Whistleblower wins 2015 lawsuit against Axos Financial, formerly Bank of Internet

Thomas De Wever/iStock Editorial via Getty Images

A whistleblower won a lawsuit against Axos Financial (NYSE:AX), formerly, known as Bank of Internet or BOFI, over allegations he made in a 2015 lawsuit.

Charles Matthew Erhart was awarded $1 million in damages plus an additional $500,000 for defamation, according to a copy of the jury verdict from Wednesday.

Erhart alleged in the lawsuit that Bank of Internet failed to notify regulators of risky loans to dubious borrowers and didn't disclose to regulators that it had received grand jury and other subpoenas, among other allegations.

Axos (AX) didn't immediately return a Seeking Alpha email request for comment after normal business hours.

The verdict comes after Axos was was sued by another former employee in March, who alleged that the company intentionally understaffed its compliance department.

According to an NBC report about the newest lawsuit, the bank has specialized in loans to foreign nationals and has offered cash-recapture loans, which allow borrowers who paid cash for a property to immediately get money out of the investment.

One of the company's recent loans, made in mid-February, refinanced a $100M Trump Tower mortgage due in September, NBC said, citing a New York City Finance Department document. The loan was made days after The Trump Organization's auditor resigned, the article said.

Axos (AX) has short interest of 3.95%.

Axos last month reported a Q3 earnings beat.

Comments

[Sunny Side]

Stay away from this bank... we refinanced with them .... took 4 months and now we can't get a human on the phone.... we are locked out of our online access, I keep using the username that we have had and they say they are going to text us a code and we never get it. Left a vm for Mr. Gaarbrants...we will see if he calls or cares. Stay away from this bank!

[optional-]

@Sunny Side , You think the CEO is the guy to try and contact?
About the fact that you forgot your password? Good luck out there.

I have used this bank for over 15 years. All my grown kids use this bank, and my parents. No issues. We get human's when we need them. The wait is less than 5 minutes, and the human is a USA citizen and not an idiot.

[Sunny Side]

Beware of this bank. I retired from BofA and was a mortgage banker for a few years. We recently refinanced with Axos, it was my husband's choice, I was ill. It took 4 months and now we can't get a human on the phone. Stay away! Call
Quicken Loans.

[optional-]

@Sunny Side , You retired and you still have a mortgage? Maybe the phone problem is related to you. I never had an issue with it. You can also send an email ([e-mail] and they will call you). If something doesn't work in life, then try something else - don't moan on a chat board. It works better.

[boris gudonov]

Disgusting

[optional-]

@boris gudonov , You are right. Shameful that Erhart got a dime. He was just a 7 month employed plant installed for the 2015 short-selling hit job. Jury got suckered. Never got to hear anything about the real story behind Erhart and his data thefts (which always went straight to the short hit squad first).