Wells Fargo denies wrongdoing in foreclosing on land near McCarran

By Steve Green

Published Wednesday, Oct. 27, 2010 | 2:20 p.m.

Updated Wednesday, Oct. 27, 2010 | 5:01 p.m.

Wells Fargo Bank officials have denied they wrongfully foreclosed on Las Vegas land planned for a massive hotel-casino and condominium project, saying the charges are "complete and utter fabrications."

In a May 11 lawsuit filed in Clark County District Court, Miami-based Alkimya Investment LLC and Alkimya Addition LLC charged that Wells Fargo and BankAtlantic deceived Alkimya into thinking they wouldn't foreclose on land at about 300 E. Tropicana Avenue at Deckow Lane, across the street from McCarran International Airport, and then went ahead with the foreclosure anyway.

Alkimya had proposed for that site a 1,300-room hotel-casino and four high-rise condominium towers with 5,000 units, along with a convention center and shopping and office center.

The developer of the project and the head of Alkimya is Masoud Shojaee, head of a major homebuilding company in Southern Florida called Shoma Development Corp., and who says he has developed thousands of residential housing units, three office buildings and retail developments.

The suit says that Wachovia Bank and BankAtlantic had loaned Alkimya $80 million in 2005 and that Wachovia had planned to provide additional advances and consented to several extensions on the loan.

But after acquiring Wachovia in 2008, Wells Fargo "planned to use the Alkimya property as a vehicle to generate quick profits through liquidation as part of an overall plan to cover Wells Fargo's disastrous losses on its own loans and investments" and that Wells Fargo concealed from Alkimya a "secret plan to liquidate the Alkimya property," the lawsuit charges.

Such a liquidation would be profitable for Wells Fargo, the suit says, because the property was appraised at $293.4 million in November 2009 with just $69 million in debt against it.

The suit charges that Wells Fargo promised to refinance, renew or extend the loan after it matured and induced Alkimya into making continued interest payments totaling $697,000 before Wells Fargo executive Bruce Perrine told Alkimya it could stop making interest payments while the loan was being renewed and worked out.

In court papers, Shojaee said Perrine's title is regional manager-Florida of Wells Fargo's Homebuilder Banking Group and that Perrine has been "our leading loan representative for many years."

"In reality, Wells Fargo told the Alkimya borrowers that they could stop making interest payments in order to manufacture a default and create the appearance that the loan was no longer current, thereby creating what would appear to be a legitimate cover for Wells Fargo's secret plan not to renew the loan," the suit charges.

The charges were backed up by affidavits submitted by Shojaee and Tania Martin, chief financial officer of Alkimya.

Attorneys for Wells Fargo, which managed to foreclose on the land last month despite the lawsuit, said in court papers none of that is true.

"This lawsuit is the kind that has become all too familiar in the Eighth Judicial District Court (for Clark County) in recent years. A bank loans money to a developer. The developer defaults due to the economy crumbling beneath him. The bank schedules a foreclosure or pursues a deficiency judgment after foreclosure. The developer sues or files a 'kitchen sink' counterclaim, claiming the bank is somehow responsible for the default on the loan. 'How dare the bank loan me millions of dollars that I cannot repay?' Or so the developer claims," Wells Fargo's court response said.

"The purpose of such a tactic is as transparent as it is wrong -- the developer is seeking to delay the inevitable foreclosure, or the inevitable deficiency judgment, by asserting meritless claims before the court. This is one of those cases," said the response, filed by attorneys Patrick Reilly and Lance Earl of the Las Vegas office of the law firm Holland & Hart.

Their response said Wells Fargo gave Alkimya chance after chance to bring the loan current, but with the last payment received in December 2009, the loan was in default and $70.3 million was due this summer -- on top of $664,000 in allegedly unpaid property taxes.

And Perrine, identified by Wells Fargo as a Wells Fargo senior vice president, said in a court declaration: "At no time on behalf of Wells Fargo did I ever agree that the borrower could stop making interest payments on the indebtedness as part of any renewal and workout plan. The statements to that effect in the affidavits submitted by Mr. Shojaee and Ms. Martin are false."

"Shojaee and Martin also claim in their affidavits that the purpose of my statement was to 'manufacture a default and create the appearance that the loan was no longer current, thereby creating what would appear to be a legitimate cover for Wells Fargo's secret plan not to renew the loan in violation of its prior promises which had induced the Alkimya borrowers to pay interest.' Those statements are complete and utter fabrications. The obligations owed by the borrowers to Wells Fargo ... matured in August 2009 and have never been extended."

The lawsuit remains active despite the completed foreclosure with Alkimya continuing to pursue fraud and breach of contract claims against Wells Fargo.

One of the Alkimya attorneys, Michael Mushkin, said that in August as part of the lawsuit, Alkimya dropped a request for an injunction that would have stopped the foreclosure.

He said that was after its expert concluded "the damage was done" -- that is, Alkimya had no hope of selling the land to pay off the loan or of gaining financing to put the project back on track.