Representative Cases

Two BankExperts consultants were engaged by the FDIC in 26 separate professional-liability lawsuits against former officers and directors of failed banks. These bank failures alone cost the FDIC’s insurance fund an estimated $4.84 billion in depositor claims. Drawing upon extensive hands-on commercial lending and credit experience, BankExperts consultants advised the FDIC on whether the conduct of officers and directors in approving certain loss loans was negligent and breached their fiduciary duties. Our consultants provided written reports and courtroom testimony concerning prudent lending standards, oversight responsibilities and governance practices.

A BankExperts consultant was retained by the U.S. Department of Justice to provide deposition testimony in a matter involving an award by the U.S. Department of Veterans Affairs of a $65 million contract to a developer for construction of a VA health-care center. After construction began, the VA terminated the construction contract, alleging fraud in the procurement process. Our consultant’s testimony included opinions on the parties’ adherence to generally accepted commercial lending standards and practices.

A BankExperts consultant was retained by counsel and provided testimony defending a multi-property residential mortgagor against foreclosure and damages alleged by the trustee of a $1 billion securitized mortgage pool. The issues included indications of possible fraud at origination, documentation deficiencies and unaddressed red-flag warnings posed by duplicate notes.

BankExperts consultants have been engaged in numerous participation-loan disputes. In one matter, participating banks alleged that a lead bank had directed material information to prospective participant banks that it had reason to believe was false. Our consultant opined as to whether the lead bank’s actions were in keeping with banking-industry standards and practices. In another matter, a participant bank claimed at arbitration that the lead bank breached its fiduciary duties under the participation agreement by unilaterally selling the loan and abandoning its role as lead bank. Our consultant reviewed the circumstances and testified that the loan sale was an unsafe and unsound transaction.

A BankExperts consultant was retained on behalf of security holders in a $1.2 billion matter involving fraud by a commercial leasing company that packaged and sold thousands of equipment leases in pools to multiple banks. The pools were credit-enhanced by surety bonds, and the senior securities were rated investment-grade by major rating agencies. Our consultant provided expert opinions and testimony that the participant banks had not performed proper Know Your Customer investigations, had failed to conduct their own independent loan reviews, and had not adhered to applicable banking standards of care.

A BankExperts consultant supported a bank’s $15 million claim that a large insurance company unreasonably denied coverage for an operational loss under a Corporate Treasury Services agreement. Our consultant concluded that the bank’s loss was properly characterized as an operational loss rather than a credit loss.

A BankExperts consultant was retained by the Department of Justice on behalf of the Internal Revenue Service regarding the IRS’s denial of a claim by a hard-money lender that purportedly incurred large losses on defaulted land loans. Our consultant prepared a report and testified that the claimed loan losses appeared to be exaggerated and that the IRS had acted reasonably.

A BankExperts consultant was retained by three New York City law firms representing several major lending institutions to provide consultation, written reports and trial testimony in a $75 million action against a mortgage banking company and a regional bank. The case involved fraud, bank operations, bank management, extension of credit, and applicable credit policies and practices.

A BankExperts consultant was retained by a law firm representing the State of Delaware in a case before the Supreme Court of the United States captioned Delaware v. Pennsylvania and Wisconsin, 598 U.S. 114 (2023), a landmark 9-0 decision, involving the escheat of unpaid official checks issued by banks. Our consultant was asked to provide a written report about money orders, travelers’ checks, cashier’s checks, teller’s checks, official checks and similar instruments, and how those instruments were used and perceived by bankers and members of the public.

In one matter arising from the collapse of a $100 million fraud and money-laundering scheme involving the diversion of payroll funds, a BankExperts consultant addressed whether deposit accounts were special or general accounts, whether deposited funds were trust funds, whether the bank properly exercised a right of setoff, and whether it acted properly in freezing the accounts. In another matter, a brokerage firm had pledged $500 million in cash collateral to a bank solely against possible daylight overdrafts. After the brokerage firm entered bankruptcy with no overdrafts outstanding, the bank applied the cash to unrelated credit exposures. Our consultant opined as to whether the bank had disregarded the obligations of reasonably prudent bankers, had ignored the terms of the security agreement and had improperly used a banker’s right of setoff.

A financial institution claimed losses of $5 million as a result of alleged actions and inactions by senior management and board members in making certain loan and other financial commitments. A BankExperts consultant provided testimony concerning whether the conduct of board members and senior managers involved negligence, recklessness and poor judgment.

