I know I promised I wouldn’t say any more about BOFI, but I can’t help it. There’s a new short article out, which I will summarize for you.
Jonathan Ball is the Chief auditor of Bofi who quit when Erhart quit. The author links to Mr. Ball’s recent declaration in which Ball says he led the audit department at La Jolla Bank for 18 years. He says he left La Jolla Bank in March 2010, and according to his Linkedin profile he joined BOFI one month later…
Now, La Jolla Bank (the largest US bank failure in 2010), where Ball ran internal audit for almost two decades, failed in February 2010 (a month before he left), after going down as one of the biggest bank frauds in Southern California history. The company’s executives admitted to accepting bribes, and the bank’s failure cost taxpayers a $1 billion loss. The bank was publicly criticized by the government for having weak and inadequate internal controls, conditions that the government claimed persisted for years while Ball was tasked with running the internal audit division. Ball leaves La Jolla Bank off his Linkedin profile
The author of the article wanted to be clear that Mr. Ball was never accused of having any role in the actual fraud at La Jolla Bank. He was not alleging that Ball’s actions were illegal in any way. However, given that he ran internal audit at a bank that failed as a result of fraud and weak internal controls, and has subsequently found himself in a very similar situation only five years later at BOFI, his past is clearly very relevant to BOFI investors. And the author didn’t ask, but I’ll ask, Why did Bofi hire a guy fresh from a back seeped in fraud and failure?
I mean, Jeez guys, this may all blow over, and I know you don’t want to feel bad about this, but how many red flags do you need? There are other stocks out there.
Here’s another way to look at it. A few months ago the stock was over $140 (before the stock split which I will ignore). In the last week it got as low as $72 ($18 post-split). So, with the stock falling almost in half, and a PE of 11 or 12 or something, the entire insider contingent steps up and in the last week buys a total of… less than one thousand pre-split shares. Yes, less than ONE thousand pre-split shares. (3000 post-split shares equals all of 750 shares a couple of weeks ago, pre-split). Does that inspire confidence in YOU?
There are better choices.