Truist Bank, based in Charlotte, North Carolina, is set to pay $9M to resolve allegations it breached federal financial policies.
According to a Justice Department case, the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Northern District of Georgia settled the case in a collaborative effort.
The $9 million sum will resolve the allegations that the bank breached the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) in relation to the administration of trust accounts owned by SunTrust Bank (SunTrust) from December 2011 until 2015.
“Banks occupy a special place of trust in our society,” said U.S. Attorney Ryan K. Buchanan for the Northern District of Georgia. “This settlement shows that when banks violate that trust — especially in situations involving vulnerable customers — they will face accountability.”
Truist Bank pays the price to settle FIRREA breach
Branch Banking and Trust Company acquired SunTrust in December 2019, and the combined entity was renamed Truist. Truist managed certain accounts on behalf of The Halpern Group (Halpern), a New Jersey-based company.
Halpern was the middleman in personal injury claim award payouts; this was more formally referred to in the court documents as a “structured settlement facilitator.” SunTrust was the go-to bank for Halpern, and their clients established accounts and trusts with the banking entity, which would reportedly “help them (successful claimants) preserve their recoveries by protecting against unwise disbursements. Both SunTrust and Halpern collected fees in exchange for their agreement to provide these services.”
In 2011, SunTrust ran several accounts named the “Doe Run Accounts,” which were part of the usual trade that Halpern would run past the bank. This set list of claimants came from a settlement of lead poisoning cases near Herculaneum, Missouri.
Those beneficiaries, who depended on SunTrust and Halpern had various health and cognitive issues from lead poisoning. The case brought forward by the United States resulted in the million-dollar settlement fee surrounding SunTrust and Halpern issuing irregular payouts from these claims for “the benefit of third parties (e.g., relatives). The United States contends that SunTrust’s approval of these disbursements violated its fiduciary obligations as the trustee of these accounts.”
Truist will now pay the United States $9,125,000 to resolve claims under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA
“Our federally insured financial institutions must act in accordance with the law, including meeting their obligations to beneficiaries when they serve as trustees,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division.
Featured Image: Charlotte, North Carolina; Photo, John Hill; Pexels
