Synovus Financial in Columbus, Ga., has agreed to pay nearly $9 million to settle lawsuits that claim the company knew of illegal transactions by one of its clients.
The $29.4 billion-asset Synovus filed a motion to approve a compromise with the U.S. Bankruptcy Court for the Middle District of Florida in Tampa on Aug. 4, the court told American Banker on Tuesday.
The lawsuits were brought by the bankruptcy trustee of 16 staffing companies in Clearwater, Fla., that were owned by Frank and Anne Mongelluzzi before the companies went into liquidation. The trustee filed the suits as part of the effort to repay creditors of the bankrupt companies.
Synovus was aware that from 2007 to 2010, Frank Mongelluzzi ran a check-kiting scheme in which checks were written on accounts that lacked the funds needed to cover them, according to the lawsuits. Synovus was paid money it was owed when the staffing firms were sold in 2010, but creditors did not receive anything after the state dissolved those business, the suits also alleged.
Synovus denied any wrongdoing. “Although Synovus has agreed to settle the case, we continue to disagree adamantly with the allegations, which relate to events that took place more than six years ago," according to an email from a bank spokesman. "We are satisfied that resolving the matter at this time is in the best interests of all parties involved.”
Christine Herendeen, the bankruptcy trustee for seven Mongelluzzi-owned companies, filed seven lawsuits against Synovus in October 2014, the Tampa Bay Business Journal reported. Herendeen filed nine other lawsuits against the bank involving related companies in January 2015. The collective lawsuits sought to recoup around $100 million.
About $4.7 million from the $9 million settlement will go to the estates of the bankrupted companies tied to Herendeen's lawsuits. The other $4.2 million will go to the bankruptcy estate of Frank Mongelluzzi, which is being handled by another trustee, Angela Welch.