The bank formerly run by Steven Mnuchin, President-elect Donald Trump's nominee to head the Treasury Department, allegedly used illegal practices in foreclosing on delinquent homeowners, according to a leaked 2013 memo from the California Attorney General's Office.

According to the memo, obtained Tuesday by The Intercept, the department found evidence "suggestive of widespread misconduct" in the foreclosure operations at OneWest Bank in Pasadena, Calif., during Mnuchin's tenure as chairman.

Mnuchin in 2009 led a group of Wall Street investors in recapitalizing OneWest from the ashes of the failed IndyMac. He served as chairman for six years, until the bank was sold in August 2015 to CIT Group in Livingston, N.J.

The memo, written by deputy attorneys general in the consumer law division, claimed that OneWest unlawfully backdated foreclosure documents, violated waiting-period statutes and made improper bids at trustee sales. It recommended that then-California Attorney General Kamala Harris pursue a civil enforcement action against the bank, though Harris declined to do so. Harris was elected to the Senate in November and was sworn in Tuesday.

News of the memo is likely to give more ammunition to Mnuchin's critics on Capitol Hill, as hearings for Trump's cabinet picks get underway. Lawmakers, including Sen. Elizabeth Warren, D-Mass., have blasted Mnuchin and OneWest for refusing to modify troubled mortgages.

Consumer groups have also been vocal in their opposition to Trump's Treasury pick. In a press release Tuesday, the California Reinvestment Coalition called for a full investigation into OneWest's foreclosure practices.

"Where's there's smoke, there's fire, and the American people deserve a full explanation of these serious charges of fraud," said Paulina Gonzalez, executive director of the CRC.

Last month the CRC filed a redlining complaint with the Department of Housing and Urban Development, requesting an investigation into Fair Housing Act violations at OneWest Bank.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.