The San Francisco-based bank alleges in a suit filed June 17 in U.S. District Court that partners Robert Lauth Jr., Gregory Gurnik, Lawrence Palmer, Michael Curless and other company officials committed felony fraud as they tried to protect their own wealth from failing development projects they had personally guaranteed.Schouten's story says another creditor, Inland American Real Estate Trust, has also accused the company's officials of shifting assets in order to leave creditors holding the bag. Inland has also accused Lauth principals of paying millions to corporate insiders on the eve of filing for bankruptcy protection. Shades of Conseco's Stephen Hilbert?
The principals in the locally based developer had promised personal assets as collateral for five loans from Wells Fargo, but the suit alleges they secretly transferred most of those assets in 2008 as they began defaulting on the loans, which had been scheduled to mature starting in October 2008.
The Lauth principals tried to get Wells Fargo to replace the personal guarantees with a guaranty of an affiliate company, but the bank refused. The bank began looking into the principals’ transfers after financial statements, submitted in May, showed substantially fewer assets remaining to serve as collateral for the loans.
Wells Fargo alleges that Robert Lauth, the company’s CEO, transferred ownership of his Carmel home and two properties in Naples, Fla., to his wife, Robin, less than a week before he submitted his financial statement. He also transferred assets to Robert Lauth Family Foundation Inc. and an unidentified trust that has his wife as a beneficiary.
Fellow partners Gurnik, Palmer and Curless also transferred assets to their wives, without receiving anything of value for the transfer, the suit says.
“The principals making each transfer did so with the actual intent to hinder, to delay or to defraud Wells Fargo in obtaining payment,” according to the suit.
A spokeswoman for the Lauth principals, Myra Borshoff Cook, denied the charges.
Friday, June 19, 2009
Lauth Principals Sued For Fraud
Wells Fargo Bank has filed a lawsuit in the U.S. district court in Indianapolis against the principals of Lauth Group, Inc., charging them with felony fraud for allegedly transferring certain personal assets pledged as collateral to other family members and entities controlled by those family members. The IBJ's Cory Schouten writes: