Dive Brief:

• Truist will pay the federal government $9.125 million to resolve allegations related to trust accounts administered by SunTrust between 2011 and 2015, the Justice Department said Monday.
• The accounts SunTrust administered stemmed from a settlement of Missouri lead poisoning cases, and the bank approved disbursements that weren’t in the best interests of the accounts’ beneficiaries, the DOJ said in a news release.
• “Our federally insured financial institutions must act in accordance with the law, including meeting their obligations to beneficiaries when they serve as trustees,” Principal Deputy Assistant Attorney General Brian M. Boynton, head of the DOJ’s civil division, said in the release.

Dive Insight:

A Truist spokesperson said the matter “relates to authorized distributions for a small number of trust accounts which took place around a decade ago. We deny these allegations but are pleased to have put the matter behind us.”

SunTrust worked with a New Jersey company doing business as The Halpern Group, which operated as a “structured settlement facilitator,” according to the DOJ.

In cases where people received settlement awards related to personal injury litigation, Halpern would refer them to SunTrust, where they set up trust accounts designed to help them preserve their compensation “by protecting against unwise disbursements,” the DOJ said. SunTrust and Halpern collected fees for these services.

Around December 2011, SunTrust began administering a group of trust accounts, called the “Doe Run Accounts,” that had been referred by Halpern, the DOJ said. The accounts, related to a settlement of lead poisoning cases near Herculaneum, Missouri, were for beneficiaries who claimed lead poisoning had resulted in health or cognitive issues.

Instead of helping those beneficiaries steer clear of ill-considered payments, SunTrust frequently approved requests for “imprudent” disbursements not in the beneficiaries’ best interests, including payments to family members,  the DOJ alleged. In approving the disbursements, SunTrust violated its fiduciary obligations as the accounts’ trustee, the department said.

“Banks occupy a special place of trust in our society,” Ryan K. Buchanan, U.S. Attorney for the Northern District of Georgia, said in the release. “This settlement shows that when banks violate that trust — especially in situations involving vulnerable customers — they will face accountability.”

Atlanta-based SunTrust merged with Winston-Salem, North Carolina-based BB&T in 2019 to become Truist.