By Margaret Jackson
The Denver Post
Posted: 12/18/2010 01:00:00 AM MST
Updated: 12/18/2010 01:20:02 AM MST
Developer Jon Cook is suing United Western Bank, claiming the lender defrauded him when it misrepresented its ability to renew loans for one of his development projects.
Cook and the bank had reached an agreement June 8 to increase loans secured by property west of South Broadway and West Jewell Avenue and renew them for two more years, according to the lawsuit filed this week in Denver District Court. The loans had matured May 29.
Cook plans to develop the property, part of the 6 acres he has assembled known as the Lumberyards, with housing, offices, retail and restaurants.
But Cook didn’t know that the bank would not be able to honor the agreement because the federal Office of Thrift Supervision was about to put United Western under a “cease and desist” order, knowledge his lawsuit alleges the bank had.
The order, among other things, required the bank to boost capital levels by June 30, stop offering above-market-rate products aimed at attracting short-term money from outside the state, and reduce its concentration of construction and commercial real estate loans.
Both Cook and attorney Jeffrey Cohen declined to comment on the lawsuit.
Ted Abariotes, general counsel for United Western, said the bank does not comment on pending litigation. It has not yet filed a response because not all the parties named in the lawsuit have been served, he said. The suit also names bank executives Gary Petak, Bret Duston and Anthony Codori.
Cook took out two loans totaling $6 million on the property. Under the June 8 agreement, the bank agreed to increase one of the loans by $2.5 million. The deal was essential to Cook’s plan to develop and sell the property to fully pay off the loans, according to the lawsuit.
In exchange for the renewals and increase in loans, Cook paid the bank $155,378 to bring current all interest due.
The bank “misrepresented to Mr. Cook and Lumberyards that it would renew and increase the Bank loans in order to obtain the $155,378.01 by false pretenses, thereby allowing the Bank to present a false picture of its financial standing and condition to the OTS,” the lawsuit states.
The bank in recent months has had some success in efforts to recapitalize.
In October, three outside investors said they would inject $103 million in capital into the bank. Affiliates of private-equity funds Lovell Minnick Partners and Oak Hill Capital Management plan to invest $47 million each by buying 117.5 million shares of United Western common stock at a price of 40 cents per share.
Additionally, Ric Duques, former chairman and chief executive of First Data Corp., committed to purchase 22.5 million shares for $9 million.
The investments require United Western to raise another $97 million in a private placement. It must also complete the purchase announced in June of Legent Clearing, a company Duques controls.
Margaret Jackson: 303-954-1473 or email@example.com