Members of the executive team and board ousted from CertusBank earlier this month filed a lawsuit saying they were libeled, defamed and prevented from defending themselves against serious public accusations of mismanagement.
Milton Jones, Walter Davis and Angela Webb were terminated from their respective posts as executive chairman, CEO and president. Banking veteran John Poelker of Atlanta was appointed interim president and CEO of the bank.
The suit filed in federal court Wednesday implicates the board and a shareholder in a civil conspiracy to smear Webb, Davis and Jones. The shareholder in question is hedge fund manager Benjamin Weinger of New York, who plaintiffs claim “waged a campaign of misinformation and half-truths against the Plaintiffs to convince fellow investors and a majority of the CertusBank Board of Directors (hereinafter ‘Board’) to remove the Plaintiffs from their jobs and destroy their business and personal reputations.” Weinger’s firm 3-Sigma Value Financial Opportunities L.P. is also named in the suit.
Jones, Webb and Davis claim Weinger unlawfully leaked information that was fodder for a report by industry magazine American Banker last month and subsequent media coverage that damaged their reputations.
Although the bank had issued a public statement saying it was launching an investigation into the claims, the plaintiffs say the board refused to take action to determine the source of the leak of the information. They say the board also refused to allow them to defend themselves publicly.
CertusBank did not respond to questions about the allegations, saying the company could not comment on an ongoing legal dispute.
As further evidence that the information was leaked as part of a calculated personal attack, the suit alleges that Weinger used racist language in internal oral and written communications. Webb, Davis and Jones are all African-American.
The motive, according to court documents, was that “Weinger and 3-Sigma desired to change the management and Board composition of CertusBank and to position CertusBank as a target for acquisition because they did not receive a rapid return on their hedge fund investment.”
The plaintiffs said some board members condoned the behavior.
“CertusBank directed Plaintiffs to say nothing in rebuttal of these false allegations which damaged the bank and were refused to allow them to do anything to restore or defend their reputations,” court documents say. “Instead, Plaintiffs were given 15 minutes to decide whether to resign their positions at the bank or be fired. The truth about the Board’s actions, ultra-vires acts, breaches of their duties, self-dealing and other acts have been intentionally suppressed by the Board.”
The suit alleges that the termination caused them many millions of dollars in damages, libel and defamation, and brings claim against Weinger for interfering with their contractual rights and future economic advantages.
Weinger could not be reached for comment in response to the allegations made in the lawsuit.
