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wo related developers in Lexington have sued PBI Bank, alleging that the bank sold them foreclosed properties at inflated prices as a condition of lending them money to develop other properties.
The bank has denied the claims and countersued the developers.
The lawsuit, filed in Jefferson Circuit Court by Southwynd LLC and Majestic Development Company LLC, names as defendants PBI Bank; the banks holding company, Louisville-based Porter Bancorp Inc. (NASDAQ: PBIB); and the banks former Lexington market president Mark Delcotto.
The lawsuit was moved to U.S. District Court on Oct. 3.
According to the lawsuit, the managers of Southwynd and Majestic Development are James C. Ball III and Steven D. Wright, the owners of Ball & Wright Capital Holding Company LLC. According to the lawsuit, they wanted to borrow money from PBI for developments that were to be called Southwynd and Majestic.
The lawsuit claims that as a condition of granting the loan, the bank required the plaintiffs to buy from PBI 16 lots that PBI had taken from an unrelated borrower in lieu of foreclosure. Also, according to the lawsuit, the bank required the lots to be purchased for about $165,000 apiece, for a total purchase price of $2.5 million.
The loans were made and the lots purchased on Sept. 30, 2009.
According to the lawsuit, PBI required that the borrowers sell the 16 lots for no less than $125,000 apiece but refused to provide financing for development of the lots. According to the lawsuits, because PBI didnt provide financing to develop the lots and because the lots were so overpriced, the new owners had no chance of paying off PBI for the 16 lots.
PBI later agreed to take the 16 lots back in lieu of foreclosure and later sold them for $50,000 apiece, according to the lawsuit
read more Lexington developers claim PBI Bank forced it to buy foreclosed properties to get loans - Louisville - Business First
The bank has denied the claims and countersued the developers.
The lawsuit, filed in Jefferson Circuit Court by Southwynd LLC and Majestic Development Company LLC, names as defendants PBI Bank; the banks holding company, Louisville-based Porter Bancorp Inc. (NASDAQ: PBIB); and the banks former Lexington market president Mark Delcotto.
The lawsuit was moved to U.S. District Court on Oct. 3.
According to the lawsuit, the managers of Southwynd and Majestic Development are James C. Ball III and Steven D. Wright, the owners of Ball & Wright Capital Holding Company LLC. According to the lawsuit, they wanted to borrow money from PBI for developments that were to be called Southwynd and Majestic.
The lawsuit claims that as a condition of granting the loan, the bank required the plaintiffs to buy from PBI 16 lots that PBI had taken from an unrelated borrower in lieu of foreclosure. Also, according to the lawsuit, the bank required the lots to be purchased for about $165,000 apiece, for a total purchase price of $2.5 million.
The loans were made and the lots purchased on Sept. 30, 2009.
According to the lawsuit, PBI required that the borrowers sell the 16 lots for no less than $125,000 apiece but refused to provide financing for development of the lots. According to the lawsuits, because PBI didnt provide financing to develop the lots and because the lots were so overpriced, the new owners had no chance of paying off PBI for the 16 lots.
PBI later agreed to take the 16 lots back in lieu of foreclosure and later sold them for $50,000 apiece, according to the lawsuit
read more Lexington developers claim PBI Bank forced it to buy foreclosed properties to get loans - Louisville - Business First
