith re-alleges and incorporates paragraphs 1 through 147, above, as though fully set forth herein To sustain a claim for false concealment in Missouri, the plaintiff must prove the defendant s knowledge of material facts, a duty on behalf of the defendant to make those facts known, the defendant s successful concealment of those facts, the defendant s intent to induce reliance upon its silence, actual and reasonable reliance on behalf of the plaintiff, and injury to the plaintiff. Margolies v. Matthew Headley Holdings, LLC, No , (8 th May 19, 2006, citing Keefhaver v. Kimbrell, 58 S.W.3d 54, (Mo. Ct. App At all relevant times, the Defendants concealed their Fraudulent Actions and their Improper Disbursements from the Bank. 24 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 24 of 47

25 185. The Defendants concealment of their Fraudulent Actions and their Improper Disbursements constitute a fraudulent omission and a misrepresentation and fraud on the Bank by omission The Fraudulent Actions of the Defendants and their omission and concealment of their Fraudulent Actions and Improper Disbursements constituted ongoing false representations to the Bank (the Representations The Representations were false in all respects The Defendants were aware that their Representations were false The Defendants had a duty to make the facts concerning the falsity of the Representations and their Fraudulent Actions and Improper Disbursements known to the Bank The Defendants successfully concealed these facts The Defendants intended that the Bank rely on their Representations, and induced the Bank to rely on the Representations At all relevant times when D. Hampton and Flippin were employed by the Bank, the Bank was unaware of the falsity of the Representations The Bank relied on the Defendants Representations and the understanding that D. Hampton, Flippin, and Philbert would not embezzle, convert, divert, or misappropriate the Bank s funds, or otherwise make Improper Disbursements, transfers, and transactions The Bank was reasonable in relying on the Representations As a direct and proximate result of the Fraudulent Actions and Improper Disbursements of D. Hampton, Flippin, and Philbert, the Bank sustained the Direct Losses and Consequential Losses. 25 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 25 of 47

26 WHEREFORE, the Bank prays this honorable Court for a judgment against Defendants D. Hampton, Flippin, and Philbert, jointly and severally, in the total sum of at least $930,815.80, together with interest thereon at the judgment rate, and together with attorneys' fees and costs of collection such as are on account with the undersigned counsel for the Bank at the time of entry of judgment hereon; and for such other and further relief as the Court deems just and proper. Count IV (BREACH OF FIDUCIARY DUTIES COMES NOW Plaintiff, by and through its undersigned counsel, and for its cause of action on Count IV against Defendants D. Hampton, S. Hampton, Flippin, and Philbert, states as follows: 196. Plaintiff herewith re-alleges and incorporates paragraphs 1 through 147 above, as though fully set forth herein In Missouri, a claim for breach of fiduciary duty has four elements: (1 the existence of a fiduciary relationship between the parties; (2 a breach of that fiduciary duty; (3 causation; and (4 harm. Lafarge North America, Inc. v. Discovery Group, L.L.C., No (8 th Cir. July 27, 2009, citing Koger v. Hartford Life Ins. Co., 28 S.W.3d 405, 411 (Mo. Ct. App D. Hampton and Flippin had a fiduciary relationship with the Bank, and owed fiduciary duties to the Bank Defendants D. Hampton and Flippin also owed fiduciary duties to the Bank in their capacity as executive officers of the Bank The Defendants fiduciary duty included a duty to notify the Bank of the Fraudulent Actions and Improper Disbursements, and the falsity of their Representations At all relevant times, the Defendants concealed their Fraudulent Actions and their 26 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 26 of 47

27 Improper Disbursements from the Bank The Defendants concealment of their Fraudulent Actions and their Improper Disbursements constituted a breach of their fiduciary duties to the Bank The Representations were false in all respects The Defendants intended that the Bank rely on their Representations At all relevant times when D. Hampton and Flippin were employed by the Bank, the Bank was unaware of the falsity of the Representations The Bank relied on the Defendants Representations and the understanding that D. Hampton, Flippin, and Philbert would not embezzle, convert, divert, or misappropriate the Bank s funds, or otherwise make Improper Disbursements, transfers, and transactions The Bank was reasonable in relying on the Representations and the observance by the Defendants of their fiduciary duties to the Bank As a direct and proximate result of the Fraudulent Actions and Improper Disbursements of D. Hampton, Flippin, and Philbert, and their breach of fiduciary duties, the Bank sustained the Direct Losses and Consequential Losses. WHEREFORE, the Bank prays this honorable Court for a judgment against Defendants D. Hampton and Philbert, jointly and severally, in the total sum of at least $930,815.80, together with interest thereon at the judgment rate, and together with attorneys' fees and costs of collection such as are on account with the undersigned counsel for the Bank at the time of entry of judgment hereon; and for such other and further relief as the Court deems just and proper. 27 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 27 of 47

