Bank exec was improperly tipped off to damning memo: suit

The chief executive of an embattled California bank was improperly tipped off to an internal memo about allegedly questionable money transfers into his personal checking account — by the head of the company’s compliance department, according to explosive new documents filed in a whistleblower lawsuit.

John Tolla — who is still the head of compliance at Axos Financial, known at the time as Bank of Internet — admitted in a deposition that he’d told CEO Greg Garrabrants about a potentially damaging internal memo that detailed how the CEO had allegedly funneled money into his own account and may have avoided paying taxes, according to court documents filed late Wednesday.

The memo, which was written to the board’s audit committee by whistleblower Charles Erhart in January 2015, alleged Garrabrants had allegedly deposited third-party annuity checks into his own personal account, as well as transferred large sums of money from an account under his brother’s name, according to the court documents.

The memo also questioned whether Garrabrants would have done this to avoid paying taxes, according to a filing in court documents.

An Axos representative said that the claims by Erhart, whom the bank is suing for damages, are “without merit,” and that Tolla followed the correct procedures by informing Garrabrants.

“Garrabrants has never deposited any money from any source into a personal account at Axos Bank (formerly BofI) that was not authorized and lawful,” the spokesman said.

Tolla didn’t return a voice mail seeking comment. In his deposition, he said he thought it was appropriate to tell Garrabrants about the internal report because the information had already been submitted to the Office of the Comptroller of the Currency, one of its regulators.

Axos, a publicly traded company valued at $1.74 billion, has been under scrutiny by regulators since 2014 regarding its lending practices, according to court documents.

The Post first reported in 2017 that several federal regulators and enforcement agencies, including the Securities and Exchange Commission and the US Treasury, were investigating the bank for possible money-laundering.

The SEC dropped its investigation in 2017, but a Treasury official told The Post last year in response to a Freedom of Information Act request that its investigation was still “ongoing.” While the status of that investigation is unclear, the bank previously said that “results of FOIA requests are often misinterpreted.”

Since the SEC investigation was dropped, Garrabrants’ bank was behind much of a $57 million bridge loan to Kushner Cos. and its real estate partner, KABR, for a development in Jersey City, NJ, Bloomberg reported last year.

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The newest court filing in Erhart’s suit, which was initially filed in 2015, are the first to include information from depositions by Tolla and other current Axos executives.