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Sonoma Valley Bank Shareholders File Claim to Retrieve Assets

Say bank did not do due diligence when loaned Marin County developer more than $40 million

Sonoma Valley Bank shareholders are hoping to recover up to $20 million that was lost when the bank filed for bankruptcy last August, according to an article in Wednesday’s Press Democrat.

In an insurance claim filed this month, shareholders say bank employees did not do their due diligence when they loaned as much as $40 million to Bidjan Madjlessi, a Marin County real estate developer and previous owner of Petaluma’s .

The East Side apartme and residents complain of holes in ceilings and walls, broken windows and mold.

According to records, Madjlessi has defaulted on $35 million in loans. Claimants blame bank officers and directors for not properly checking the realtor’s background or the dozens of shell companies he created to apply for loans.

The group of shareholders also said they would file a class action lawsuit this week in Sonoma County Superior Court.

For more info, read the full article here.

Ralph Hutchinson July 02, 2011 at 07:41 AM
Insiders are ineligible to join in a Class-Action given conflicts of interest. So the largest shareholders cannot participate. The Directors Loan Committee: Chairman Downing, Switzer, Nicholas, Brangham and Sangiacomo were the voting members. Surely they approved all the Bijian relationships given the size and complexity. Melland the handling officer underwrote the loan with assistance from staff, Cutting signed off and took the deals into Committee. The last 6-12 months Regulators directed the entire Board to act as the Loan Committee having doubts on competence and to ensure there was better transparency so none of them can really claim "they didn't know." Certainly when Melland was relieved of duty in February of 2010 the entire Board was voting. Who knew what and when prior to that is under investigation. Charter Oak Bank Napa and Rabobank (fka Community Bank of Napa) both participated in parts of Bijian's toxic loans. Charter's former President was quoted in the Register saying $5 million of the $13 that failed them was originated at SVB. Rabo is big enough they wouldn't hiccup. Westamerica still fights in foreclosure and bankruptcy with the remnants of SVB forbearance fiascos.
Ralph Hutchinson July 02, 2011 at 07:42 AM
Insiders are ineligible to join in a Class-Action given conflicts of interest. So the largest shareholders cannot participate. The Directors Loan Committee: Chairman Downing, Switzer, Nicholas, Brangham and Sangiacomo were the voting members. Surely they approved all the Bijian relationships given the size and complexity. Melland the handling officer underwrote the loan with assistance from staff, Cutting signed off and took the deals into Committee. The last 6-12 months Regulators directed the entire Board to act as the Loan Committee having doubts on competence and to ensure there was better transparency so none of them can really claim "they didn't know." Certainly when Melland was relieved of duty in February of 2010 the entire Board was voting. Who knew what and when prior to that is under investigation. Charter Oak Bank Napa and Rabobank (fka Community Bank of Napa) both participated in parts of Bijian's toxic loans. Charter's former President was quoted in the Register saying $5 million of the $13 that failed them was originated at SVB. Rabo is big enough they wouldn't hiccup. Westamerica still fights in foreclosure and bankruptcy with the remnants of SVB forbearance fiascos.
Ralph Hutchinson July 02, 2011 at 07:55 AM
FDIC froze the retirement and deferred comp, and claims are being made against the remaining assets not purchased by Westamerica which include primarily a few converted offices (credit admin and ops/finance) off W Second St. The office furniture was sold at 2 FDIC online auctions last Fall and this Winter. Doesn't appear to be much of a recovery given comittments reported in the SEC reports. The Execs and Directors were not the only ones that have these funds tied up but retirees that left the company before Bijian.
Sonny Lynch July 02, 2011 at 03:36 PM
There has been no explanation for why President Cutting would sign a forbearance agreement for Bijan. That write-down kills the bank anyway. Why did he do it?
Ralph Hutchinson August 25, 2011 at 06:46 PM
Another shareholder group filed suit against Sonoma Valley Bank and the Directors and Execs personally for negligence and misrepresenting financial condition. Its not getting local coverage in Sonoma Valley Press but below is the link from the County Seat ---> http://www.pressdemocrat.com/article/20110817/BUSINESS/110819548

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