Attorneys for Steven D. Hayworth, founder and former CEO of Gibraltar Private Bank & Trust Company, filed a lawsuit against the bank late Friday in a Miami federal court, alleging fraud and breach of contract damages of $40 million.
The 40-page complaint filed with the U.S. District Court for the Southern District of Florida details Hayworth’s Gibraltar career. It began in 1994, when Hayworth, a former banking executive at several banks, and an investor group he assembled acquired Gibraltar Savings & Loan Association and founded the bank. His Gibraltar career ended in 2012, when Hayworth contends he was pressured into leaving shortly after Gibraltar settled several lawsuits in connection with the Rothstein Ponzi scheme fallout. Former Fort Lauderdale lawyer Scott Rothstein was an investor in the bank.
The complaint said Hayworth had successfully sold the Coral Gables-based bank to Boston Private Bank in 2005, then repurchased it in 2009 at a deep discount. He raised capital for both the $93 million repurchase and its $40 million expansion in 2010. Rothstein participated as an investor in this repurchase after he was vetted by US Bancorp. Days later, Rothstein fled the country amid news of his massive Ponzi fraud bust.
The complaint said Gibraltar’s board of directors needed a scapegoat and as a result, pressured Hayworth to step down from his post and breached the bank’s obligations under his contract — after the board used him to successfully negotiate a $10 million settlement for investors in the Rothstein-related litigation in 2012, Hayworth’s attorney said Monday. The board is now chaired by well-known banker Adolfo Henriques, who served as vice chairman, president and chief operating officer from 2011 to the time of Hayworth’s departure.
“Essentially they needed a scapegoat,” said Andrew C. Hall of Hall, Lamb and Hall. “The reality is it was just a scapegoat because Steve got them through the trouble and did a great job of it, and what they did was suggest to him that they wanted to give the CEO title to Adolfo Henriques and all the benefits of his employment will be unchanged.”
Hall said Hayworth reluctantly agreed as long as he remained chairman, Henriques reported to him and the employment contract ensuring a base salary of at least $800,000 and other benefits stayed intact. “He didn’t know the bank took a secret vote to terminate him and keep him on board in a different function at a salary of 40 percent less than what he was making … It breached the employment agreement and it was a fraud, they misrepresented to him what they were doing.”
Hayworth’s lawsuit is seeking $10 million in compensatory damages, noting the loss of compensation and incentives including stock options, bonuses and fringe benefits and “adverse consequences” on future earnings since the departure, and $30 million in punitive damages and is requesting a jury trial. “The lawsuit is pretty clear about the fairly treacherous acts of the board … I don’t think it is appropriate to mislead and misrepresent yourself to your CEO,” Hall said.
Hayworth currently is vice chairman of the Orlando-based Seaside National Bank in Orlando and he is living in South Florida.
Gibraltar Private Bank, which mainly caters to high net worth individuals, has assets of about $1.6 billion and holds a rating of 3.5 stars from Bauer Financial. Gibraltar did not immediately return a call or email requesting comment.
This report was updated.