Ginn Fraud Charge Upheld
A U.S. judge has denied requests by Credit Suisse and Cushman & Wakefield to dismiss fraud charges made by a former investor in the Ginn Sur Mer development.
In a recent court document obtained exclusively by Guardian Business, Judge Ronald E. Bush offered a “report and recommendations” concerning the high-profile case involving four resorts seeking billions in damages.
The defendants claim Credit Suisse and Cushman & Wakefield engaged in “predatory lending practices” that caused these developments to collapse. Through a “loan to own” scheme, Credit Suisse and Cushman & Wakefield artificially inflated the value of the resort projects and induced investors to borrow “unreasonably excessive amounts”, according to court documents.
Credit Suisse allegedly charged tens of millions in “exorbitant” loan fees which caused the projects to become financially insolvent and fail.
One of the plaintiffs in the case, L.J. Gibson, was an investor and property owner in Ginn Sur Mer.
According to the court document, the plaintiff class “is so numerous that joinder of all members is impracticable”.
Therefore, the plaintiffs, with approval from the court, proposed separate funds to be created for stakeholders in the four luxury resorts allegedly victimized by the bank.
In this most recent court document, filed on February 17, the judge offered a mix bag of rulings on various Motions to Dismiss by Credit Suisse and Cushman & Wakefield.
In the case of L.J. Gibson and Ginn Sur Mer, the judge opted to not dismiss both the fraud and negligent misrepresentation claim. Likewise, breach of fiduciary duty was also not dismissed, Judge Bush ruled, as well as the tortious interference with contractual relations claim.
“The point here is not to endorse plaintiffs’ breach of fiduciary duty claim against Credit Suisse but, rather, to point out that plaintiffs have stated a plausible claim at this point in the litigation,” the court read. “Whether the claim ultimately prevails remains to be seen. Therefore, it is recommended that Credit Suisse’s Motion to Dismiss be denied as to plaintiffs’ breach of fiduciary duty claim. Plaintiffs’ breach of fiduciary duty claim against Cushman & Wakefield is premised upon Credit Suisse’s alleged breaches of its own fiduciary duties to the plaintiffs – that is, by virtue of an alleged conspiracy between the two defendants.”
In the case of Cushman & Wakefield specifically, the judge also upheld the plaintiffs’ negligence and Class Allegations claims.
Comprising nearly 900 homes, two championship ocean-front golf courses, 4,400 condominium hotel units, two marinas and a casino, a medical facility and a private airport expansion, investors allege the $4.9 billion project in Grand Bahama was on track before Credit Suisse forced it into default in 2008.
Hundreds of millions had already been invested in the venture.
In 2008, Ginn Sur Mer and its subsidiary development defaulted on loans it took on after mortgaging the land to the tune of $276,750,000 in favor of Ginn-LA Conduit Lenders Inc. These rights were transferred to Credit Suisse.
The bank insists these alleged “predatory loan practices” are baseless.
The other resorts seeking damages in the case include Tamarack Resort, Yellowstone Club and Lake Las Vegas.
By Jeffrey Todd,
The Nassau Guardian