The latest informant attempting to break the whistleblower curse has filed a lawsuit this month in a United States district court in Tennessee, legal documents reveal.
The whistleblower is George Fort, the former CFO of Tennessee Commerce Bancorp, who was ousted in May the day after he told the Federal Deposit Insurance Corporation that the bank was guilty of many violations, including creating false minutes of meetings. He alleged violations by five of the bank’s 17 officers.
“Talk about proximity to punishment,” D. Bruce Shine, Fort’s attorney, told CFO.com. “On March 3rd he told them he was going to the FDIC, three days later he went to the FDIC, and the next day he was fired.”
According to the lawsuit, Fort gave a presentation to the bank’s audit committee on February 15 to detail his concerns about faulty minutes presented by the asset liability committee during a period of two-and-a-half years. The lawsuit contends that in February and March Arthur Helf, the bank’s CEO, and Michael Sapp, its president, had a series of meetings with Fort designed to intimidate him and convince him to “ignore” his concerns. He was subjected to “retaliation” and “verbal abuse” by Helf, according to the lawsuit.
On March 7, a day after showing the same presentation that he gave to the bank’s officials to the FDIC, Fort claims he was removed from his office at 3 p.m. without any warning and told that he was being placed on “administrative leave.” On the same day, the bank issued a news release indicating that its 2007 10-K form would be delayed because of weaknesses in its internal controls. In the fifth paragraph of that statement it said that Fort was “placed on paid administrative leave but is expected to participate in the ongoing assessment efforts.”
Shine said that his client was never told anything about assessments when he was removed from the bank. “They never contacted him,” he says. “It was a façade”
In a May interview with the Knoxville News Sentinel after filing his initial complaint, Fort said, “I’m seeking relief from retaliatory action taken by the company when I reported to the audit committee and the FDIC and the Tennessee Department of Financial Institutions certain information that I believe to be violations of SEC regulations and federal laws relating to fraud against shareholders.”
Fort is seeking to be reinstated at the bank, to have his attorney fees paid, and $500,000 in damages for libel. He claims that the bank libeled him in two press releases that associated him with the possibility that Tennessee Commerce might be delisted from the NASDAQ stock exchange.
Although Shine said he thinks Fort has a strong case, he noted that it echoes that of David Welch, the former CFO of Cardinal Bancshares, who was also represented by Shine. Welch claimed that he was fired in 2002 from the bank holding company after he raised questions about the bank’s accounting policies and internal controls and later refused to certify its financial results. The bank argued that Welch was suspended and later fired solely because he refused to meet with an independent auditor and an attorney representing the company if his lawyer wasn’t present.
Welch initially won protection under the whistle-blower provision of the Sarbanes-Oxley Act but that decision was overturned last year by the Department of Labor’s Administrative Review Board. A study last year found that of nearly 1,000 complaints filed under the whistle-blower provisions of Sarbox, not one survived company appeals to result in an unequivocal win for the complainant, although many were settled.
Shine said that Tennessee Commerce has 30 days from the date that the lawsuit was filed on July 9 to issue a formal response. So far it has only issued a statement calling Fort’s claims “without merit” and promising to vigorously defend against them.
“This lawsuit comes as no surprise,” said Beth Courtney, a spokesperson for Tennessee Commerce Bancorp. “We intend to demonstrate and prove in due time that Tennessee Commerce acted properly with respect to these allegations.”
Last week the Tennessee Commerce reported second quarter earnings per share of $0.38, up from $0.34 per share the year before. The bank holds more than $1 billion in total assets.