Bank of America Executives Battle Fraud AllegationsAugust 23, 2010
Joe Price, Bank of America’s consumer banking chief and Kenneth Lewis, BofA’s former chief executive, are being sued by the Attorney General of New York, Andrew Cuomo. The Attorney General is alleging Mr. Price and Mr. Lewis hid substantial losses from shareholders while preparing for a 2008 vote on the bank’s takeover of rival investment bank Merrill Lynch.
They are also being accused by Cuomo of falsely claiming that they would continue with the merger without financial help from the government and then turned around and asked for and received 20 Billion in bailout money. Neil Barofski, the Inspector General for “The Troubled Asset Relief Program,” claims the pair misled the government to get the TARP money and joined the Attorney General when he announced the suit at a February 4 press conference.
Trail lawyers for Lewis and Price negated the allegations by saying they are “implausible and internally inconsistent.”
The trouble began a year after Bank of America rescued Merrill Lynch and the financial institution began experiencing further losses. The continued decline forced Bank of America to accept a second TARP bailout from the government, outraging the public as well as investors.
Papers filed by Mr. Lewis’s trial lawyers said, “Some have looked to assign blame for every aspect of the financial crisis, even where there is no evidence of misconduct.” They continued to defend the ex-chief executive by explaining, “This case is a product of that dynamic and does not withstand either legal or factual scrutiny.”
Trial lawyers for the two also argue that Cuomo is using the two BofA executives as scapegoats for investors to cast blame upon for the billions of dollars of losses the bank has suffered over the last few years.
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