DOJ: Sterling Bancorp, Inc. to plead guilty to $69M securities fraud

The U.S. Department of Justice recently reported that a Southfield, Michigan-headquartered bank holding company’s plea agreement regarding the alleged filing of false securities statements.

Through the signed plea agreement, Sterling Bancorp, Inc. was the holding company for its wholly owned subsidiary, Sterling Bank and Trust F.S.B., and has pleaded guilty to securities fraud for filing false securities statements relating to its 2017 initial public offering (IPO) and its 2018 and 2019 annual filings.

“For years, Sterling originated residential mortgages that were rife with fraud to pad its bottom line and then lied about these loans in its IPO and subsequent public filings, defrauding unwitting investors,” Justice Department Criminal Division Assistant Attorney General Kenneth A. Polite, Jr. said. “This proposed guilty plea reflects the nature and seriousness of the wrongdoing and demonstrates the Department of Justice’s commitment to protecting the integrity of our public markets, holding corporations accountable for their criminal misconduct, and compensating victims for their losses.”

According to the Department of Justice, as part of the plea agreement, Sterling agreed to cooperate fully with the United States in all matters relating to the conduct covered by the plea agreement and other conduct under investigation by the United States, to self-report violations of U.S. federal criminal law, and to continue to implement a compliance and ethics program designed to detect and deter violations of U.S. securities laws throughout its operations.

Sterling Bancorp, Inc. will plead guilty to one count of securities fraud, be required to serve a term of probation through 2026, submit to enhanced reporting obligations to the department and pay more than $27.2 million in restitution to its non-insider victim-shareholders.