Truist Bank Agrees to $9.1 Million Settlement Over Trust Account Mismanagement

Truist Bank has reached a settlement agreement with the United States government, agreeing to pay $9,125,000 to resolve allegations of misconduct in the administration of certain trust accounts. The settlement, announced on Monday, October 21, 2024, addresses claims under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA).

The case centers on the practices of SunTrust Bank, which was acquired by Branch Banking and Trust Company in December 2019 and subsequently rebranded as Truist. The allegations cover a period from December 2011 through December 2015, during which SunTrust allegedly mismanaged trust accounts associated with personal injury settlements.

According to the U.S. Department of Justice, SunTrust partnered with a New Jersey company known as The Halpern Group, which acted as a "structured settlement facilitator." The Halpern Group referred personal injury settlement recipients to SunTrust for the establishment of trusts designed to protect their settlements from unwise disbursements. Both SunTrust and the Halpern Group collected fees for these services.

The focus of the investigation was a group of trust accounts known as the "Doe Run Accounts," which were established for beneficiaries who claimed health and cognitive issues resulting from lead poisoning near Herculaneum, Missouri. The government contends that instead of safeguarding these vulnerable clients' interests, SunTrust frequently approved imprudent disbursements requested by the Halpern Group, including payments to third parties such as relatives.

Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division, emphasized the gravity of the situation, stating, "Our federally insured financial institutions must act in accordance with the law, including meeting their obligations to beneficiaries when they serve as trustees." He added that the settlement demonstrates the department's commitment to holding banks accountable for knowingly violating legal requirements.

U.S. Attorney Ryan K. Buchanan for the Northern District of Georgia echoed this sentiment, saying, "Banks occupy a special place of trust in our society. This settlement shows that when banks violate that trust — especially in situations involving vulnerable customers — they will face accountability."

The settlement is the result of a coordinated effort between the Civil Division's Commercial Litigation Branch, Fraud Section, and the U.S. Attorney's Office for the Northern District of Georgia. It underscores the government's ongoing efforts to ensure that financial institutions adhere to their fiduciary responsibilities, particularly when dealing with vulnerable populations.

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