The bank was on the ropes and scrounging for dimes. According to Stull vs. Bank of America, that scrounging included the theft of hundreds of millions of dollars in public bond funds. "Since at least 1986," San Francisco's intervenor lawsuit claims, "the Bank has been fully aware that its Corporate Trust Department was out of control. ... The Bank was knowingly taking and keeping money that did not belong to it. ... The Bank committed acts maliciously, fraudulently, and oppressively, with the wrongful and fraudulent intention of injuring San Francisco from an improper and evil motive amounting to malice, and in conscious disregard of San Fran-cisco's rights."
Even though the city and state have shrilly accused Bank of America of fraud and theft, the institution seems confident that Stull will be settled in its favor. Bank of America has not formally disclosed the existence of Stull to its stockholders, contending that the litigation is "immaterial" to the bank's financial future. (Its auditors do not agree.)
There are signs that BofA may be justified in its optimism.
In May, Reuters reported: "Some [California] state officials are downplaying the dispute. State finance officials said they do not believe the lawsuit will hurt the bank's relationship with most California agencies. ... It's a lovers spat."
The city of Los Angeles joined the lawsuit only at the last minute and eschewed criminal prosecution. "For us it's not a matter of concern," Los Angeles County Treasurer Larry Monteilh told Reuters. "[BofA is] trying to do the right thing. I don't think the bank tried to pull the wool over anyone's eyes."
And the city of San Francisco, which is accusing Bank of America of fraud and theft, recently awarded BankAmerica a $500 million bond underwriting deal. BofA holds almost all of the city's cash on deposit. BofA supervises investment of most of the city's $12 billion in financial assets. Despite allegations of theft, fraud, and deceit, BofA remains profitably cozy with its accuser.
Whistle-blower Patrick Stull appears to be the major fly in Bank of America's ointment. As long as Farella Braun & Martel sticks with Stull, he will be able to object to any settlement he considers insufficient. And if Renne and Lungren drop out of the case, Stull can continue on alone.
Despite fears that BofA will try to defend itself in the court of public opinion by attacking his motives, Patrick Stull says he is in for the long haul and looking forward to the big payday.
"Nobody wants to put the bank out of business," Stull says. "But the bank has to pay. It has to learn there are penalties for lying, stealing, and covering up. It has to be subject to the law.
