An internal auditor fired by BOFI Federal Bank after his whistleblowing on unlawful activities at the Bank has filed a federal lawsuit in San Diego, California.
Charles Matthew (“Matt”) Erhart alleges he was threatened, harassed and fired when he brought up illegal activities at the Bank to management and to federal regulators. He seeks relief under the Sarbanes-Oxley Act of 2002, the Dodd-Frank Act of 2010, and a variety of California state statutes and common law claims.
BOFI boasts on its website (www.bofiholding.com) that its performance has it ranked #1 in the country among the largest public thrifts. Its assets exceed $5.8 billion. BOFI stock recently reached an all-time high of $143.92 per share (NASDAQ symbol: BOFI). The lawsuit alleges that BOFI’s valuation is based, at least in part, upon inaccurate information being supplied by the Bank to the public and the regulators.
The complaint recites numerous instances of wrongdoing uncovered by Mr. Erhart and brought to BOFI management’s attention. It includes allegations of:
- altered and suppressed reports to federal regulators
- the existence of a host of loans to criminals and foreign nationals listed as Politically Exposed Persons under the Bank Secrecy Act
- more than 150 accounts with no Tax Identification Numbers, while the Bank told regulators it had none
- numerous grand jury and criminal subpoenas, while the Bank told regulators it had none
- a statement by a senior manager of the Bank that he could not vouch for the accuracy of the Bank’s financials after they were sent to the Chief Financial Officer, Andrew Micheletti
- punishment of Mr. Erhart for putting in writing that the Bank violated California law in secretly recording phone calls to lottery winners and recipients of structured settlements
- the sudden resignation of the head of Internal Audit (Mr. Erhart’s supervisor) for refusing to engage in illegal activities
- high levels of deposit concentration not properly disclosed
- suppression and doctoring of a list of high-risk customers with cash cards requested by regulators
- a threat to Mr. Erhart by a Senior Vice President that if he “continues to turn over rocks, eventually he’s going to find a snake and he’s going to get bit”
- a threat to have Mr. Erhart arrested by San Diego police for disclosing the violations of law to federal regulators
- the Bank’s CEO, Gregory Garrabrants, telling Bank employees that he intended to “bury the BOFI whistleblower”
Mr. Erhart’s attorney, Los Angeles-based Carol Gillam, stated, “As a former federal prosecutor and long time employment lawyer, I find the Bank’s conduct as alleged here to be among the most egregious I have seen from a publicly traded company. I intend to fully vindicate Mr. Erhart’s rights, while federal law enforcement agencies continue their investigations as well.”
The case is assigned to Judge Cynthia Bashant and the case number is 3:15-cv-2287-BAS-NLS.