A former employee of Vancouver-based Riverview Bancorp Inc. has filed a lawsuit against the company, alleging she was retaliated against and wrongfully fired for uncovering and reporting multiple cases of fraudulent activity at the bank.
In her lawsuit, Tracey McEuen, formerly an internal auditor for Riverview Bancorp — corporate parent of Riverview Community Bank — seeks $1.4 million in damages, including for loss of income and health benefits, and emotional distress and loss of reputation.
McEuen was a protected whistleblower but fired for revealing deceptive practices at the bank, including violations of federal regulations and falsification of reports, according to the lawsuit filed on Nov. 19 in U.S. District Court in Tacoma.
Kim Capeloto, Riverview's executive vice president for marketing and operations, said Wednesday he had not seen the lawsuit and, as a result, it would be inappropriate for him to comment on it. "Our general policy would be that if it is pending litigation we would not comment on it," he said. He was informed by voicemail of Riverview employees who are the subject of accusations in the lawsuit.
Court documents show attorneys with the Seattle-based law firm Littler Mendelson are representing Riverview in the case. A representative of the firm told The Columbian on Wednesday that it was unable to comment on the matter.
McEuen's Portland-based attorney, Anne Foster, said Wednesday her client declined to be interviewed for this story.
McEuen's lawsuit names Riverview Bancorp and Riverview Community Bank as the defendants. It makes two central allegations: that McEuen's firing was in retaliation for her protected whistleblowing activities; and that her firing breached state government policies that protect consumers and investors from fraud, and that protect "the reporting of such fraud by employees consistent with federal whistleblower statutes."
McEuen's protected whistleblowing activities included raising compliance issues with the bank's management; collecting evidence of violations; refusing to engage in unlawful and/or fraudulent conduct; and raising compliance concerns with others at the bank who could have launched enforcement proceedings.
"During relevant times, the bank and its officers and managers knew of McEuen's protected activities," according to the lawsuit.
The bank fired McEuen because she uncovered and reported multiple cases of spurious activity, according to the lawsuit, including changes to internal audit reports; violations of bank policies and codes of conduct; violations of the federal Sarbanes-Oxley Act of 2002, which tightened financial and corporate governance rules; falsification of risk assessment reports; and potential embezzlement.
'All of the issues'
The lawsuit describes a complex set of events and conversations at the bank that occurred between February and October in 2011.
It outlines alleged interactions between McEuen and numerous colleagues and senior officers while she was employed there.
It makes several accusations, including that one senior officer improperly altered certain documents; that another manager used the bank's payroll system to steal money; and that two other employees were fired for complaining about fraud.
Part of the lawsuit centers on Don Sasaki, the bank's risk manager, who was McEuen's supervisor. Sasaki referred questions about the lawsuit to Capeloto.
McEuen, who was hired on Feb. 28, 2011 as an internal auditor for the bank, alleges Sasaki rewrote reports she made and removed "issues McEuen had found in her audits."
Moreover, Sasaki contacted "area managers" and allowed them to correct the issues. Once the issues were corrected, the lawsuit alleges, "Sasaki would remove all mention of it from the 'final' audit documents. McEuen believed Sasaki's edits and corrections to be unlawful under the banking statutes and regulations and Sarbanes-Oxley."
The lawsuit alleges Sasaki regularly engaged in such conduct for years. It bases that accusation on statements made to McEuen by others at the bank. They include another supervisor -- Brenda Lockett, a compliance manager -- and another internal auditor -- Jeanne Cromwell, who was hired at the same time as McEuen but who later quit because she refused to continue to work for Sasaki.
The lawsuit says McEuen was later asked by the bank's vice president of human resources -- Krista Holland -- to explain why Cromwell left the bank.
McEuen did so, and also told Holland that she shared Cromwell's concerns about Sasaki.
During McEuen's meeting with Holland, the lawsuit alleges, Holland told McEuen "that she was aware of 'all of the issues'" and recommended McEuen and Lockett meet with Ron Wysaske, the bank's president, and share their concerns with him.
That meeting occurred, and "McEuen repeated her concerns to Wysaske," according to the lawsuit.
Payroll audit prepared
At one point, McEuen was preparing to conduct an annual audit of the human resources/payroll department. At that time, the lawsuit alleges, the bank's assistant controller -- who is not named in McEuen's complaint -- took McEuen "out to the back parking lot of the bank" and told her "that there is evidence of Holland 'stealing money' from the bank via the payroll system."
Holland could not be reached for comment Wednesday.
Later on, the lawsuit alleges, Tiffany Kelly, a human resources analyst, met with McEuen and confirmed that "Kelly believes Holland is falsifying the payroll records and system and that both the assistant controller and Sasaki are aware of this information."
The lawsuit alleges the bank later fired Kelly, telling her it was because of a workforce reduction. "McEuen believes Kelly was terminated because she knew and complained about fraud," according to the lawsuit.
And another employee — Lisa Wourms — also was fired "allegedly as a result" of a workforce reduction, according to the lawsuit, although emails between Wourms and others surfaced "regarding evidence of fraud in the HR/payroll department."
On Oct. 14, 2011, about eight months into her employment with the bank -- and "just two weeks after receiving a glowing review from Sasaki," the lawsuit says -- McEuen was fired. The bank erroneously asserts it fired McEuen because she violated company policy by bringing an external hard drive to work, the lawsuit alleges, when McEuen had already obtained permission from Sasaki to do so. McEuen's lawsuit follows another related complaint she lodged on April 9 with the federal Occupational Safety and Health Administration. A final decision on that complaint, filed under Sarbanes-Oxley, has not been made yet, according to McEuen's lawsuit.