by Structured Settlement Watchdog®
The septic tank continues to fill with the toxic "sewage" of members of the National Association of Settlement Purchasers (NASP). A lawsuit was filed in October 2015, by a whistleblower against settlement purchaser BofI Federal Bank in the United States District Court for the Southern District of California in a case styled Charles Matthew Erhart v BofI Holdings Inc., an entity doing business as BofI Federal Bank and Bank of the Internet. Civil Action Number 3: 15CV2287 BAS CLS
Download Whisteblower complaint against NASP member BofI Federal Bank 10-13-2015
I suggest you read the whole complaint and if you have a Pacer account, the Defendants and Plaintiffs motions and response in the still pending case. A sampling of the allegations:
- "In or about January 2015, Plaintiff conducted a Loan Origination Audit. He discovered that the Bank was making substantial loans to foreign nationals including
Politically Exposed Persons (“PEP’s”) in potential violation of BSA/Know Your Customer rules. Plaintiff was able to readily uncover information that many of the borrowers were criminals, even notorious criminals, and other suspicious persons who put the bank at high risk for violating the Bank Secrecy Act’s Anti-Money Laundering Rules (“AML Rules”) as well as exposing the Bank to reputational risk. The purpose of the AML Rules is to help detect and report suspicious activity including the predicate acts to money laundering and terrorist financing. The PEP’s included very high level foreign officials from major oil-producing countries and war zones" [ Complaint at #34]. - When the GCC high-risk customer list was initially presented to SVP John Tolla, approximately 30% of the customers on the list were “bad” – i.e., the verification process produced alerts. The list included at least one social security number (“SSN”) belonging to a deceased person, 30 SSN’s that could not be found in public records, scores of SSN’s that did not match the customer’s name or were issued before the customer’s date of birth was born, many had suspiciously high cash balances, even exceeding $70,000 [ Complaint at #41] In the Plaintiff's memorandum, the number appears to be in excess of 100 SSN/TIN discrepancies.
- "In early 2015 Plaintiff and others conducted a review of personal deposit accounts of senior management. In doing so Plaintiff discovered that CEO Gregory Garrabrants was depositing third-party checks for structured settlement annuity payments into a personal account, including nearly $100,000 in checks made payable to third parties. Plaintiff documented this in an internal audit memo to Jonathan Ball dated January 20, 2015. Plaintiff also learned that the issue of Mr. Garrabrants’ depositing of third-party checks had previously been raised to the Audit Committee before he started working at the Bank, and that restrictions were imposed on him. Plaintiff was concerned as to whether or not the CEO was reporting the income to the IRS". [Complaint at #44]
Three years ago I wrote the following blog post. It will be interesting to see how the above case shakes out.
Is Structured Settlement Secondary Market Ripe For Money Laundering? January 9, 2013
Additional information about the lawsuit against NASP member, BOFI Federal Bank
Making Sense of the Messy Situation at BOFI Holding October 19, 2015 One of the better articles I read on the subject by Brian Stoffel at Motley Fool.
Ex-Auditor Sues Bank of the Internet New York TImes October 13, 2015
BOFI Whistleblower Files Federal Law Suit Gilliam Law Firm Los Angeles, CA
Shareholder Class Action Filed Against BOFI Holding Kessler Topaz Meltzer & Check, LLP October 19, 2015 Looking at the structured settlement factoring industry as a whole and contemplating the need for regulation, note that the class period covers a similar 2013-2015 time period to many of the other recent lawsuits against structured settlement purchasers or malfeasance allegedly commuted by legal professionals or servants retained by them.
BOFI-What Happened, Who To Believe? Seeking Alpha October 15, 2015
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