Tea Party Rep: Bank Should Have Known I Wouldn't Be Able To Repay $2.2 Million Loan
Jillian Rayfield | August 11, 2011, 10:01AM
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Tea Party aligned Georgia Rep. Tom Graves (R), who castigates Washington for fiscal irresponsibility, reached an out of court settlement Wednesday after he was sued for defaulting on a $2.2 million loan -- which his attorney argued is the bank's fault for lending him the money in the first place.
Graves and his business partner Chip Rogers -- who is the state Senate's Republican majority leader -- took out a $2.2 million loan from the Bartow County Bank in 2007 to buy and renovate a local motel. The project soon went belly-up.
The bank, which has since failed and had its assets taken over, sued Graves and Rogers for defaulting. The two Republicans then countersued, "accusing [the bank] of improperly declaring the loan in default after reneging on a promise to refinance it at more favorable terms," according to Jeremy Redmon and Aaron Gould Sheinin of the Atlanta Journal-Constitution .
In June, Simon Bloom, the attorney for Graves and Rogers, argued in a court filing that the default was the bank's fault because it lent the pair the money knowing full well they couldn't pay. Bloom cited a deposition in which bank officials saw Graves and Rogers' financial records, and then had them sign personal guarantees so they'd "'have some skin in the game' presumably meaning a sense of personal obligation for the debts ... even though they clearly could not fulfill the obligation." Graves and Rogers said they were unaware of that particular filing.
The case was settled out of court on Wednesday, and a Graves spokesman called the case "fully resolved in an equitable and fair manner."
Graves and Rogers bought the motel through a limited-liability company, which they transferred to John Edens in 2009. They say that as a result they're not responsible for the loan repayments -- or for the $41,500 in unpaid taxes, penalties and interest owed the town and county for the motel. The AJC reports that Edens fell behind on electricity payments and had to shut the motel down. He then stripped it of anything of value.
The city says the abandoned site has become a nuisance, and estimates it would cost $100,000 of taxpayer money to tear it down.
Graves, who won a special election in 2010 to replace Rep. Nathan Deal (R), voted against the House bill to raise the debt ceiling on August 1st. TPM readers will also remember Graves' dire warnings about President Obama's mechanical "autopen" that he feared could one day be used to sign phony legislation. |
