Michigan-based Sterling Bancorp Inc. has agreed to plead guilty to securities fraud for filing "false" securities statements relating to its 2017 initial public offering as well as 2018 and 2019 annual filings, the U.S. Justice Department said in a statement on Wednesday.
Sterling Bancorp is the holding company for wholly owned subsidiary Sterling Bank and Trust F.S.B., with branches in San Francisco, Los Angeles, Seattle, New York, and Southfield, Michigan.
"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," said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department's Criminal Division.
In its 2018 and 2019 SEC Form 10-K filings, Sterling reiterated a series of materially false and misleading statements about its Advantage Loan Program . As a result of Sterling's fraud, the total loss to Sterling's non-insider victim-shareholders was about $70 million, the Justice Department said.
As per the terms of the plea agreement, Sterling Bancorp will plead guilty to one count of securities fraud. The company will also 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.
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