The Justice Department said late Wednesday that Michigan-based Sterling Bancorp Inc. SBT has agreed to plead guilty to securities fraud for filing “false” securities statements relating to its 2017 initial public offering as well as 2018 and 2019 annual filings. Sterling Bancorp is the holding company for wholly owned subsidiary Sterling Bank and Trust F.S.B., with branches in San Francisco, Los Angeles, Seattle, New York, and Southfield, Michigan. “For years, Sterling originated residential mortgages that were rife with fraud to pad its bottom line and then lied about these loans in its IPO and subsequent public filings, defrauding unwitting investors,” the DOJ said. Under the terms of the plea agreement, which must be accepted by the court, the company will plead guilty to one count of securities fraud, serve probation through 2026, submit to enhanced reporting obligations to the department, and pay more than $27.2 million in restitution to shareholders. Separately, the company confirmed the agreement with the DOJ and said it revised unaudited financial results for the fourth quarter and year ended Dec. 31. Restitution payments are expected to be funded in part from a dividend to be paid by the bank to the company. Revised financial highlights for the quarter and full year included a fourth-quarter net loss of 37 cents a share and a full-year net loss of 28 cents a share. Shares of Sterling Bancorp were flat in the after-hours session after ending the regular trading day down 5.2% on a choppy day for U.S. bank stocks.
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