RTC sues eight over First Federal lending losses

June 02, 1993|By Norris P. West | Norris P. West,Staff Writer

The Resolution Trust Corp. has filed suit against eight former directors of First Federal Savings & Loan of Annapolis, claiming that reckless lending led to $19 million in losses.

The lawsuit, filed Friday in U.S. District Court in Baltimore, charges eight counts of civil wrongdoing by thrift officials for commercial and residential loans.

The suit seeks to recover $19.1 million plus attorneys' fees from the former directors.

Named as defendants are former Presidents Thomas J. Norris, who also is a former board chairman, James B. Yates and Douglas A. Parran; former board Chairman Arnold G. Alexander; and Leroy E. Hoffberger, Elizabeth M. Meer, Thomas O. Tilghman Jr. and Thomas E. Marcos.

The charges are based on three transactions, RTC lawyers said:

* $3.5 million in losses from loans in 1987 for construction of 288 condominiums at the Bayside Marina in Kent Island. Among other things, the suit says the thrift failed to require down payments from borrowers. Only 19 condos were built.

* $6.4 million in losses from loans in 1986 to acquire and develop 43.5 acres in Forestville. A subsidiary of the thrift, Delta Financial Corp., was general partner in the project, and as part of the project was obligated to provide unsecured financing, the suit says. The project remains undeveloped.

* $9.2 million in losses from loans in 1986 to acquire and develop 58 acres of commercial land in Largo. The suit contends a bank official had warned that the area was overdeveloped at the time.

The suit says thrift officials began to get involved in large real estate joint ventures and partnerships after incorporating its Delta Financial Corp. unit

Beginning in 1983, according to the suit, First Federal expanded heavily into commercial real estate loans, although lending officers did not have enough experience with such lending.

Daniel F. Goldstein, an attorney for Ms. Meer, Mr. Marcos, Mr. Tilghman and Mr. Alexander, said the RTC was "cherry-picking" to find wrongdoing before the expiration of a three-year statute of limitations for filing a lawsuit.

"It's a reach to sue outside directors on three specific transactions out of all the transactions that have gone on during their service as director," he said.

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