Fired bank CFO outlines whistleblower claims

Former Tennessee Commerce finance chief sues bank, saying it retaliated when he reported 'suspicious' activity to FDIC
[Updated 6:04 p.m. with statement from bank]

Email | Print By E. Thomas Wood

[Update, 6:04 p.m. Wednesday:]

Tennessee Commerce Bancorp CEO Art Helf issued a statement late today about the lawsuit filed by George Fort:

"It not company policy to speak to active litigation. However, regarding Mr. Fort’s complaint, it is the bank’s position that the complaint is without merit."

As originally filed:

George Fort, former chief financial officer of Franklin-based Tennessee Commerce Bancorp, filed suit in Nashville's U.S. District Court today against the bank over what he says was a retaliatory discharge.

In his legal complaint, available at this link, Fort says he noticed "material deficiencies in the Company's internal controls" starting last year. He was required by law to certify personally that the bank's financial procedures were free from such deficiencies, and so he raised questions.

He says the bank's internal auditors shared at least some of his doubts. According to Fort, they "produced a written report in January 2008 identifying policy violations by 5 of the 17 bank officers, calling activity by one bank officer 'somewhat suspicious.'"

In February of this year, Fort says, he hired his own attorneys and, through them, reported to the audit committee of the Tennessee Commerce board about his concerns. At the same time, the bank's external auditors also wrote the audit committee to ask for a meeting, stating: "The facts are consistent with a potential for fraud and should be investigated," according to the legal filing.

Days afterward, Fort claims, CEO Art Helf subjected him to "retaliation and verbal abuse."

Things went downhill from there. With Fort accusing Chief Administrative Officer Lamar Cox of "manufacturing fictitious board minutes," Cox and other senior officers responded by blaming Fort for deficiencies identified by the auditors, the complaint says.

Fort went on to tell the audit committee later in February that the "total inactivity" of the board's asset-liability committee was a concern, and that "fraudulent" meeting minutes from that committee "had been presented to the board, external and internal auditors, and bank regulators over a two and a half year period."

On March 3, Fort warned the company (Ticker: TNCC) that he planned to meet with officials of the Federal Deposit Insurance Corporation. On March 6, he did just that, spilling the beans about all of his concerns. On March 7, he was escorted from the bank's office and placed on administrative leave. Two months later, the bank announced that he had been fired.

Fort told financial-industry blog "The Bank Draft" in May that he had filed a complaint with federal authorities under the Corporate and Criminal Fraud Accountability Act, claiming he was fired after acting as a whistleblower.

At that time, bank CEO Art Helf issued the following statement:

"The Company will respond to Mr. Fort's allegations at the appropriate time in an appropriate manner, but I assure you that the Company disputes and denies Mr. Fort's allegations and takes issue with any suggestion that the Company has violated any federal or state laws. We take legal and regulatory compliance very seriously. Management of Tennessee Commerce does not tolerate any illegal activities at our bank."

NashvillePost.com is currently trying to reach bank officials for any further comment and will update this story as appropriate.

The Fort controversy follows a dispute over executive pay that led to the resignations of three Tennessee Commerce directors a year ago. These issues, combined with the negative investor sentiment on bank stocks in the past year, have pushed down Tennessee Commerce shares from more than $30 to less than $15 this afternoon.