New Allegations In Obama-Rezko Linked Bank: FDIC alleges lavish spending at Mutual Bank of Harvey
Steve Bartin 31 October 2011 No Comment
[This article was syndicated via RSS from echo $source; ?>. The views represented do not necessarily represent those of the Chicago Daily Observer.]It's back in the news. The infamous Mutual Bank of Harvey that did the Rezko-Obama land deal. Crain's Chicago Business reports:
The family that owned Mutual Bank of Harvey pocketed millions in dividends, spent bank funds on a lavish wedding and held a board meeting in Monte Carlo, all as the politically wired bank careened toward failure, regulators allege.This is the same Amrish that Blago's children refer to as "Uncle Amrish". Did Blago and Obama realize they were dealing with a Chicago Mob friendly banker from Chicago's old First Ward?
The allegations come in a lawsuit filed last week against members of the Veluchamy family and other former officials at the south suburban bank, which failed in 2009 after what the Federal Deposit Insurance Corp. describes as a spree of reckless real estate lending.
The tales of excess add drama to a case already riveting local bankers and their lawyers. It's the biggest government suit against insiders at a failed local bank since the banking crisis began two years ago. The FDIC expects to suffer a $775-million hit to its insurance fund from the failure of Mutual Bank, which had $1.7 billion in assets at its peak.
On Oct. 25, the FDIC sued directors and officers of the bank, once among the Chicago area's fastest-growing. With similar suits expected over FDIC losses at some 30 other failed local banks, this one will be closely watched.
“I think they're trying to hammer these guys and really send a message,” says James Hannon, banking attorney at Gozdecki Del Giudice Americus & Farkas LLP in Chicago. “These directors could be poster children for what's to come in terms of FDIC litigation.”
The suit, filed in U.S. District Court in Chicago, seeks $130 million from members of the Veluchamy family, which owned the bank; former bank President Amrish Mahajan; the bank's former lawyer, James Regas, who also co-owned the now-failed Western Springs National Bank, four other former directors and two other former officers.