Alleged Fraud and Breach of Fiduciary Duty at Ski Resort


Alleged fraud and breach of fiduciaryThis case involves a foreclosure and subsequent counterclaim by the owner of a parcel of property at a ski resort. An appraisal of the ski resort put the valuation of the property at $21,000,000. A real estate developer decided to sell subdivisions of a property which was adjacent to a ski resort. The real estate developer owned the ski resort and planned on expanding it. The developer planned to sell each subdivision to an investor, and the investor could then decide to build a vacation structure or sell the property at a profit. The real estate developer started working with a bank, which would provide loans to the potential investors. The real estate developer sold some pieces of property but had trouble with the subdivisions that were farther from the ski resort. In order to increase sales of the unsold lots (and with the bank’s knowledge), the real estate developer stated that investors could purchase a subdivision for $4 million, and the developer would return 12% of the payment. This would enable the investor to pay the interest on their loan to the bank for two years, at which point, the property would have appreciated and the investor could sell it. The plans for expansion never progressed past the planning stages, and the bank foreclosed on certain subdivisions. The lessee counterclaimed and alleged that the bank had acted improperly.

Question(s) For Expert Witness

  • 1. Were the bank's actions unfair, unethical, or illegal?

Expert Witness Response E-004502

I would be very interested in reviewing this case. Much of the bank’s defense in this case will depend upon loan documents to include the bank’s loan approval, any subsequent modifications, and related correspondence between the bank and the real estate developer regarding the bank’s knowledge of the various matters. The bank’s involvement with the 12% rebate offer is also critical.

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