According to SEC, misleading statements were filed in the first two quarters of 2007 to hide the worsening state of a large portion of the bank’s commercial residential real estate land acquisition and development portfolio as well as committed accounting fraud by improperly recording loans.
Though the problem was acknowledged in the third quarter of 2007, BankAtlantic and Levan attempted to sell some of the deteriorating loans, concealed the attempted sales from auditors and investors and understated its net loss by more than 10% in its 2007 annual report.
SEC director of Division of Enforcement Robert Khuzami said that BankAtlantic and Levan used accounting gimmicks to conceal from investors the losses in a critical loan portfolio.
SEC has sought financial penalties and permanent injunctive relief against the holding company and Levan to cease from future violations of the federal securities laws. It has also requested an officer and director bar against Levan.