BankExperts consultants have assisted counsel for class litigants and the FDIC in failed-bank matters involving management and board governance, lending, and interest-rate and liquidity-risk management. The institutions involved have ranged from banks with approximately $200 million in assets to global Systemically Important Financial Institutions (SIFIs). BankExperts consultants have also assisted counsel in defending individual bankers from regulatory sanctions, evaluating claims involving FDIC guarantees on assets purchased from failed banks, and addressing industry standards for enterprise and business-unit risk management, including credit, market, liquidity, interest-rate and compliance risks.

BankExperts engagements have involved numerous Ponzi schemes, suspicious transactions, elder-abuse scams, forgeries, counterfeit instruments and the appropriate response of banks to red-flag indications of fraud. In one matter, a bank was alleged to have aided and abetted a Ponzi scheme; our consultant concluded that the bank had provided normal, routine banking services and had not assisted the perpetrator. In another matter, our consultant concluded that a large international bank had facilitated a Ponzi scheme by failing to exercise appropriate precautions, delaying action on numerous red-flag warnings and ignoring signs of employee complicity.

BankExperts consultants have been involved in determining bank responsibilities in a number of cases involving escrow-account administration. Two cases involved numerous foreign nationals seeking U.S. citizenship under the U.S. Citizenship and Immigration Services’ EB-5 program. In one matter, it was alleged that approximately $9 million was fraudulently withdrawn from an escrow account. Our consultant investigated whether the bank carried out its fiduciary duties in responding to red-flag indicators of fraud, complied with the escrow agreement and conformed to generally accepted banking practices. In another EB-5 matter involving approximately $48 million in alleged losses from unauthorized withdrawals, our consultant testified as to whether the bank violated fiduciary obligations and duties of care, failed to comply with the escrow agreement and applicable federal guidelines and violated standards of safety and soundness, operational risk, internal controls and its own policies.

BankExperts consultants have provided expert services in several multimillion-dollar fraud and bankruptcy cases. In two related cases, BankExperts consultants were retained by the bankruptcy referee to develop opinions on various issues. Our consultants concluded that two large international banks appeared to have aided senior company officers in looting a global company. The resulting bankruptcy caused large losses to bondholders and other creditors. Our consultants provided forensic investigation, written reports, and testimony at deposition and trial concerning credit-process issues, syndication practices and allegations of corporate insider wrongdoing.

BankExperts consultants have analyzed numerous funds-transfer practices, including SWIFT, ACH and Fedwire transfers, as well as back-office processing standards and internal controls. One internet-fraud matter involved three wire transfers totaling $5.7 million to beneficiaries in China. Based on direct experience with bank operations, internal controls and payment systems, our consultant provided a written report and testimony concerning whether the bank’s actions were consistent with generally accepted and commercially reasonable banking standards and practices when it accepted and acted upon the transfer requests.

Investment advisers to a public-school employees’ retirement system recommended investments in absolute-return hedge funds despite known deficiencies. In a class action against the advisers, a BankExperts consultant prepared a written report evaluating the advisers’ conduct in carrying out proper due diligence in making investment recommendations that contributed to the portfolio’s poor performance.

In one securities class-action matter, a BankExperts consultant was retained to evaluate whether certain information that had been omitted was material to investors. Our consultant opined that the information would have been material to reasonable investors. In another matter, securities holders alleged that a large communications-equipment manufacturer failed to disclose material information and acted recklessly in extending approximately $2 billion in vendor financing to an international customer. Our consultant rendered an opinion concerning whether the company’s practices were consistent with prudent lending standards.

Drawing upon senior-management experience in international corporate banking, a BankExperts consultant provided a report and courtroom testimony before the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) in support of a $300 million claim brought by a global corporation against an emerging-market sovereign state. The issues examined included the customs and practices applicable to cross-border funding, the operation of parent-company guarantees and the handling of funding of subsidiaries from offshore, and whether the abrupt devaluation of the local currency effectively bankrupted the local subsidiaries.

In a case regarding a tax assessment in a country outside the U.S., our consultant testified on matters relating to risk mitigation strategies, including special purpose vehicles, asset-backed structures and credit enhancements.

Regarding a case brought by victims of suicide bombers during the Iran/Iraq War, our consultant provided a written opinion establishing, in general, that U.S. dollar payments made between parties located outside the U.S. are processed through the dollar clearing and settlement mechanisms of Fedwire and CHIPS, which are exclusive functions of U.S.-domiciled dollar clearing-house banks located in New York.