Sterling Bancorp in Southfield, Mich., has filed a lawsuit against its founder and controlling shareholder.
The $2.5 billion-asset company disclosed in a regulatory filing that it 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 controlling position 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 said the lawsuit seeks to recover compensatory and other damages, disgorgement of certain monies and injunctive relief.
The move comes shortly after Sterling agreed 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. Sterling shut down the program in late 2019.
The OCC had claimed that Sterling bank 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.