Photo: Flickr via jswieringa
Moses “Mark” Stern, a 37-year-old commercial real estate investor, made a promise to Citi back in 2007.He personally guaranteed Citi’s $126 million loan, which the bank gave him to purchase 11 shopping malls in the U.S. southeast.
Now the deal is dead and Stern is broke. He’s filed for bankruptcy and filed a lawsuit against Citi for “manufacturing three non-financial defaults,” which he claims pushed him to the point of bankruptcy.
But Citi seems to think they’re getting the $126 million back. They told Forbes it “looks forward to enforcing that judgment.”
They’ve brought Stern to court twice to enforce the personal guarantees he made three years ago, even though he told Forbes there’s no way he can pay back the $126 million today.
There’s also some question about how the loan was made. Apparently it was also personally guaranteed by a man named Josh Safrin, who says his signature was forged on the loan documents.
And the escrow agent, Ephraim Frenkel, who was also invovled in the deal, apparently claimed he had $26.5 million in escrow, which would have been collaterol for the loan, but it never existed. The most that he ever held in escrow was $13 million, and it doesn’t sound like it was there for long.
So really, this just looks like Citi not doing sufficient research on who they gave a $126 million – personally guaranteed – loan to. And thanks to their insisting that he give still give them the money back, when he’s most likely got only a small fraction of it (click here to see his bankruptcy filing), it looks like they still aren’t doing enough research on the situation.