Lindquist & Vennum Wins Significant Jury Verdict on Behalf of American Bank
MINNEAPOLIS, Dec. 2, 2011 /PRNewswire/ -- Lindquist & Vennum PLLP today announced that the firm has won a significant jury verdict for American Bank in a case tried in Minnesota Federal District Court. After a three week long trial, a 12-person jury found TD Bank liable for aiding and abetting and conspiracy to commit loan fraud perpetrated by disgraced Orlando businessman and boy-band promoter Louis J. Pearlman. The suit was brought by Lindquist & Vennum litigators Eric Nystrom and John Ekman on behalf of American Bank of St. Paul and 25 other banks that made a $28.5 million loan to Pearlman in March 2006. The jury awarded American Bank and the other participant banks nearly $13.6 million.
The jury rendered its verdict on December 1, 2011, at the conclusion of a trial before the Honorable Ann D. Montgomery, Judge for the United States District Court for the District of Minnesota.
John Skopinski, Senior Vice President and Chief Credit Officer with American Bank said, "We are pleased with the decision of the jury, which gives many local banks the chance to recover money that otherwise was lost to Pearlman's fraud. We were fortunate to have had our interests represented so capably by Lindquist & Vennum. Eric Nystrom, John Ekman and the rest of their team did an excellent job throughout a long and difficult case."
Eric Nystrom, Litigation Partner with Lindquist & Vennum remarked, "TD Bank conspired with a convicted felon to deceive their business peers for their own personal gain. The large size of today's award sends a strong message about business ethics and the importance of doing the right thing." John Ekman, Litigation Partner and co-counsel added, "This is a significant recovery on a loan that was a near total loss for American Bank and their counterparts."
American Bank was seeking damages for aiding and abetting and civil conspiracy arising out of TD Bank's participation in the $28.5 million loan that it knew to be fraudulent. American Bank alleged that TD Bank's participation in the fraudulent loan allowed the loan to close, thereby assisting Pearlman in committing fraud.
From 2001 to 2005, TD Bank loaned Pearlman more than $16 million. In August 2005, as a result of an international investigation, TD Bank learned that the accountants that provided audited financials for Pearlman's airline, Trans Continental Airlines (TCA), and that prepared Pearlman's tax returns, did not exist. The investigation further revealed that TCA did not own any airplanes and was not licensed by the Federal Aviation Administration.
Upon discovering Pearlman's fraud, TD Bank entered into a forbearance agreement with Pearlman to give him time to refinance his loans with other lenders and then provided the last financing to allow the loan to close. The loan made by American Bank and the other participants was based on the same financial information that TD Bank knew to be false. TD Bank's conduct increased losses to federally-insured banks from $11 million to more than $27 million.
Louis Pearlman is currently serving a 25-year federal prison sentence for his role in a $300 million Ponzi and bank fraud scheme. Before being arrested for his fraud, Pearlman was best known as the founder and promoter of the successful 1990s boy bands, including The Backstreet Boys and *NSYNC.
Lindquist & Vennum's commercial litigators regularly represent banks and other corporate clients in high profile cases. Eric Nystrom has significant trial experience in business and commercial litigation. John Ekman is a former U.S. Department of Justice trial attorney who specializes in financial services and business litigation.
About Lindquist & Vennum PLLP
Lindquist & Vennum's nearly 200 attorneys provide a full array of corporate finance, transactional and litigation services from offices in Minneapolis and Denver. The firm serves corporate, governmental and individual clients across the nation and around the world. For more information, visit www.lindquist.com.
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