Header graphic for print
Construction Law Today

FDIC Sues Georgia Lawyers For Professional Malpractice in Closing Development Loans

Posted in Construction Finance and Insolvency, FDIC & Bank Failures

Lawyer standing at an ominous corridor contemplating malpractice on the other side of a doorwayFor the first time since the S&L crisis, the FDIC is suing a failed bank’s former lawyers for professional malpractice.

The claims come against lawyers who formerly represented the now failed Neighborhood Community Bank in Newman, Georgia.  The FDIC’s complaint (PDF) alleges that the lawyers deviated from the bank’s instructions and colluded with a borrower to falsely represent disbursement of loan proceeds.  Important for those in the construction industry, each was an acquisition and development loan.

The complaint also alleges that the lawyers represented both the bank and the borrowers in various capacities at the same time, subverting the lawyers’ loyalty to the bank and violating their fiduciary duties.