Subpoenas have been issued by South Carolina's Attorney General's Office in connection to allegations of financial mismanagement by former executives of CertusBank.
The state's Securities Division, which is overseen by the Attorney General's Office, sent subpoenas to several "individuals and entities" associated with the recent turmoil at the Greenville, S.C., company, Eric Bland, a lawyer at Bland Richter in Columbia, S.C., said Friday. Bland, who represents three former CertusBank executives who were fired in early April, confirmed that the investigation is linked to allegations of mismanagement by his clients, although he did not name the recipients or confirm whether his clients were among those subpoenaed.
Bland said he is unaware of any other federal or state agency that is investigating his clients.
Few details on the investigation, first reported in the Greenville News, have been made public or confirmed by those involved. The subpoenas are not related to CertusBank and neither the bank nor any current employees have received subpoenas, spokeswoman Kelly Owens said. A spokesman for the state attorney general's office declined to comment.
Bland confirmed that the state's probe is connected to allegations of mismanagement that were raised in a March 27 American Banker article. He said, however, that he had not seen the subpoenas and could not provide details. The American Banker article detailed a dispute between the bank's management and its investors over allegedly excessive executive spending and questionable related-party transactions, including payments of nearly $10 million to Integrated Capital Strategies, a consultancy owned by the top CertusBank executives. Calls to Integrated Capital Strategies were not immediately returned on Friday.
Certus' board of directors terminated the three founders of the bank, executive chairman Milton Jones, CEO Walter Davis and President Angela Webb, less than two weeks after the allegations were made public; a fourth founder, co-CEO Charles Williams, resigned on March 31.
Jones, Davis and Webb filed a lawsuit against the bank and an investor, Benjamin Weinger of New York hedge fund 3-Sigma Value, on April 23, claiming the defendants conspired to defame the founders in order to wrest control of CertusBank. The lawsuit disputes many of the allegations of mismanagement that Weinger made in a letter that he distributed to other Certus shareholders, allegations the suit claims were motivated by animosity toward African-Americans. Weinger was not immediately available for comment.