28 Count V (MONEY HAD AND RECEIVED COMES NOW Plaintiff, by and through its undersigned counsel, and for its cause of action on Count V against Defendants D. Hampton, S. Hampton, Flippin, and Philbert, states as follows: 209. Plaintiff herewith re-alleges and incorporates paragraphs 1 through 147 above, as though fully set forth herein In Missouri, (an action for money had and received is based... on equitable principles permitting recovery of money from defendant that, in all justice and fairness, the evidence shows defendant should not keep. Kubley v. Brooks, 141 S.W.3d 21, 29 (Mo. banc An action for money had and received is proper where the defendant received money from the plaintiff under circumstances that in equity and good conscience call for defendant to pay it to plaintiff. Palo v. Stangler, 943 S.W.2d 683, 684 (Mo. App. E.D At all relevant times, the Defendants concealed their Fraudulent Actions and their Improper Disbursements from the Bank As a result, the Defendants received the Improper Disbursements and the benefit of the Improper Disbursements from the Bank under circumstances that in equity and good conscience call for the Defendant to repay them to the Bank As a direct and proximate result of the Fraudulent Actions and Improper Disbursements to D. Hampton, Flippin, and Philbert, the Bank sustained the Direct Losses and Consequential Losses. WHEREFORE, the Bank prays this honorable Court for a judgment against Defendants D. Hampton, Flippin, and Philbert, jointly and severally, in the total sum of at least $930,815.80, 28 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 28 of 47

29 together with interest thereon at the judgment rate, and together with attorneys' fees and costs of collection such as are on account with the undersigned counsel for the Bank at the time of entry of judgment hereon; and for such other and further relief as the Court deems just and proper. Count VI (UNJUST ENRICHMENT COMES NOW Plaintiff, by and through its undersigned counsel, and for its cause of action on Count VI against Defendants D. Hampton, S. Hampton, Flippin, and Philbert, states as follows: 215. Plaintiff herewith re-alleges and incorporates paragraphs 1 through 147, above, as though fully set forth herein There are three elements to a claim of unjust enrichment under Missouri law. First, a plaintiff must confer a benefit and enrich a defendant. Second, the enrichment must be at the expense of the plaintiff. Finally, the Court must determine that it would be unjust for the defendant to retain the benefit. Hawkins v. Nestle U.S.A., Inc., Case No. 4:17CV205 HEA (Mo. E.D. Feb. 7, 2018, citing Miller v. Horn, 254 S.W.3d 920, 924 (Mo. App The Improper Disbursements conferred a benefit on the Defendants and enriched the Defendants The Improper Disbursements and enrichment of the Defendants was at the expense of the Bank It would be unjust for the Defendants to retain the Improper Disbursements and the benefit of the Improper Disbursements As a direct and proximate result of the Fraudulent Actions and Improper Disbursements of D. Hampton, Flippin, and Philbert, the Bank sustained the Direct Losses and Consequential Losses. 29 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 29 of 47

30 WHEREFORE, the Bank prays this honorable Court for a judgment against Defendants D. Hampton, Flippin, and Philbert, jointly and severally, in the total sum of at least $930,815.80, together with interest thereon at the judgment rate, and together with attorneys' fees and costs of collection such as are on account with the undersigned counsel for the Bank at the time of entry of judgment hereon; and for such other and further relief as the Court deems just and proper. Count VII (CONSPIRACY TO VIOLATE RICO COMES NOW Plaintiff, by and through its undersigned counsel, and for its cause of action on Count VII against Defendants D. Hampton, S. Hampton, Flippin, and Philbert, states as follows: 221. Plaintiff herewith re-alleges and incorporates paragraphs 1 through 181, above, as though fully set forth herein U.S.C. 1962(c prohibits conducting the affairs of an enterprise through a pattern of racketeering activity. 18 U.S.C. 1962(d makes it unlawful to conspire to violate 18 U.S.C. 1962(c. Hence, 1962(d makes it unlawful to conspire to conduct the affairs of an enterprise through a pattern of racketeering activity that violates 1962(c A violation of 18 U.S.C. 1962(d intentionally omits two elements of 1962(c, the requirement that the defendant participated, directly or indirectly, in the conduct of the affairs of the enterprise, and the requirement that the defendant participated in the enterprise through a pattern of racketeering activity by committing at least two racketeering (predicate acts A conspiracy to violate RICO pursuant to 18 U.S.C. 1962(d is established if: (1 an enterprise existed; (2 the enterprise affected interstate or foreign commerce; (3 the defendant associated with the enterprise; and (4 the defendant objectively manifested an agreement to participate in the affairs of the enterprise. 30 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 30 of 47

31 U.S.C. 1962(d makes it unlawful to conspire to conduct the affairs of an enterprise through a pattern of racketeering activity. RICO defines enterprise to include any group of individuals associated in fact. 18 U.S.C. 1961(4. The essence of an association in fact is that it is not a legitimate business or other entity operating in the public eye. U.S. v. Lemm, 680 F.2d 1193, 1200 n. 7 (8th Cir The Fraudulent Actions of the Defendants were a violation of federal and state laws, including, but not limited to, 18 U.S. Code 656 (theft, embezzlement, or misapplication by bank officer or employee; Section 1030(a(4 of the CFAA (committing a fraud by knowingly accessing a protected computer without authorization or exceeding authorized access; Section RSMo. (misapplication of funds of a financial institution by officer or employee; and Section RSMo. (stealing As a direct and proximate result of the Fraudulent Actions and Improper Disbursements of D. Hampton, S. Hampton, Flippin, and Philbert, the Bank sustained the Direct Losses and Consequential Losses. WHEREFORE, the Bank prays this honorable Court for a judgment against Defendants D. Hampton, S. Hampton, Flippin, and Philbert, jointly and severally, in the total sum of at least $930,815.80, together with interest thereon at the judgment rate, and together with attorneys' fees and costs of collection such as are on account with the undersigned counsel for the Bank at the time of entry of judgment hereon; and for such other and further relief as the Court deems just and proper. 31 Case 2:18-cv WJE Document 1 Filed 05/18/18 Page 31 of 47