The Bank Slate


Sterling in Mich. reorganizes legal department

Sterling Bancorp in Southfield, Mich., which recently filed a lawsuit against its founder and former CEO, has hired a chief legal officer.

The $2.5 billion-asset company disclosed in a regulatory filing that it had added Elizabeth Keogh as part of a reorganization of its legal department.

Keogh has been a self-employed legal consultant for the past 13 years, with Sterling among her clients. Prior to 2009, she was a corporate attorney with the law firms of Thacher Proffitt & Wood and Sonnenschein Nath & Rosenthal.

Colleen Kimmel, the company’s former general counsel, will remain general counsel and corporate secretary of the bank.

The changes come weeks after Sterling filed a lawsuit in U.S. District Court for the Eastern District of Michigan against former CEO Scott Seligman and “other nominal defendants.”

The lawsuit, which seeks to claw back roughly $25 million of dividends and other payments to Seligman, alleges that he breached his fiduciary duties to Sterling and its bank by using his clout to develop and direct the defunct Advantage Loan Program to “advance his own interests and unjustly enrich himself” at the expense of the company and its other investors.

Sterling filed the lawsuit after agreeing to pay a $6 million civil money penalty as part of a formal agreement with the Office of the Comptroller of the Currency. The OCC said the penalty was based on violations of law and “unsafe or unsound practices” tied to the Advantage Loan Program, which Sterling shut down in late 2019.

The OCC claimed that Sterling originated numerous loans that were based on false or fraudulent loan information. The agency said it also found underwriting deficiencies and Bank Secrecy Act and anti-money laundering violations tied to the program.

Leave a Reply

Your email address will not be published. Required fields are marked *