Carver Bancorp and Boston Bank of Commerce have seen their relationship go from bad to worse.

The two African-American-owned institutions have been sparring since last spring, when $107 million-asset Bank of Commerce made the first of three hostile bids for New York-based Carver.

In the latest twist, Bank of Commerce - which owns a 7% stake in Carver - sued its much larger target, accusing Carver of trying to "stuff the ballot box" for an upcoming board election. Documents filed in a Delaware court Wednesday said Bank of Commerce alleged that Carver sold two friendly investment houses an 8.25% stake to ensure the election of its nominees in the upcoming vote.

The complaint alleged that Carver's chief executive officer, Deborah C. Wright, steered roughly $1.5 million worth of super-voting preferred stock to Morgan Stanley Dean Witter & Co. and Provender Opportunities Fund LP of New York because she knew they would support Carver's candidates and reject those nominated by Bank of Commerce. Ms. Wright maintains close ties to key executives at both investment houses, the complaint said.

"This is an action to prevent … Carver from disenfranchising Carver's public stockholders by stuffing the ballot box at its upcoming annual meeting," the Bank of Commerce complaint said. "There is no question that Morgan Stanley and Provender got these shares because they are committed to supporting Wright."

The complaint also said that David Grain, a subordinate of William Lewis, the co-chief of mergers and acquisitions at Morgan Stanley, told Bank of Commerce chief executive Kevin Cohee that the investment house would "crush" Bank of Commerce if it challenged $470 million-asset Carver's nominees. These include former New York City mayor David N. Dinkins.

"On Jan. 12, Lewis' subordinate, David Grain, called Cohee and said that he was delivering a message from Lewis and from John Mack, the president and chief operating officer of Morgan Stanley Dean Witter & Co.," the complaint said. "The message was that Cohee 'had better leave Debbie [Wright] alone and not run for these board seats.' If Cohee persisted, Morgan Stanley 'would use their M&A dept. and PR firm to crush' " him.

Bank of Commerce, which has nominated two candidates for the Carver board, has been seeking to acquire the thrift since early 1999. Mr. Cohee has made no secret of his desire to establish an African-American bank with a nationwide presence, and he views Carver as a crucial launching pad.

In its complaint, the Boston bank says Carver's board has failed to deliver shareholder value and that its "dismal financial results and poor operations" make new management necessary. But in a statement this week, Carver ridiculed Bank of Commerce's claims.

"Anyone familiar with proxy contests will recognize that inflammatory litigation is a common and often desperate tactic in pursuit of votes," the statement said. It added that the investment houses' stake supplied capital for growth and that the alliances "are in the best interest of all shareholders because of the access they provide to new equity."

Morgan Stanley also blasted the suit. "We absolutely agree with Carver that the suit is baseless on its merits and outrageous on its claims," said Ray O'Rourke, a Morgan Stanley spokesman. "We absolutely stand by our employee, and moreover, we stand by the decision to invest in Carver."

Bank of Commerce, for its part, continues to assert that Carver is up to no good. Further proof of this, the company said, is that it had to sue Carver last November in order to force it to schedule an annual board meeting. Carver maintained that the meeting was delayed because Ms. Wright - who took over as CEO last year - needed more time to develop a strategy for the company.

In any event, Robert P. Cooper, senior counsel at Bank of Commerce, said the legal wrangling has more to do with communities than control of a bank. "There's a lot more at stake than two banks fighting. It's about integrity, and a broader purpose of these underserviced communities having critical institutions, and allowing these communities to develop," he said. "Boston Bank has shown we can develop these communities."

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