Two title companies have agreed to pay Banc of California $39.9 million to settle a fraud lawsuit brought by the bank three years ago.
The $9.4 billion-asset bank, based in Santa Ana, said in a regulatory filing this week that it would accept the payment from Chicago Title Insurance Co. and Chicago Title Co. LLC and release them from any other claims.
After attorneys' fees, the bank said, it will receive an estimated $31.3 million, or 36 cents per share on an after-tax basis. The estimates assume a 27% effective tax rate.
Banc of California and other firms in 2019 accused the title companies of helping to orchestrate a $300 million alcohol-license borrowing scam. The Securities and Exchange Commission at the time said the alleged scam defrauded dozens of investors over several years.
The bank said the title companies aided a local California restaurateur in duping investors and banks into making high-interest loans to liquor-license applicants. Rather than set up escrow accounts at Chicago Title for each liquor-license loan, funds were instead illegally funneled to a company controlled by the restaurateur, Gina Champion-Cain, according to the lawsuit. Banc of California said the bulk of the loans it made were not repaid.
The settlement was agreed to on March 3.
