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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: shades who wrote (66069)	7/13/2006 10:57:59 PM
From: shades	Respond to of 110194

Ch 7 Trustee Sues American Business Financial Execs, Banks (dump the trash on suckers eh? - the american way? Billions turned into 5 million - hehe - poor grandma millie) PHILADELPHIA (Dow Jones)--The Chapter 7 trustee overseeing the bankruptcy of American Business Financial Services Inc. on Thursday filed suit against the company's former leaders and its banks. Papers filed in Philadelphia's Court of Common Pleas by trustee George L. Miller name as defendants American Business Financial founder Anthony J. Santilli, his wife, Beverly Santilli, and other leaders of the defunct mortgage lending operation. American Business Financial filed for bankruptcy last year in Delaware, owing roughly $490 million to about 22,000 individual noteholders. Also on the roster of defendants in the lawsuit filed Thursday are major financial institutions that Miller alleges aided and assisted the Santillis in "an artifice and scheme to conceal staggering losses and continue the illusion that ABFS was a financially viable company." U.S. Bank, JP Morgan Chase Bank, Credit Suisse First Boston, Bear Stearns & Co. and Morgan Stanley & Co. are accused in the suit of profiting from American Business Financial, at the expense of creditors. Representatives of most of those sued were not immediately available to comment on the lawsuit. "I haven't seen the lawsuit, so we decline to comment on it," JPMorgan spokesman Tom Kelly said. Ch 7 Trustee Sues American Business Fincl Execs, Banks -2- . Attorneys by the dozens swarmed around American Business Financial's bankruptcy case when it was first filed as a Chapter 11 reorganization effort. Most of them disappeared once the case ran out of cash and was converted to a Chapter 7 bankruptcy. (BWAHAHA - the sharks come and go) Little remains of the billions in mortgage loans originated by American Business Financial. Most of the company's remaining financial assets, complex instruments hooked to loan securitization deals, were sold recently for about $5 million. Most of that money will go to pay off Greenwich Capital Financial Products Inc., the Royal Bank of Scotland unit that was American Business Financial's largest financial backer in its last desperate year. The court-appointed trustee, Miller, with the aid of a few law firms, is charged with pursuing litigation that could produce some cash for American Business Financial's noteholders and other creditors. According to the complaint, many waiting to be paid are elderly people who invested their life savings in American Business Financial, a Philadelphia-based operation that sold stock on the public market and filed regular statements with the Securities and Exchange Commission. The lawsuit alleges that American Business Financial booked more than $500 million of fictitious gains in order to preserve the appearance of financial health. According to the complaint, while the company foundered in secret, its top executives "used ABFS as the Santilli family bank." Anthony and Beverly Santilli are alleged in the complaint to have charged personal expenses to the company and taken unjustified bonuses and dividends. Ch 7 Trustee Sues American Business Fincl Execs, Banks -3- . The investment banks were sued for their role in "providing financial cover and credibility" for American Business Financial. A federal judge in Philadelphia has before him a motion to dismiss a class-action lawsuit brought on behalf of the noteholders. Thursday's state court action is aimed at taking the case to a jury in Philadelphia, not far from the building where American Business Financial Services, with the aid of tax breaks from the city, set up shop. -By Peg Brickley, Dow Jones Newswires; 302-521-2266; peg.brickley@dowjones.com (END) Dow Jones Newswires July 13, 2006 17:22 ET (21:22 GMT)