Four luxury resorts suing Credit Suisse for $24 billion in damages claim a portion of the capital used in its “predatory lending practices” came from illegal business dealings with the Iranian government.
The accusation, contained within a U.S. court document obtained by Guardian Business, details how Credit Suisse “acquired huge fees, cash and profits from Iran and other prohibited nations” between 2003 and 2008. The multinational, according to the courts, deliberately stripped identifying information from wire transfers in excess of $1 billion from Iranian banks seeking to purchase technology in U.S. dollars.
Credit Suisse pleaded guilty to the charges in 2009 for violating the International Emergency Economic Powers Act. But some of the money it made from the transactions, the plaintiffs claim, was invested in Ginn Sur Mer to facilitate a foreclosure and subsequent takeover.
“This scheme enabled Credit Suisse to increase its capital and lending capability by illegal means and invest a portion of its illegal proceeds and profits to make loans to others, including the named resorts herein,” the U.S. court document reads.
The court document goes on to allege some of the clients in the wire transfer scheme included members of Iran’s Atomic Energy Commission, which is purportedly linked with the country’s nuclear weapons program.
Ginn Sur Mer, the only plaintiff not located in the U.S., was allegedly the victim of the multinational’s “loan to own” scheme that brought about its foreclosure in 2008.
Investors in the $4.9 billion “mega mix” resort in Grand Bahama, comprising hundreds of homes, golf courses, condo units and an impressive list of services and amenities, insist they were induced to borrow “unreasonably excessive amounts” based on inflated valuations.
Credit Suisse, the document said, subsequently charged tens of millions in “exorbitant” loan fees which eventually caused the project to become financially insolvent and fail.
In 2008, Ginn Sur Mer and its subsidiary development defaulted on loans it took on after mortgaging the land to the tune of $275,750,000 in favor of Ginn-LA Conduit Lenders Inc. These rights were transferred to Credit Suisse.
Credit Suisse insists that the charges, including racketeering, fraud, negligent misrepresentation, breach of fiduciary duty and conspiracy, are baseless.
The plaintiffs allege Credit Suisse targeted certain master-planned residential and recreational developments, such as Ginn Mur Mer, with new-found capital in an effort to take advantage of the hot property market “in and about 2004”.
“Concurrently with defendant Credit Suisse’ scheme to evade U.S. economic sanctions, and with the intent of expanding its presence in the ‘hot’ U.S. real estate market as a means of generating hundreds of millions of dollars in excessive loan fees for its operators, Credit Suisse devised and planned what is herein referred to as the defendants’ ‘Loan to Own’ scheme,” the court document stated.
In December 2009, after pleading guilty to the charges, it was widely reported that Credit Suisse forfeited $536 million to the U.S. and the New York County District Attorney’s Office. It was the largest ever entered against an entity for such violations.
The other resorts seeking $24 billion in damages during the ongoing case in the U.S. include Tamarack Resort, Yellowstone Club and Lake Las Vegas.
By Jefffrey Todd
The Nassau Guardian
