Magazine article American Banker

FDIC Chases $73M, Pushed by Eco Group

Magazine article American Banker

FDIC Chases $73M, Pushed by Eco Group

Article excerpt

An environmental group in Austin, Tex., wants its pound of flesh from a local developer and is asking the Federal Deposit Insurance Corp. to mete out the punishment.

The case is a convoluted tale that involves real estate loans gone bad, a savings and loan gone bust in the 1980s amid fraud allegations, and a developer who seeks shelter from the FDIC in bankruptcy court.

It sounds like a story that has been played out many times, but the case is more notable than most FDIC duels because of the amount of money the agency seeks from a single borrower, the developer Gary Bradley.

Mr. Bradley filed for personal bankruptcy in July. His biggest creditors are the FDIC and the Internal Revenue Service. According to a May 1995 opinion issued by Judge Lynn Hughes of the U.S. District Court for the Southern District of Texas in Houston, Mr. Bradley and a former business associate, James Gressett, owe the FDIC $52 million for loans made by the failed Gibraltar Savings Association that they personally secured and defaulted on.

With interest, the FDIC says, the debt has climbed to $73.5 million.

Mr. Bradley and Mr. Gressett appealed all the way to the U.S. Supreme Court and lost.

Gibraltar's assets went into FDIC receivership and some were assigned to First Texas Bank, which later became First Gibraltar Bank, then First Madison Bank, and then First Nationwide Bank.

In 1985 the two men secured more than $100 million of loans from Gibraltar, ostensibly for their Circle C Development Corp., then received an additional $15 million personal loan. They defaulted on the loans in 1988, the same year the thrift failed.

The partners had personally guaranteed a portion of the money that was supposed to develop the Circle C Ranch -- at the time a large, open tract of land southwest of downtown Austin.

That is where the environmentalists, Save Our Springs Alliance, enter the stage. …

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