Bank of Internet sued

A putative class action suit was filed Tuesday (November 3) in federal court against San Diego-based BofI Holding, parent of Bank of the Internet, which specializes in mortgage loans to high-wealth individuals, often foreign. The law firm is San Diego's Scott & Scott and the plaintiff is Ralph Hazan.

The suit charges that from September 4, 2013, to October 13, 2015, those who bought stock in the Nasdaq-listed bank were fed materially false information. According to the suit, the company's internal controls were "frequently disregarded"; borrowers included foreign nationals who should have been off-limits, according to federal anti-money-laundering laws; the bank fired an internal auditor who raised these issues to management, and the company's statements were "materially false and misleading."

Some of the charges made in the lawsuit were included in a New York Times article on the bank in August of this year. "The bank has made loans to people who were later found to have run afoul of the law," said the Times. "Bank of Internet has lent money to some unsavory characters," added the Times, quoted in the lawsuit.

A spokesman for the bank said it would have no comment.