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As far as battleground stocks go, BofI Holdings (AX 3.34%) -- commonly referred to as the Bank of the Internet -- is at the head of the class. Starting with fraud allegations surfacing in May of 2015, the company has been dogged by short-sellers and lawyers with an axe to grind. As it stands today, 36% of BofI's float is sold short.

But between August and December, shares have exploded, nearly doubling. Does that mean that the short-sellers have given up, and that the good times are set to roll at BofI once again?

Perhaps, but the answers aren't anywhere near as clear as shareholders might have hoped. Here's why.

The original complaint

This entire incident began when Matt Erhart, a former employer working in the company's internal audit department, filed a suit against BofI for wrongful termination.

The details he provided in his filings were the stuff that soap operas are made of: allegations of the CEO Greg Garrabrants laundering money through the bank, a toxic culture where cover ups and lying to authorities were encouraged, and dangerous business practices where risks were much higher than what was being reported to authorities.

In the month immediately following this filing, shares of the company tanked 45%. The company held an immediate press conference to deny many of the allegations, but at the time, it had little effect.

The aftermath

Since Erhart's complaint was filed almost 20 months ago, the company has been squarely in the cross hairs of short-sellers. Numerous hit pieces have shown up on popular blogging sites. But perhaps the most damning came not from short-sellers, but from lawyers representing the Houston Municipal Employees Pension System.

The group contends that it has checked in with up to nine former employees, and they confirm -- to varying levels -- the accusations that Erhart threw at the company. One stated, "internal controls were whatever Greg [Garrabrants] wanted them to be," with another accusing, "it started to become very rare that we would deny a loan." The stock once again dipped significantly following this filing, dropping 25% over the next two days.

Is there another shoe that's about to drop?

BofI's performance, however, has defied all of the detractors. While the company hasn't enjoyed quite the same growth rates that it has in years past, that is to be expected from any growing company. What's important is that BofI's deposits and loan portfolios have continued to grow at enviable clips, 33% and 25%, respectively, during the most recent quarter.

Meanwhile, Garrabrants has continued to deny any and all accusations flung at the company. The court case with Erhart has yet to get meaningfully under way, as well as the case with the Houston group as well. That leaves very little to surface in the form of a "smoking gun."

That leaves investors in a very precarious situation. If nothing turns up in the allegations, and BofI's loans are indeed every bit as safe as they say they are, we are looking at a very cheap stock relative to its long-term potential.

If, on the other hand, one of two things happens over the coming year, the stock could absolutely plummet. The first would be any major finding by regulators or courts that demonstrate orchestrated fraud taking place. The second would be bad loans coming home to roost, partially spurred by external circumstances, like a decline in the California real estate market (where many of BofI's loans are).

How I'm approaching the situation

So far, I've been against buying shares of BofI. For a long time, that was a wise stance to take. But over the past few months, the market has seemed to believe that the chances of fraud existing are lessening. If that's the case, betting against the company would unequivocally be a bad decision. That's why I have no shares sold short of the company.

At the same time, I have absolutely no interest in owning shares. There are too many factors adding up to a toxic culture that I want no part in owning. For starters, reviews by former employees on Glassdoor.com -- both before and after the short-sellers began hammering the company -- paint a very unhealthy situation.

Furthermore, when I wrote what I believed to be a very even and fact-based article on BofI following Erhart's original presentation, Garrabrants took umbrage with it, and went so far as to call The Motley Fool to discuss it. I simply don't want the CEO of any company I own to be spending their time defending it from every article that may reasonably call issues into question.

As to whether or not the short-sellers will be proven right, I think the only real judge will be time. Over the five-year time frame, I see only a binary situation arising: either the stock will be a huge winner, or it will plummet. As I'm not a banking expert myself, I am making my decision based on the cultural evidence available. How you choose to make a decision will be highly personal. The important thing is to enter the investment with eyes wide open.