Two former officials of Clarke County State Bank are named in a counter lawsuit that claims fraudulent misrepresentation and forgery.
Peak 8 Development filed the counter lawsuit against CCSB March 29 that claims Paul Coffelt, a loan officer at the bank's former West Des Moines loan production office, forged financial documents and misrepresented the terms of the loan the company applied for to complete Woodland Reserve, a real estate project in Ankeny.
CCSB allegedly delayed payments to the company and then foreclosed on the project after Peak 8 didn't supply an additional $135,000 in equity. The company refuses to pay the increase, stating this wasn't the amount originally agreed upon at the time the loan papers were signed.
Chris Langpaul of LaMarca & Landry, P.C., one of Peak 8 Development attorneys, said Coffelt misrepresented what the bank loan committee required for equity.
"He set (them) up to fail from the beginning," said Langpaul. "They got 80 percent complete and then they pulled the rug out from under them."
Coffelt also allegedly assured representatives of the development company they could get additional funding for the initial phase if needed above the $2.5 million already loaned. Court documents indicate a $12 million mortgage was recorded in Polk County for the entire project.
Peak 8 Development received a commitment letter from the bank saying the company was approved for an additional $500,000, which they allegedly didn't receive. This has left the first phase of the development project unfunded and unfinished, Langpaul said.
Delayed payments to the company and the unfunded $500,000 also resulted in "damaged relationships" with subcontractors. Records show the company owes more than $22,000 to subcontractors and mechanic's liens. The company now says contractors and subcontractors refuse to work for them because of unpaid work.
Peak 8 Development claims fraudulent misrepresentation because Coffelt told the company the terms of the loan were the same as the original commitment letter sent to them. The company says they later discovered the loan documents contained multiple differences from the terms promised, which resulted in the company overpaying by hundreds of thousands of dollars and the loan getting used up faster than anticipated.
Former bank president Daran Becker is accused of covering up the alleged fraudulent activities by shredding key loan documents. Court documents show Peak 8 found out about the shredded documents because company representatives requested the documents and were told the records "no longer existed" by Becker.
The destroyed documents are thought to contain evidence of forged signatures and promises made by the bank, which haven't been honored.
Court documents show Peak 8 Development hired an accountant to reconstruct their accounts, but were only able to reconstruct a portion because access was allegedly restricted by bank.
Dave Selene took over as bank president Feb. 15. Selene directed all questions to the bank's attorney Tom Flynn of Belin McCormick law firm, who didn't return a phone call.
The counterclaim also accuses Coffelt of illegally transferring funds between several accounts of CCSB and outside banks through a "complex and sophisticated system." Coffelt is said to have had an ownership interest in several of the accounts.
The counterclaim states millions of dollars were thought to be illegally transferred.
The company is suing for damages, but hasn't determined the amount they seek.
"We don't know the number, partly because the bank has the documents and some documents we believe were shredded," Langpaul said. "We simply want to be made whole."