American Bank Wins $13.6 Million Jury Verdict Against TD Bank for Loan Fraud

by Mike Mintz on December 5, 2011 · 2 comments

in martindale.com

On December 1, 2011, in a Minnesota Federal District Court, a 12-person jury granted American Bank a considerable verdict of $13.6 million against TD Bank for loan fraud.  In this action, American and 25 other banks alleged that TD Bank conspired with a convicted felon, Orlando businessman and boy-band promoter, Louis J. Pearlman, to deceive plaintiffs to loan Pearlman $28.5 million in March 2006.  After a three-week trial, the jury found TD Bank liable for aiding, abetting and conspiracy to commit loan fraud.

Between 2001 and 2005, Pearlman took out loans of more than $16 million with TD Bank.  In August 2005, TD Bank discovered that Pearlman’s personal accountants and those for his airline, Trans Continental Airlines (TCA) were nonexistent.  Moreover, they discovered that TCA was a farce.  It was not licensed by the Federal Aviation Administration (FAA), and it did not own a single airplane.

 

After learning of Pearlman’s fraud, TD Bank and Pearlman entered into a forbearance agreement, permitting Pearlman to refinance his loans with other potential lenders.  American Bank and the other plaintiffs loaned Pearlman a significant amount of money based on the same fraudulent financial information, which TD Bank already knew to be entirely false.

 

However, as a result of TD Bank’s misconduct, the federally insured banks’ losses increased from $11 million to over $27 million.  For this, American sought damages against TD Bank, and it is now pleased to announce that the jury has found in its favor.  American’s attorney, Eric Nystrom, Litigation Partner with Lindquist & Vennum, stated that “[t]he large size of today’s award sends a strong message about business ethics and the importance of doing the right thing.”  So, too, does Pearlman’s 25-year-sentence in a federal prison for his $300 million bank fraud and Ponzi scheme.

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LexisNexis Employees
December 12, 2011 at 9:25 am
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