George Fort has won over $2 million in damages and an order of reinstatement to his position as Chief Financial Officer (CFO) of Tennessee Commerce Bank. Under the Sarbanes-Oxley Act (SOX), the reinstatement order has immediate effect and will not be stayed while the bank appeals. 18 USC § 1514A(b)(2)(A) and 49 USC § 42121(b)(2)(A). The Occupational Safety and Health Administration (OSHA) issued the order on Wednesday. Congratulations to Tennessee attorney Bruce Shine who represents George Fort.
George Fort worked for the Tennessee Commerce Bank (stock symbol TNCC) since 2004. He was soon promoted to CFO and was responsible for the bank’s SOX compliance. In June 2007, the bank’s CEO, Arthur Helf, decided that he and the other top executives deserved bonuses and pay raises that would more than double their annual compensation. Three board members resigned in protest. Then Helf decided that he would cash out over a million dollars in stock options just before the bank had to report the raises and resignations. Fort objected that this was insider trading. Fort also raised concerns about internal controls, file maintenance procedures and fabrication of meeting minutes. By 2008, Fort had decided that he would no longer sign the bank’s Form 10k because he believed the company was not in compliance with SOX. Over Helf’s objection, Fort went to the bank’s audit committee to present his concerns. Fort went to federal and state bank regulators with his concerns. The next day, the bank placed Fort on administrative leave, and later fired him.
The OSHA findings show that its staff gave strong weight to the timing of the administrative leave right after Fort went to state and federal regulators. This was sufficient to find that Fort’s protected activities were a contributing factor in the decision to fire him. OSHA’s investigation also uncovered inconsistencies in the bank’s explanation of how and when it decided to fire Fort. These prevented the bank from proving that they would have fired Fort even if there had been no protected activity. OSHA informed TNCC of its preliminary findings and gave the bank an opportunity to submit evidence. TNCC initially submitted no evidence but asked for mediation to try to settle the case. When the settlement negotiations failed, then the bank submitted new evidence. OSHA found that the new evidence did not change its findings.
OSHA ordered TNCC to:
- Reinstate Fort as CFO immediately;
- Pay backpay of $6,442.40 per week ($624,913, and counting);
- Pay $301,500 for a missed bonus;
- Pay interest (which I estimate to be $117,299, and counting;
- Pay $35,000 for seven missed Board meeting fees;
- Reinstate Fort’s stock options of 152,308 shares ($1,057,018 at $6.94 per share, although this price is declining today);
- Pay $31,601.41 in medical expenses, car allowance, insurance and job hunting expenses;
- Pay attorney fees of $129,794.19;
- Expunge Fort’s employment records;
- Refrain from further retaliation; and,
- Post a “Notice to Employees” about their rights under SOX.
I compute that the total present value of this order is $2,297,125 — the largest amount of any OSHA order for a whistleblower that I know about. This figure assumes that TNCC will comply with the reinstatement order and stop Fort from suffering further lost wages and compensation. The value of the reinstatement order is likely to be worth even more than this figure. OSHA’s press release, however, says only that the value of this order is over $1 million. Still, this decision, and the increased pace of OSHA’s whistleblower investigations, is a refreshing new development.
Fort’s attorney, Bruce Shine, tells me that TNCC has already announced that they will appeal. I wonder if they will reconsider their settlement position now that they have to bring Fort back as CFO. Shine also expresses appreciation for a “masterful” investigation by OSHA’s investigator who not only collected a large amount of information, but also analyzed it to write a detailed and persuasive decision. Employers will need to treat OSHA investigations more seriously now as they will have to make their case quickly and accurately if they want to avoid getting such huge awards issued against them. Congratulations to all.
