TD Bank / id theft
Bank officer admits to help steal customer’s identity, then bank sues customer
By Jessica Farrish
Heartland News Service
Heartland News Service
A West Virginia businessman is being sued by the same South Carolina bank where his identity was stolen by a loan officer in 2006.
Bank officials at then-Carolina First Bank in Hilton Head, which is now TD Bank (NYSE: TD), also harmed his credit by knowingly reporting the bogus loan to national credit rating agencies, according to a countersuit filed by the victim’s attorneys.
Charles “Steve” McCue, 67, of Summersville and Lewisburg, was one of 18 victims in a fraudulent scheme that cost banks around $7 million, according to previously published reports.
“I was really flabbergasted that this could happen at a national bank, having been a national bank officer, stockholder and director (in the past), ” said McCue.
Blair Witkowski, a former CFB mortgage loan officer and vice-president, had obtained McCueʼs personal information from bank documents in 2006 and then forged a power of attorney, using McCueʼs name and credit history to ask for a loan of $300, 000. A notary public in the bank had signed off on the documents without McCue present, and CFB approved the loan in November 2006.
McCue knew nothing of the loan for several months.
Witkowski pled guilty in federal court in June to one count of conspiracy to commit bank fraud. Although he admitted to personally using the proceeds as part of a fraudulent scheme involving residential mortgages in four states, TD Bank wants McCue to cough up the $300, 000.
McCue said the bank’s attorneys had drawn up a forbearance agreement in 2007 and asked him to sign it.
“I’ve been in business since I was young, and I understand what a release of liability is, ” said McCue. “I’d never seen one as technical [as this one], and it threw up red flags for me.
“I was one of the only people who refused to sign it, ” he added. “I said, ʻNo, this is much deeper than that, and I want to find out what the hellʼs going on down there.ʼ”
McCue said he asked bank officials for his file, which was delivered, sanitized of all internal memoranda, after a lengthy delay.
“I asked them to notify the FBI that I was defrauded by their bank, and they did, ” he said.
When he refused to sign the forbearance agreement, McCue said, bank officials retaliated.
Although they knew Witkowski had illegally borrowed $300, 000 using McCueʼs identity, bank officials reported the bogus loan as delinquent to credit reporting agencies in an attempt to defame McCue, McCue said.
McCueʼs credit score plummeted from 752 to 566. He suffered a reduction of credit from $1 million to $750, 000, a loss of credit card lines from $70, 000 to $12, 000 with increased interest rates, and he has a higher interest associated with land purchase.
He’s also embarrassed and has suffered health issues due to stress, he added.
McCue at one time owned Wal-Mart shopping centers in Nicholas and Greenbrier counties.
He has filed a countersuit in Beaufort County, S.C., alleging that CFB, which is now TD Bank, N.A., used the Fair Credit Reporting Act to defame him.
McCue said bank officials have never released internal investigation documents that could potentially aid victims in understanding what happened.
“They’ve had 18 people that were misused by Witkowski and the contractors, and they didn’t offer to tell any of them, ” said McCue.
Although he initially faced 30 years in prison for his role in the fraud, Witkowski was ordered to serve 20 months and to pay more than $6.7 million in restitution.
McCue said the U.S. Attorney’s Office should take a closer look at CFB practices.
“I want to know why somebody’s head hasn’t rolled in that bank, ” said McCue. He added that he believes CFB officials have “swept this under the rug in several ways.”
Billy McGee of Nelson Mullins, the Columbia, S.C., firm representing the bank, was not immediately available for comment last week.
Ironically, the South Florida Business Journal reported in December that TD Bank was ordered to expedite a federal review of fraud alerts regarding Ponzi schemer Scott Rothstein’s former bank accounts to determine if they can be used at trial.
The order and sanction by U.S. District Judge Marcia Cooke is the latest unusual event in another civil trial where the bank is being sued for $27 million in losses suffered by Texas-based Coquina Investments, the South Florida Business Journal reported.
The Journal said banking and plaintiffs’ attorneys nationwide are watching the case as a possible bellwether.
In the Coquina civil case in Miami, defendant TD Bank was ordered by Cooke to ask the Office of the Comptroller of the Currency what information can be provided about any suspicious activity reports (SARs) or internal fraud alerts that flagged Rothstein’s accounts at TD Bank. Normally, SARs, which are designed to catch money launderers like the Ponzi schemer, are confidential.
TD Bank had not produced any SARs, but in May 2011 produced some internal fraud reports, the Business Journal reported. On the eve of the trial, some heavily redacted reports were produced – a timing that irritated the judge, the report said.
The issue of whether a bank’s fraud alerts can be used at trial has been hotly debated in Cooke’s courtroom.
“Victims around the country would be greatly encouraged if the plaintiffs are successful here in South Florida, ” said Charles Intriago, a Miami attorney and money-laundering expert, in the Business Journal’s story. “There’s very little jury sympathy for a bank, and right now is a rough time for a bank to be in front of a jury.”
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