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Undisclosed Executive History May Be Final Blow For BOFI

My research suggests that BOFI has employed a former felon for over 5 years in a very senior and pivotal role (SVP, with oversight over the bank’s mortgage operations).

Banks are strictly prohibited from employing ex-criminals absent a formal FDIC waiver…I searched public Section 19 FDIC records and found no evidence of a Section 19 waiver on file.

The executive appears to have filed for bankruptcy while employed by BOFI. BOFI then made him 2 loans (totaling over $700k) after his bankruptcy!

If my research is accurate, BOFI had to have known of the executive’s prior criminality given that it would have come up during the credit checks associated with his loans.

Therefore, I believe BOFI is in violation of Section 19 of the Federal Deposit Insurance Act 12 U.S.C. 1829.

Recently, I outlined a number of questions I thought Bofi Holding, Inc (NASDAQ: BOFI) management needed to answer to regain credibility. To my knowledge and based on sell side notes, I do not believe BOFI responded to any of my questions. Therefore, today I am shining a light on what I think is a "smoking gun" moment for BOFI that suggests not only an absolute lack of internal controls, but a potential blatant violation of federal law. If my research is correct, it is unconscionable for regulators to allow the status quo to continue at BOFI.

DISCLAIMER: I am not trying to sling mud here. In this note I will not identify the bank executive in question by name and I have also gone to great lengths to hide direct identifying information from this note. I have gone through multiple verification angles to determine if the individual with a criminal background in Florida is indeed the same person currently employed at BOFI. This includes comparing his mugshot picture to his Linkedin picture, comparing various copies of his signature available on public record documents, and comparing DOB data from his mugshot with DOB records from public sources that point to an exact match. While I cannot obviously be 100% certain this is the same individual, my analysis has been rigorous enough to triangulate confirmation of ID through multiple avenues.

I encourage investors to conduct their own due diligence on BOFI. I also note that the information contained herein is based on information I deemed to be reliable but again encourage all readers to do their own analysis of the facts presented below. All of the information contained herein is based on my analysis of public records. I am not alleging that BOFI violated any laws of regulations, but instead I am making my research public and leaving readers with the opportunity to generate their own conclusions regarding BOFI's compliance with laws/regulations. Nonetheless, I expect that the information uncovered in this note will raise serious regulatory red flags.

In summary, my research leads me to believe that the executive who has been running the wholesale/correspondent lending business (brokered mortgages) at BOFI for the past five years was found guilty in a court of law for multiple felony crimes including Grand Theft, Forgery of a Credit Card Receipt, Burglary, and Dealing in Stolen Property. Section 19 of the Federal Deposit Insurance Act prohibits, without the prior written consent of the Federal Deposit Insurance Corporation (FDIC), a person convicted of any criminal offense involving dishonesty or breach of trust or money laundering (covered offenses), or who has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for such offense, from becoming or continuing as an institution-affiliated party, owning or controlling, directly or indirectly an insured depository institution (insured institution), or otherwise participating, directly or indirectly, in the conduct of the affairs of the insured institution.

Florida Department of Corrections Booking Photo

A recent court filing in Florida (October 2015) to vacate the plea included affidavits from the individual in question that were signed in San Diego (this should help alleviate any questions/concerns regarding whether this is in fact the executive currently employed at BOFI):

Source: 17th Judicial Circuit Court in Broward County Florida October...


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