A former credit officer suing Northern Trust Corp. claims he was fired for refusing to alter evidence in a Justice Department investigation into discriminatory lending practices.
Dean K. Galloway is seeking at least $100,000 in compensatory damages for wrongful termination and an undetermined sum as punitive damages.
Mr. Galloway, who was senior credit officer for Northern Trust, said the Chicago company fired him April 3, 1995, in retribution for refusing to "scrub" mortgage files before they were turned over to the Justice Department and the Federal Bureau of Investigation.
The government was investigating whether Northern Trust had discriminated against African-Americans and Hispanics who had applied for mortgage loans in 1992 and 1993. The investigation ended in early 1994, when Northern Trust agreed to set up a $750,000 fund to compensate the applicants.
Mr. Galloway said that Northern Trust had been trying to end the investigation so it could receive a favorable Community Reinvestment Act rating and resume its expansion plans, and that it had asked him to "scrub," or eliminate damaging evidence, from mortgage applications the Justice Department was requesting.
In the lawsuit, Mr. Galloway said that in January 1994 bank officials altered the mortgage files he had refused to touch. However, the suit says, Mr. Galloway didn't notify bank regulators until February 1995.
The Justice Department review took two months and ended in February 1994. The department and Northern Trust entered into their agreement shortly afterward.
Northern Trust, a $21 billion-asset commercial bank that derives most of its profits from individual and corporate trust customers, had hoped the establishment of the fund would put the investigation to rest. But Mr. Galloway's lawsuit, filed last month in Cook County Circuit Court, raised the issue again.
It wasn't immediately clear whether the government would investigate the claims made in the lawsuit. "We're aware of the case," said Myron Marlin, a Justice Department spokesman, who declined to comment further.
Northern Trust issued a page-long statement strongly denying Mr. Galloway's allegations. The company said it had "kept the department fully informed as to how the information was being assembled and produced throughout the process.
"We were well aware that our process had to be above reproach, and continue to believe it was," Northern Trust said.
It said that it had revised reports only as required by the Home Mortgage Disclosure Act, to correct inaccuracies. "We did this because many banks had been criticized for inaccuracies in the reports, which summarize by race, ethnic origin, and other categories what has happened to each mortgage application."
Northern Trust left little doubt that it would fight the suit rather than settle. "We intend to defend this lawsuit vigorously and take every opportunity to demonstrate that these charges are baseless," it said in the statement.