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:

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.

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.
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?


I know said...

Read the lawsuit on Justia. It is a C Felony complaint by the Wells Fargo Bank asking for recovery under the Indiana Crime Victims Compensation Act. It is in Judge David Hamilton's Court.

Maybe some of the other little gremlins in Indianapolis might begin to surface. A whole lot of good old boys in the Statehouse and Marion County know what's been going on. So does law enforcement.

I know said...

If you look into the original Blue Sky Casino Contract process in the Gaming Commission the bond deadline was missed by the applicants including Lauth and all the Gaming Commission did was slap them on the wrist with a $10,000.00 fine and gave them a forty year contract.

The whole mess has allowed the bonds to fail twice and now is in distress exchange. It appears this was a pattern for a few things that the local Prosecutor, the Attorney General and the State Representative Ethics Chairman was told and everybody looked the other way.

No wonder our banks like Wells Fargo fail. The good old boys just keep helping each other out by looking the other way!!!!!

Gary R. Welsh said...

You ever notice, I Know, how all of Indianapolis' high-flyers are tied to the gambling industry? There was crimnal activity associated with the awarding of the Lawrencburg license, the Anderson horse race track, the Shelbyville race track, etc. As long as the U.S. Attorney's Office in Indianapolis chooses to look the other way, these guys can do as they please.

Downtown Indy said...

"You ever notice, I Know, how all of Indianapolis' high-flyers are tied to the gambling industry? "

Just taking their cue from Willy Sutton answering a question about bank robbery, "Because that's where the money is."

Gary R. Welsh said...

"Because that's where the money is."

If you're one of the lucky ones cut in on an insider deal, you can turn a $10,000 investment into millions in a very short period of time. You don't get a shot at those opportunities unless you control the people who make the decisions at the Commission.

I know said...

With C Felony Fraud in Indiana a jail time would be applied and a record attached for life. If my memory serves me correctly the system usually has someone approach the FBI and ask for immunity for an individual or a family in return for all the "DIRT" to come spilling out.At least that is what is shown on TV.

With the pedestal that everyone including the Governors office put this company on it makes one wonder what or who is really being thrown under the bus if the gentleman in the black suits are being given information. Hmm, who is looking over their shoulder in Indianapolis right about now?

The Federal Bureau of Investigation already has been given information years ago about the illegal goings on in Indiana Gaming, the Gaming Commission and the friends and family plans. Now maybe they will have to dust of the books again that they already have!

thundermutt said...

Gary, the headline should say "principals" not "principles". For more reasons than one.

"Principals" are the leaders of a firm. "Principles" are moreal or ethical guidelines.

thundermutt said...

Oops. That's "moral".

Gary R. Welsh said...

Thanks for the correction.