By james art The US Department of Justice ordered Truist Financial Corp. to pay a $9.12 million fine to settle claims under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
The fine relates to the administration of certain trust accounts by SunTrust Banks Inc. from December 2011 to December 2015.
Truist assumed these financial obligations in December 2019 as part of BB&T Corp.’s purchase of SunTrust. for $33.4 billion.
Justice said in its news release that the claims resolved through the settlement were only allegations and there was no determination of liability.
Truist said in a statement that “this matter relates to authorized distributions to a small number of trust accounts that occurred approximately a decade ago. We deny these allegations, but are pleased to put the matter behind us.”
Justice said in a news release Monday that the trust accounts were held by a New Jersey development company called The Halpern Group.
Halpern has served as a “structured settlement broker” in matters involving individuals who have received settlement awards in personal injury litigation and referred those individuals to SunTrust.
These individuals set up trusts at SunTrust that were intended to help them preserve their recovery by protecting against unreasonable payments. Both SunTrust and Halpern collected fees in exchange for agreeing to provide these services.
Halpern, and in turn SunTrust, began administering in December 2011 a group of trust accounts known as “Doe Run accounts” as a result of the settlement of lead poisoning cases near Herculaneum, Missouri. These accounts include beneficiaries who claim various health and cognitive problems from lead poisoning.
Justice officials alleged that “instead of helping these beneficiaries avoid unreasonable payments, Halpern requested, and SunTrust often approved, unreasonable payments that were not in the beneficiaries’ best interests, including payments to third parties, such as relatives “.
Justice officials argued that SunTrust’s approval of those payments breached its fiduciary duties as custodian of those accounts.
“Banks hold a special place of trust in our society,” said Ryan Buchanan, U.S. Attorney for the Northern District of Georgia. “This settlement shows that when banks breach that trust – particularly in situations involving vulnerable customers – they will be held accountable.”