FDIC Accuses Akerman Law Firm Of Failing To Protect A Failed Bank

By Donna Gehrke-White, Sun Sentinel

June 27--The Federal Deposit Insurance Corp. has accused a top South Florida law firm of negligently representing failed Peninsula Bank, which has branches in the region.

In a federal lawsuit, the FDIC alleges that Akerman Senterfitt and two of its leaders, including Drake M. Batchelder, former managing director of the firm's Fort Lauderdale office, failed to secure more than $4.6 million in real estate collateral that could have helped offset a $7 million bank loan loss.

When a real estate trust company defaulted on the loan, Peninsula "was unable to foreclose on the property" because Akerman didn't have it in writing that the bank had a claim to the land, the FDIC lawsuit says.

Ben Hill, Akerman's attorney, denied the charges and said he would vigorously defend Akerman, one of Florida's largest law firms.

"We just got the lawsuit," Hill said, "but after reading it, we disagree with the FDIC." The law firm acted properly, he said.

Batchelder retired some time ago from Akerman, Hill said. He is now living in the St. Augustine area, where he is trying a second career as a sales associate for a real estate company. Batchelder did not return a phone call from the Sun Sentinel.

Bank analyst Ken Thomas, who is based in South Florida, questioned why the FDIC, an independent agency set up by Congress to insure bank deposits, is pursuing the lawsuit.

The FDIC goes after deep pockets to help recoup losses from bank closings, he said, but the $4.6 million that the agency alleges the law firm lost for Peninsula is less than 3 percent of the bank's total losses, Thomas said.

FDIC spokesman David Barr said he knew of no other lawsuits to recoup Peninsula losses.

The bank ultimately lost about $195 million, and regulators should have closed it much sooner to avoid such a large loss, said Thomas.

Thomas said that more than 40 percent of Peninsula's loans were non-paying three months before the Florida Division of Financial Institutions took over Peninsula in June 2010 and appointed the FDIC as receiver.

"At 20 percent, most banks are taken over," he said. "It's outrageous they waited so long."

Tiffany Vause, spokeswoman for the state regulatory agency, said Wednesday that she needed to research more before she could comment.

Florida had 29 bank closings to lead the nation in 2010, when Peninsula was one of several that were turned over to the FDIC. Peninsula had 13 bank branches in southern Florida when it closed three years ago, including five in Palm Beach County and one each in Broward and Miami-Dade counties.

An FDIC audit blamed Peninsula's leaders for the bank's closing.

"Peninsula failed primarily because its Board of Directors and management did not effectively manage the risks associated with the institution's rapid growth from 2003 to 2006 that led to a heavy concentration" of commercial and developers' real estate loans, the audit said.

In 2007, bank leaders retained Akerman to help protect the bank from a possible loss when it entered into negotiations with North Bay Village Investment Trust. Akerman lawyers were supposed to obtain real estate collateral for the North Bay deal to go through, according to the FDIC lawsuit.

"However, Defendants negligently failed to secure the Bank's interest in the real estate collateral, and when North Bay defaulted [in 2009], Peninsula was unable to foreclose on the property," the FDIC lawsuit says. "The value of the property at the time of North Bay's default was at least $4.6 million."

Hill, the attorney for Akerman, said the law firm looked after the bank's interests and was not negligent.

Meanwhile, Peninsula's finances continued to deteriorate, and in 2010 regulators stepped in.

Staff researcher Barbara Hijeck contributed to this report.

[email protected], 954-356-4404 or Twitter @donnagehrke

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Source:	McClatchy-Tribune Information Services
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