After investors sued the former top executives of Lydian
Private Bank over claims that inaccurate
financial statements misled them during a capital raising, a federal report
revealed that government agencies are investigating “questionable activities”
of the failed bank, according to the South
Florida Business Journal.

The Palm Beach-based
bank failed in August, at an estimated cost to the FDIC of $292.1 million, and
its assets were assumed by Miami-based Sabadell United Bank.

According to a March 21 report by the US Department of the
Treasury’s Office of Inspector General, the bank was hammered by its
over-concentration in high-risk mortgages, such as loans with no documented
income and negative amortization, and a “dominant” chief executive with inadequate
oversight from the board of directors, the publication said.

Lydian chairman Rory Brown was also CEO up until the months before
the bank failed. Attorney Gregory William Coleman, who represented Brown and
Lydian in recent litigation, did not return a call seeking comment, the
publication said.

The OIG report stated that it did not address all the
problems with Lydian because there are multiple investigations by various
government agencies concerning what it called “questionable activities.” The
OIG referred other unidentified matters to the Treasury Department’s Office of
Investigations, which determines whether or not financial laws were broken, the
publication added.