now does BB& really look like such a well run bank
Trial showed different view of BB&T's inner works
By Scott Sexton | Journal Columnist
Fast-forward to last week in the Forsyth County Hall of Justice, where a civil trial involving BB&T and allegations of fraud, incompetence and greed just concluded.
Far from the halls of Congress, tales of clandestine audio recordings, slimy officials hiding from subpoenas, and $250,000 bonuses sullied BB&T's hard-earned reputation.
"All that money and all those zeroes," said Susan Farmer, one of the 12 jurors who sat on the case of BB&T v. John Sherwood. "I don't think anybody over there knew what they were doing." Mortgage trading platform
The whole mess started in March 2004, when a bank executive named Bill Cameron approached Sherwood, who was then employed by Wachovia, about starting a "mortgage trading and securitization platform."
Basically, that's the buying and selling of mortgages, loans and securities and sounds a whole lot like what landed many banks in trouble.
Sherwood concluded that BB&T didn't know what it was doing and declined. Not to be deterred, Cameron made another run at it in late 2004 or early 2005.
As part of the negotiations to break a noncompete clause with Wachovia, Sherwood told BB&T that he stood to lose nearly $500,000 in Wachovia stock if he left. BB&T countered by offering him a "forgivable loan" for $498,579.78, the amount equal to the Wachovia stock price.
Oh, and Sherwood would also be in line for guaranteed minimum quarterly bonuses of $212,500 on top of an annual $150,000 salary -- $1.4 million for a year's work.
Symbolism not missed
The interesting portions of this greed-fueled tale were found in court testimony and in the voluminous depositions taken by lawyers.
Sherwood secretly taped hours of conversations, and gave copies to a lawyer representing a former employee in a separate arbitration case. On one recording, Cameron could be heard bad-mouthing a BB&T subsidiary and plotting to lie to a court. He also ducked a subpoena by refusing to answer his door.
Simple things such as setting up computer systems were screwed up. And, by the way, nobody at BB&T ever bothered to verify the information on Sherwood's job application.
"They do that at McDonald's," said Walter Holton, Sherwood's attorney.
The whole episode reads like Keystone Kops Gone Bad. Judge Stuart Albright ruled before the trial started that Sherwood had to pay back half the forgivable loan, but the jury then decided that Sherwood didn't commit fraud.
Do the actions of a few bad actors trash BB&T's overall good name? Of course, not. But the symbolism didn't escape the notice of the jury, either.
"They wasted a lot of money and then agreed to take part of the bailout," said juror Jacqueline Hill. "It's no wonder we have such a mess."