S.F. Giants owner Scott Seligman implicated in Sterling bank fraud case
Detroit — Sterling Bank & Trust founder Scott Seligman, a minority owner of the San Francisco Giants, knew about and provided “encouragement” for a years-long criminal conspiracy involving a loan program that helped his family reap a $115 million windfall, according to federal court records.
Seligman has not been charged with wrongdoing, but the alleged conspiracy surfaced in a new criminal case that follows months of questions raised in a separate civil lawsuit about money generated by an initial public offering.
The case described by prosecutors includes details about tax cheats, money launderers and bank executives engaged in a scheme that implicates Seligman, 69, the wealthy scion of a prominent Metro Detroit family active in the sports, art and philanthropic worlds.
The criminal case and a related securities class-action lawsuit allege executives at the bank used a residential loan program to boost revenue of its parent company, Southfield-based Sterling Bancorp. Inc., and position the company to go public in 2017.
During an initial public offering, Seligman and family sold $114.7 million in shares, a Wall Street success story that soured months later amid federal investigations, grand jury subpoenas, upheaval within the bank’s executive ranks and now these criminal charges in an ongoing investigation.
Federal prosecutors have charged former Sterling bank executive YiHou Han with bank and wire fraud conspiracy. The San Francisco banker and co-conspirators falsified loan documents and knowingly provided loans to borrowers involved in money laundering and tax evasion, prosecutors said.
Seligman is not labeled a co-conspirator, and he and the bank are not named in the Han criminal case. Instead, the filing refers to “Financial Institution A” and “Executive 1,” which two sources familiar with the investigation say are Sterling bank and Seligman, respectively. The sources requested anonymity, citing the ongoing criminal investigation, and their information is supported by dates and facts contained in the criminal filing.
The criminal filing also identifies several potential targets of the investigation, including three other unnamed bank executives, and indicates federal agents are focused on lending practices involving the bank’s residential Advantage Loan Program. The program catered to Asian borrowers in San Francisco, Los Angeles, New York and Seattle, prosecutors said.
“With the knowledge and encouragement of members of Financial Institution A’s senior management, including Executive 1, Executive 2, Executive 3, and Executive 4, the defendant and her co-conspirators falsified documents and material information about borrowers’ qualifications for the Advantage Loan Program, and concealed material information about borrowers from Financial Institution A’s underwriting department, in order to increase the volume of loans originated under the Advantage Loan Program — which, in turn, increased the bank’s revenue — and their personal commissions,” Justice Department Trial Attorneys Jason Covert and Kevin Lowell wrote.
“Throughout his career, Mr. Seligman has always cooperated with government regulators and he intends to continue to do so,” his lawyer, Russell Duncan, told The Detroit News.
Han, a San Francisco woman who goes by the nickname “Fanny” and once attended black-tie society events at Seligman’s side, was arraigned virtually April 16 by a federal magistrate judge in Detroit and released on a $1 million unsecured bond.
She is scheduled to plead guilty next month to a charge punishable by up to 30 years in prison, potentially giving federal investigators a key insider against others implicated in the alleged conspiracy.
Han’s lawyers and federal prosecutors did not respond to messages seeking comment. Company lawyers and Chief Financial Officer Stephen Huber did not respond to messages Friday.
Rising above regional roots
The criminal case is the most serious fallout from a…
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