FDIC takes over lawsuit about Rubashkin finances
BGRGI | Quote | Chart | News | PowerRating -- The U.S. Federal Insurance Deposit Corp. is taking over a lawsuit filed against people who ran troubled meat packer Agriprocessors in connection with a loan made by a failed bank.
Omni National Bank of Georgia had loaned $300,000 to Nevel Properties in November 2007.
Nevel Properties is a rental business in Postville run by former Agriprocessors executive Sholom Rubashkin and Tzvi Rubashkin.
Aaron Rubashkin of Brooklyn, N.Y., who was president of Agriprocessors, also signed the promissory note.
Nevel Properties filed for Chapter 11 bankruptcy March 2, 2009, claiming less than $50,000 in assets and more than $1 million in liabilities. This included more than $30,000 owed to energy companies and $14,000 owed to Postville's water department.
Omni National filed a suit against the three Rubashkins on March 10 in Allamakee County District Court claiming a balance due of $332,173.
But later that same month, the U.S. Office of the Comptroller of Currency shut down the bank.
OCC officials said they acted because they found Omni National's assets and earnings dissipated "due to unsafe and unsound practices." The bank had depleted most of its capital, and there was no reasonable chance it could have recovered without federal assistance, OCC officials said.
The FDIC was appointed as receiver for Omni National, and on June 24 the FDIC filed papers to become the plaintiff in the bank's suit against the three Rubashkins. It was refiled in U.S. District Court in Cedar Rapids.
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