Expert: Whistle-blower victory noteworthy

By Michael Hewlett
JOURNAL REPORTER

A judge’s ruling against BB&T Corp. in a whistle-blower lawsuit is a significant victory under a law passed eight years ago that is designed to protect people who expose their companies’ wrongdoings, a national advocate for whistle-blowers said yesterday.

“It’s significant because it’s been very hard for employees to win cases under that law,” said Stephen Kohn, the executive director of the National Whistleblowers Center in Washington. “Her case is extremely credible, and the Securities and Exchange Commission and other oversight agencies should open an aggressive investigation into the company.”

On Thursday, a federal administrative-law judge, Jeffrey Tureck, ruled that BB&T, which has its headquarters in Winston-Salem, must rehire Amy Stroupe, a former corporate investigator whom the bank fired in 2007 after she uncovered a Ponzi scheme financed in part by more than $20 million in loans from the bank.

Tureck also ruled that Stroupe is entitled to three years of back pay with interest. Stroupe and her attorneys have not yet determined how much back pay BB&T owes.

A spokeswoman for BB&T, Cynthia Williams, said that the bank believes that the ruling is erroneous and doesn’t accurately reflect what occurred.

“BB&T adamantly denies doing anything wrong and will be filing an appeal in this matter,” Williams said in a statement. She declined further comment.

After her firing, Stroupe filed a whistle-blower lawsuit under the federal Sarbanes-Oxley Act, which was passed in 2002 in reaction to the corporate scandals at Enron Corp. and World Com Inc.

Part of the law was designed to protect whistle-blowers.

Stroupe said she cried yesterday when she heard about the ruling.

“I was so grateful for having the ability to go into the court and be completely honest about everything and not have to try to exaggerate things in my favor,” she said. “I knew I was right and (the judge) saw it in my favor.”

Stroupe accused BB&T of firing her because she uncovered more than 120 loans to borrowers buying lots in the Village of Penland, a development in Mitchell County that state officials shut down in 2007. It was one of the largest fraud cases in state history.

State officials said that the developers had wasted more than $100 million from investors, using a classic Ponzi scheme in which money from new investors pays off the mortgages of other investors.

BB&T officials testified last summer during a nine-day hearing in Winston-Salem that Stroupe was fired because she had been told to not discuss her investigations with other employees who were not involved and to not talk about a regional bank manager with whom she had had several conflicts.

BB&T said it also fired her for missing a half-day of work without getting permission.

In his ruling, Tureck said that BB&T’s stated reasons for firing Stroupe made no sense and were an excuse to conceal the real reasons for her termination. He also said he found Stroupe’s testimony to be credible and that BB&T did not follow its usual procedures in terminating employees.

“I find it virtually unfathomable that BB&T would fire an employee as highly regarded as Stroupe, and who had recently provided invaluable service to BB&T, over one or two essentially minor issues and without following its progressive disciplinary system,” he said.

There were no disciplinary actions in her personnel file, though Stroupe’s disagreements with Charlie Mattox, the retail banking manager over the region in which she worked, did lead to meetings but no formal disciplinary action.

She was told to not talk about Mattox, or about her investigations, during a meeting with Mattox and her supervisors in May 2007. A month later, she asked a bank manager for the computer of Bryan Drum, the main lender for BB&T to the Village of Penland, and the bank manager called Mattox, saying that Stroupe had talked about her investigation and mentioned her disagreements with Mattox.

Stroupe’s investigations of two branch managers under Mattox led BB&T to fire both of them. One was Drum, who made more than 120 loans totaling $20 million for lots at the Village of Penland.

“Although complainant later came to believe that Drum did not intend to commit fraud, but merely acted stupidly, the fact remains that BB&T, through the loans it was making to Penland lot purchasers, was aiding in Penland’s fraud,” Tureck said in his ruling.

Two former fraud investigators for the bank testified that the bank had a culture of discouraging any investigations of its top producers.

Judy Hoyer, one of Stroupe’s attorneys, said that in light of the financial crisis, it’s vitally important that such people as Stroupe feel they can come forward with information and expose illegal activity.

“If people are afraid to report what they see, it’ll happen again and again,” Hoyer said. “With a decision like this, it provides support to people who want to be whistle-blowers.”

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