Judge approves Four Oaks Bank’s $1.2 million settlement
04/28/2014 10:56 AM
04/28/2014 10:58 AM
A federal judge in Raleigh has approved a settlement that calls for the corporate parent of Four Oaks Bank & Trust in Johnston County to pay a $1.2 million civil penalty.
The settlement between Four Oaks Fincorp and the U.S. Justice Department was approved Friday by Judge Terrence Boyle.
Four Oaks agreed to the settlement in January a day after federal prosecutors filed a civil lawsuit accusing it of facilitating fraud by routing more than $2.4 billion in transactions for “fraudulent Internet payday lenders” through the national money transfer system. Four Oaks received more than $850,000 in fees for this service.
The bank, which has more than a dozen branches, didn’t admit to any wrongdoing. However, the bank’s board of directors “felt that this settlement was in the bank’s best interest in order to avoid a lengthy and protracted legal fight and so that the bank could continue to focus on its primary business, which is serving its local communities.”
The lawsuit accused Four Oaks of deliberately ignoring warning signs that the fraudulent payday lenders were “deceiving consumers about the terms of payday loans, making loans that are unlawful and unenforceable under state and federal laws.”
Reinvestment Partners, a Durham consumer advocacy group, praised the civil penalty when it was announced in January.
“Four Oaks has put its profits ahead of the interest of consumers,” Adam Rust, research director with Reinvestment Partners, said in a prepared statement. “Hopefully this will make all banks think twice about being passive accomplices to illegal lending.”
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