Lawyers for U.S. Labor Secretary Martin J. Walsh filed a federal civil lawsuit on Tuesday against Moorestown designer Shirley Hill, her banker husband Vernon Hill, and her design company, InterArch Inc., accusing them of mismanaging InterArch’s profit-sharing plan by over-investing in Hill’s Banks and losing millions of dollars that should have gone to plan members who work at the Moorestown firm.
Despite recurring criticism from regulators, shareholders and even some board members, Hill, founder of the former Commerce Bancorp and Metro Bank (UK) and managing director of the Philadelphia-based Republic Bank until July, has had its banks pay tens of millions in total to InterArch since the 1970s.
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Hill called it money well spent developing and enforcing the banks’ brands and their distinctive common look, including large red initials, rows of inside and drive-through teller lanes to keep crowds moving, glass walls, murals and other signature features.
But the Labor Department accuses the couple of ‘mismanaging’ InterArch Inc.’s profit-sharing plan by putting most of their money, from 2016 until the plan closed in 2020, in stocks of Hill’s Metro and Republic Banks, which then lost most of their value.
Calls to Shirley Hill at her office and to Vernon Hill and her longtime spokesperson were not immediately returned.
The Hills “did not diversify the plan’s holdings” from 2016 through 2020, as required by federal pension law, “even though Metro Bank and Republic Bank stock prices fluctuated,” until until they end the plan in 2020, according to the lawsuit. .
The plan was founded in 1976 when Vernon Hill began expanding Commerce from a small Cherry Hill lender to a fast-growing retail banking, insurance and investment company that eventually operated more than 400 branches in the metropolitan areas of Philadelphia, New York and Washington. It was sold to Canada-based TD Bank in 2008 after Hill left Commerce following criticism of its use of InterArch and other Hill family businesses by federal regulators.
Government alleges the Hills and Shirley Hill company violated federal Employee Retirement Investment Security Act by failing to buy a more effective mix of investments instead of focusing on Vernon Hill stock .
Specifically, the Labor Department accuses the Hills of failing to perform their duties to the regime and its members, including the duty to diversify investments; to engage in prohibited transactions for the benefit of the Hills’ personal investments in Vernon Hill banks; and self-transaction.
According to the civil suit, filed in federal court in Camden, Shirley Hill was the sole trustee of the plan, while Vernon Hill advised her on her investments, to the point where “Vernon Hill exercised effective control over the assets of the plan.”
The couple live in Moorestown, in a 55,000 square foot house designed by Shirley Hill, which they call “Villa Collina”, Italian for “Hill House”.
Hill’s banks have been InterArch’s main clients. According to the lawsuit, in February 2018 shares of Metro Bank, which Hill had founded eight years earlier in London, accounted for around 69% of the value of the InterArch profit-sharing plan.
But over the next 15 months, the stock lost most of its value, falling from $57 to less than $5. Still, the plan continued to acquire shares. By 2020, the shares had lost 96% of their peak value, or $17.9 million, and the plan sold them for around $731,000. (Hill left the bank in 2019 after revealing that loan losses were higher than previously reported to UK regulators.)
Similarly, the plan bought 500,000 shares of Republic Bank’s parent company, Republic First Bancorp, in 2010 after Hill invested in the bank and before he became chairman and CEO.
In early 2016, Republic shares were one-third of the plan’s value, falling to about one-eighth after the plan bought Metro shares in 2016. But from 2017 to 2020, Republic shares lost value. most of their value, dropping from $9.75 to $2.05. , and costing the plan $3.4 million. Hill was kicked out of Republic in July after losing the support of a majority of its directors.