FDIC Sues Law Firm for $6M, Says Partner Closing Loans for Bank Concealed Critical Info
The Federal Deposit Insurance Corp. has sued a Georgia law firm for malpractice, contending that a partner of the firm, simultaneously representing Neighborhood Community Bank and a developer client while closing loans, concealed from the bank material secret changes in the authorized terms of the loans.
In a complaint (PDF) filed Monday in U.S. District Court for Atlanta, the FDIC contends, as the receiver of the bank, that Joseph Mark Brittain of Smith Welch and Brittain didn’t tell NCB about a discrepancy of nearly $675,000 between the purchase price and the loan amount in one transaction.
Nor, allegedly, did Brittain inform the bank that some of its loan proceeds were being paid to the developer, Jeff Grant, or his companies, in contravention of NCB’s loan instructions, according to the complaint, which was provided by the Atlanta Business Chronicle.
The suit also alleges that the law firm’s conduct “has been in bad faith, has caused plaintiff unnecessary trouble and expense and has been stubbornly litigious, thereby entitling plaintiff to an award of the attorneys’ fees and expenses incurred in the prosecution hereof.”
Attorney Christine Mast represents Brittain and his firm. She said in an e-mail that Neighborhood Community was responsible for the failure and that the loans at issue in the case “were at risk for default from the beginning,” reports the Atlanta Journal-Constitution. She also accuses the FDIC of gunning for a deep-pockets defendant.
