A West Coast lender is suing Barnett Banks, which it claims defrauded it in a complex conspiracy that involved payoffs to bank officials.
Lawyers for Portland, Ore.-based Pacific Harbor Capital said Barnett Bank of Lee County, Fla., lent money to customers who were engaged in drug trafficking and money laundering and then involved Pacific Harbor.
Barnett Bank of Lee County was rolled into Barnett's lead bank last year.
In the late 1980s, Pacific Harbor participated with Barnett in financing a Fort Myers, Fla., country club and housing development called Fiddlesticks. The lawsuit alleges that Barnett officials misled Pacific Harbor about many aspects of the deal. Pacific Harbor lost money but the Barnett officials were rewarded with cash and property, the suit claims.
Pacific Harbor is seeking $13.2 million in compensatory damages and $25 million in punitive damages in the suit, filed in February in U.S. District Court in Portland, Ore.
In recent years the Fort Myers area has been rocked by scandals involving prominent businesspeople, land deals, drug smuggling, and money laundering. Some Barnett customers and former officials have been caught up in the criminal investigations.
Barnett said Pacific Harbor's attempt to tie criminal activities in the area to the Lee County bank's lending operations is unfounded.
Robert Puterbaugh, an attorney representing Barnett, said: "There have been so many allegations thrown out it's surprising that someone hasn't alleged that a Barnett official was in Dallas on Nov. 22, 1963, and participated in a conspiracy to kill the President."
The allegations of a criminal link are "nonsense," he added.
The Pacific Harbor case is not the first time Barnett has had to deal with conspiracy accusations. For the last few years the company has had to fend off similar allegations about its Lee County bank-allegations made by a group of investors in another Florida real estate project, called Sugarmill Springs.
A series of favorable court rulings, including one last month, rejected most of the allegations against Barnett in the Sugarmill case. But many similar accusations resurfaced in the Fiddlesticks suit.
Last week Barnett filed a motion to dismiss the suit; a decision is expected in the next few months.
The Fiddlesticks suit claims that Steven G. Zahorian, former chief executive officer of the Lee County unit, and David T. Fryzel, who was a lending officer there, knowingly allowed the developer and a lawyer whose brother was a Barnett board member to misappropriate proceeds of the Pacific Harbor loan.
In exchange the bank officials got home sites at deeply discounted prices, the suit alleges.
It points out that Fiddlesticks developer John Santini was convicted of fraud in 1995 and has admitted to diverting $1.5 million of the Pacific Harbor loan to himself.
"They stole our money," said Jeremy D. Weinstein, a California attorney representing Pacific Harbor.
Neither Mr. Zahorian nor Mr. Fryzel works for Barnett now, but Barnett denies they engaged in any wrongdoing, said Mr. Puterbaugh. Moreover, the bank itself did not benefit, but rather lost about $700,000 on Fiddlesticks, Mr. Puterbaugh said.