Despite facing a potential $219 million fine from the Federal Deposit Insurance Corporation, Dennis Alter’s status as a Temple trustee seems both literally and figuratively set in stone.
Alter, 71, had been the chairman and chief financial officer of Advanta Bank Corp. since taking over the business – then known as Teacher’s Service Organization – from his father in 1971. The business began offering credit cards to small businesses after a brief foray into sub-prime mortgage lending around the turn of the new millennium, according to a complaint filed by the FDIC.
In 2007, the bank, based in Spring House, Pa., had more than $420 million in capital and $1.03 billion in liquid assets. Philly.com listed Alter’s total compensation as CEO of Advanta as $4,189,342 in 2006.
The FDIC is now seeking to recover more than $219 million from Alter and his associates due to “gross negligence and breach of fiduciary duty” following the bankruptcy of Advanta in 2009, according to a complaint filed by the FDIC in civil court in June.
Alter, who holds undergraduate and master’s degrees from Temple, donated $15 million to the university in 2004, resulting in the new building for the Fox School of Business being named after him – Alter Hall – upon the structure’s completion.
According to the FDIC’s most recent complaint, amended on Nov. 5, Alter and his associate William Rosoff, vice chairman of Advanta’s Board of Directors, are accused of implementing “numerous, massive and unprecedented ‘re-pricing’ campaigns,” including raising the annual percentage rate interest on 60 percent of their customers in 2008 after the stock price of Advanta’s Holding Company dipped in November 2007.
The FDIC maintains that many customers were forced to pay yearly interest of more than 30 percent from Jan. 1, 2008 to May 31, 2009. The FDIC also claims that the re-pricing directly caused roughly 400,000 customers to leave the bank, and that Alter and Rosoff allegedly ignored more than 35,000 customer complaints logged over the bank’s final 16 months of existence.
FDIC spokesman David Barr said the FDIC does not comment on current litigation, instead choosing to stand by the complaints filed in court.
According to an 8-K form filed with the Securities and Exchange Commission, the FDIC received Advanta’s assets on March 19, 2010 after Advanta Corp. filed for Chapter 11 bankruptcy protection.
Alter and Rosoff filed a countersuit against the FDIC on June 17, alleging that the FDIC is attempting to blame its own mismanagement of Advanta’s finances on Alter and the bank’s organization. Alter’s representatives said Advanta’s re-pricing campaigns were in-line with practices held by most major credit agencies, and that Alter and his team “worked tirelessly” to save the company.
Legal representatives for the FDIC filed a motion to dismiss Alter’s suit on Sept. 20.
Alter and Rosoff are represented by Philadelphia-based legal firm Dechert LLP, as well as Utah firm Hatch, James and Dodge. Dechert LLP spokeswoman Beth Huffman declined to comment on either of Alter’s suits. Multiple calls and emails sent to Alter’s legal representatives were not returned.
Patrick J. O’Connor, chairman of Temple’s Board of Trustees, quashed any rumors that Alter’s status as a decision-maker at the university is in question.
“Dennis Alter is in no danger of losing his trusteeship,” O’Connor said.
Alter is one of 12 appointed trustees decided on by the Commonwealth of Pennsylvania and is one of four selected by state Speaker of the House Samuel H. Smith. Alter’s four-year term is scheduled to end in 2016.
O’Connor has served as chairman of the Board of Trustees since 2009 and personally appointed Alter to serve on the board’s Executive Committee, Budget and Finance Committee and Athletics Committee.
As a member of the board’s Budget and Finance Committee, Alter has “oversight over matters and policies pertaining to finance, business, operating and capital budgets, insurance, employee relations, contracts and grants, tuition and fees, and the long-range financial planning and development of the university,” Temple bylaws state.
University bylaws do not list any criteria or procedures for the removal of a trustee in the event of potential legal sanctions. Alter was appointed to the board by the state in 2012, roughly three years after Advanta’s collapse. He faces no criminal charges.
However, Alter’s status as a member of the Fox School of Business’s Dean’s Council may be in question.
According to university bylaws, the Fox School’s Dean’s Council – formerly known as the Board of Visitors – advises Temple’s president, provost and Board of Trustees, as well as the Fox School’s own dean, on the school’s strengths and weaknesses and recommends improvements and changes to university officials. The council also serves as a liaison between Temple and visitors to the Fox School.
The bylaws state that a member “may be removed by the [Board of Trustees’] Committee on Trustee Affairs at any time for any reason,” including “conduct tending to negatively affect the reputation of the unit or the university.”
Richard Fox, namesake of the Fox School of Business, said he “was not aware” of any pending litigation against Alter. Fox, who sits alongside Alter on the Board of Trustees, said the two do not have a close working relationship.
A university spokesman declined to comment on the matter, saying, “Temple University does not speculate on hypotheticals.”
Jerry Iannelli can be reached at jerryi@temple.edu or on Twitter @jerryiannelli.
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