ATLANTA, Aug. 11, 2011 /PRNewswire/ -- Isenberg and Hewitt's latest filed lawsuit in the Shailendra family's real estate fraud scheme alleges that greed for fees drove five area banks, four collapsed Georgia banks and 12 current and former senior banking executives to allegedly collude with Paul Shailendra, Sachin Shailendra and the Shailendra family to commit fraud by knowingly aiding in the Shailendra's alleged massive $100mm Ponzi scheme.
The named defendants include RBC, UCB, Heritage Bank, Bank of the Ozarks, and Gulf Coast Bank and Trust together with several of their senior executives as well as senior executives at the failed Park Ave Bank, Enterprise Bank, Bank of Barnesville and Colonial Bank. Ryan Isenberg, of Isenberg and Hewitt, lawyer for the Plaintiffs said, "The facts in this case show the Banks' insatiability for the fees generated by the Shailendra business and the banks willingness to break the law, bend the rules and violate banking principles and regulations to get and keep the Shailendra business. Otherwise, why would a bank let them (the Shailendras) do that?
The lawsuit alleges that the banks, bank officers, Shailendra Group employees, Paul Shailendra, Sachin Shailendra and the Shailendras engaged in and intentionally permitted fraudulent and negligent misrepresentation, concealment and diversion of partnership funds into the Shailendra's personal accounts.
The lawsuit alleges that banks:
- Allowed the Shailendras free access to bank accounts of dozens of partnerships and entities, who then regularly withdrew money as if these accounts were their personal "piggy bank" for a variety of personal purposes;
- Permitted more than a thousand bounced checks marked "NSF", to be covered by routine shifting of funds from accounts owned by partnerships and other entities to Shailendra's personal accounts. These transfers sometimes, occurring daily, were made on a simple Shailendra telephone request, without further verification or authority;
- Allowed or facilitated check kiting (the fraudulent act of taking advantage of the float to make use of non-existent funds in a checking or other bank account) by the Shailendras totaling millions of dollars;
- Permitted Shailendra and his family to open almost 100 hundred bank accounts, some for as few as 30 days. The Shailendra family moved millions in and out of these accounts and then in less than four weeks closed the account, created a new name and opened new accounts at the same bank.
- Granted dozens of personal loans to Shailendra secured by assets not owned by the Shailendras but by other partnerships and other entities, without the knowledge or consent of the unrelated owners of those entities. When Shailendra defaulted on the loans (after depositing the proceeds in his personal accounts) the colluding banks would go after the assets of the other partnerships or entities.
- Allowed, encouraged and facilitated personal guarantees obtained from Shailendra investors (to protect the Banks from Shailendras' non-performance) under the pretense that the funds would be used to enhance their investment in a specific partnership but which Defendants knew or should have known would be used for the Shailendras' personal benefit.
- Colluded with each other to assist conspiring banks by replacing defaulted loans to the Shailendras or one of the partnerships that they managed, by giving Shailendra new loans even though Shailendra was already in default of old loans and using the new loan to balance their books.
SOURCE Isenberg and Hewitt