Analysis of United States v. Sterling Bancorp, Inc.
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Jenifer Hernandez
CoPIs:
Madeline Dohogne, James Greenbush, Kenan Green, Anthony Hortiguera
College:
College of Business and Public Management
Major:
Management
Faculty Research Advisor(s):
Dawn Adams-Harmon
Abstract:
A guilty plea for securities fraud was announced and signed by the Department of Justice's Criminal Division's Fraud Section with defendant Sterling Bancorp, Inc. on March 15, 2023. Sterling Bancorp, Inc., a community bank based in Detroit with branches across the country, released a fraudulent and deceptive public offering statement (SEC Form S-1) about its flagship lending program, the "Advantage Loan Program," in conjunction with its October 2017 initial public offering (IPO). Even though the bank promoted this loan program, which in turn contributed significantly to the bank's sustained and growing revenue, a sizable portion of the loans made possible by the ALP were the result of falsified documentation. Insiders at the bank, including Scott Seligman, the founder, gained almost $100 million in stock in conjunction with the IPO. The bank's ensuing annual filings for 2018 and 2019 (SEC Form 10-K) repeated the fraudulent representations. When the scam was discovered in 2020 during a bank inspection, the stock price plummeted, costing owners almost $69 million in losses.
Our purpose is to identify and analyze the ethical violations involved in this case, and the impacts of this violation. We will represent both the prosecution and the defense in this case, and evaluate whether the penalties that resulted were appropriate.