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Chicago Bank CEO Sued for Alleged “Shaky” Loans
Wheatland Bank in Naperville, IL, which opened less than three years ago, sued its former chief executive, Michael Sykes for allegedly breach of fiduciary duty, fraud, negligence and conspiracy.
The lawsuit was filed in Cook County Circuit Court Dec. 21, 2010.
Sykes, a bank organizer and shareholder resigned as Wheatland CEO last June; Arthur Sundry, a bank shareholder who served on the board until July 1; and Edward Elsbury, a shareholder; allegedly approved commercial real estate loans they knew were shaky and then guiding those customers to another lending group that he owned.
According to a Crain’s Chicago Business report, the documents alleged that the three men co-owned a Naperville business called Mezzanine Finance LLC that made loans to commercial real estate developers at high rates. They then allegedly arranged loans from Wheatland that helped borrowers pay back the money they owned Mezzanine Finance.
The lawsuit said the three defendants “personally profited from these loans as proceeds were used to pay off mezzanine loans placed by them against the properties through their separate finance company, Mezzanine Finance LLC.” Principle officers at Wheatland didn’t know about Mezzanine’s role, the lawsuit said.
Sykes used his Wheatland desktop computer to email Mezzanine clients and others about that company’s business and did so during bank business hours, the lawsuit said.
Wheatland has about $480 million in assets, and about 30 percent of its loans are seriously delinquent. In the lawsuit, the bank is seeking compensatory and punitive damages, among other things.
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