Truist Bank (Truist), based in Charlotte, North Carolina, has agreed to pay the United States $9,125,000 to resolve claims under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). These claims relate to the administration of certain trust accounts by SunTrust Bank (SunTrust) from December 2011 through December 2015. SunTrust was acquired by Branch Banking and Trust Company in December 2019, and the combined entity was renamed Truist.
“Our financial institutions occupy a special place of trust in our communities,” said U.S. Attorney Ryan K. Buchanan. “This settlement demonstrates our office’s commitment to hold accountable any bank that violates its fiduciary duties to beneficiaries, especially in situations involving vulnerable clients.”
“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. “Today’s settlement makes clear that the Department will hold banks accountable when they knowingly run afoul of applicable legal requirements.”
The settlement announced today resolves claims arising from SunTrust’s management of certain trust accounts it administered as part of its relationship with a New Jersey company doing business as The Halpern Group (Halpern). Halpern served as a “structured settlement facilitator” in matters involving individuals who received settlement awards in personal injury litigation and referred those individuals to SunTrust. These individuals then established trusts at SunTrust that were intended to help them preserve their recoveries by protecting against unwise disbursements. Both SunTrust and Halpern collected fees in exchange for their agreement to provide these services.
In or around December 2011, SunTrust began administering a group of trust accounts, known as the “Doe Run Accounts,” that were referred to the bank by Halpern and resulted from the settlement of lead poisoning cases near Herculaneum, Missouri. Those accounts involved beneficiaries who claimed various health and cognitive issues from lead poisoning. The United States contends that, rather than helping these beneficiaries avoid unwise disbursements, Halpern requested and SunTrust frequently approved imprudent disbursements that were not in the beneficiaries’ best interests, including disbursements for the benefit of third-parties (e.g., relatives). The United States also contends that SunTrust’s approval of these disbursements violated its fiduciary obligations as the trustee of these accounts.
The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch (Fraud Section) and the United States Attorney’s Office for the Northern District of Georgia. The matter was handled by Senior Trial Counsel David W. Tyler from the Commercial Litigation Branch, Assistant U.S. Attorney Austin M. Hall from the Northern District of Georgia, and former Assistant U.S. Attorney Armen Adzhemyan from the Northern District of Georgia.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
