TD Bank Sues Family of Deceased D.C. Lawyer for Fraud - The BLT ...

Several months after longtime Washington real estate lawyer Frank Pearl died of lung cancer, TD Bank, N.A. has filed a lawsuit against his widow, claiming Pearl engaged in a host of fraudulent transactions before his death totalling more than $16 million.

Pearl, according to the complaint (PDF) filed yesterday in U.S. District Court for the District of Columbia, practiced "sophisticated-commercial-real-estate law and finance" in Washington. Beginning in the 1990s, he ran his own private equity and finance group, known as the Perseus Group.

TD Bank accused Pearl of fraudulently convincing the bank to extend his credit by listing assets that weren't actually in his name. Those assets, which he held jointly with his wife, became out of reach to his creditors after he died, according to the complaint.

According to the complaint, Pearl asked TD Bank a few months before his death in May to restructure his credit line. Instead of having Perseus as the borrower, the credit line would be for a separate holding company instead. At the time, TD Bank claimed that Pearl said he wanted to make the change to avoid having to make his financial statement public under the then-newly-enacted Dodd Frank Act. The bank alleged that Pearl actually wanted to make the change to create a buffer between Perseus and creditors.

After Pearl's death, TD Bank alleged that it found out that a number of assets Pearl had claimed to hold individually as part of his guarantee against the loans, including antiques and art work worth $65 million and several pieces of property, were actually owned together with his wife, Geryl Pearl.

The bank claimed it only learned then that Frank Pearl had created a trust, of which his wife was the sole beneficiary, which conveyed ownership of his interests in private equity funds and other property. The transfer of assets to the trust after Pearl's death "because so far perfected that a creditor on a simple contract could not acquire a judicial lien that would be superior to the interests" of the trust, TD Bank alleged.

TD Bank claims that had it known this information, it wouldn't have made the loans it did to Frank Pearl. According to the complaint, Frank Pearl created the trust about two months before he secured a $16 million extension of credit from TD Bank.

Lead counsel for TD Bank, Lawrence Gehbardt of Gebhardt & Smith in Baltimore, could not be reached today for comment. Geryl Pearl did not have counsel listed as of today and contact information for her could not be located.

Source: http://legaltimes.typepad.com/blt/2012/08/td-bank-sues-family-of-deceased-dc-lawyer-for-fraud.html

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