The gloves are off in the Perkins Rowe foreclosure lawsuit, more than 15 months after proceedings were initiated against the project’s developer, Tommy Spinosa. KeyBank National Association, which heads the consortium of banks that lent Spinosa $170 million for the mixed-use development, filed documents late Wednesday in federal court alleging that KeyBank has “unearthed some troubling facts” suggestive of “mismanagement (at the very least) and fraud (at the worst).” Throughout the foreclosure proceedings, the bank has tried, unsuccessfully, to gain access to Spinosa’s financial records. Previously, it alleged Spinosa was merely stalling. Now, it’s suggesting something more malign.
Specifically, the new filing cites a contract between Spinosa and MBD Construction, which built part of Perkins Rowe, as evidence of “wrongdoing.” The documents allege Spinosa did not disclose to KeyBank one of three contracts he had with MBD Construction to build Blocks M and N. “This contract bound Borrower to an additional $2 million liability regarding Block N, which Borrower had not revealed to KeyBank,” the documents allege. The documents go on to claim that the result of the deception “was to understate the budget for the loan by at least $2 million,” information the bank says it would have needed to make a lending decision regarding Perkins Rowe. Mark Beebe, Spinosa’s attorney, released a statement saying that KeyBank was deflecting its own negligence. “The Perkins Rowe companies and Tommy Spinosa unequivocally deny that there was any fraud relating to Perkins Rowe or any other project for that matter,” he says. “What has become more evident as the litigation has progressed is that KeyBank is attempting to hide its defalcations and inappropriate loan administration, which gave rise to considerable damage to the Perkins Rowe project and to the defendants.” Read the full story here. —Stephanie Riegel
