The Treasury Department’s Office of the Comptroller of the Currency (OCC) issued a cease-and-desist order against the former general counsel at Michigan-based Sterling Bank and Trust for not ensuring the institution’s Bank Secrecy Act (BSA) compliance and failing to timely file suspicious activity reports.
Colleen Kimmel failed to ensure the bank properly investigated a fraudulent residential mortgage loan product it offered to customers, according to the OCC, which acknowledged she did not have the proper resources to carry out her legal- and compliance-related functions.
In May 2021, three former employees of the bank pleaded guilty to charges levied by the Department of Justice over widespread bank fraud for selling bogus residential mortgage loans through its advanced loan program (ALP). In September 2022, the bank agreed to pay a $6 million fine assessed by the OCC related to the alleged misconduct.
The details: Kimmel was employed by the bank from 2012-23. From 2016 on, she served as general counsel and managed the bank’s BSA compliance over certain periods during her tenure.
From 2011 through December 2019, the bank offered low-documentation ALPs that required strong monitoring and controls because of high risks of fraud, money laundering, and lending misconduct, according to Kimmel’s consent order signed Feb. 8.
In 2017, Kimmel had information that suggested the bank originated false or fraudulent ALP loan applications, the OCC alleged. The regulator noted other employees at the bank constrained Kimmel’s ability to act, but she ultimately “did not ensure the bank conducted or suggest to the board that the bank conduct a thorough investigation into concerns related to ALP until 2019,” per the order.
In June, the bank announced in a press release an investigation by the Securities and Exchange Commission related to ALP concluded without an enforcement action.
Sterling Bank and Trust did not respond to a request for comment. Kimmel could not be reached for comment.
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