Citibank Says It Had No Duty to Warn Ex-Partner About Dewey Finances
Posted Sep 17, 2012 11:52 AM CST
By Martha Neil
Sued by Citibank for defaulting on a $209,000 loan he used to finance his capital contribution to Dewey & LeBoeuf, a former partner of the defunct law firm last month fired back in a federal court motion seeking summary judgment and claiming fraudulent inducement.
Citibank, ex-partner Steven Otillar contends, helped conceal the law firm's dire balance sheet as it participated in a "fraudulent scheme" to obtain funding from lateral partners to keep Dewey afloat financially, in breach of its fiduciary duty.
Now the bank is responding in a motion of its own in federal court in New York, supplementing its earlier effort to win summary judgment against Otillar. Citibank says it owed no fiduciary duty to Otillar and was hasn't been shown to have concealed anything, Reuters reports.
"Otillar offers only his speculation that because Citibank was Dewey's longtime lender, it must have had information that was unknown and unavailable to Otillar," the bank states in its Wednesday filing. But it was the partner's duty to investigate Dewey's financial situation, the bank says.
Attorney Helen Davis Chaitman, who represents Otillar, said in a Friday email to Reuters that she is "confident that Citibank's internal documents will prove our contentions." Otillar is now a partner at Akin Gump Strauss Hauer & Feld in Houston.
Attorney Michael Luskin, who represents the bank, and a Citi spokeswoman did not immediately respond to the news agency's request for comment.
Additional and related coverage:
ABAJournal.com: "Former Dewey Partner Alleges He and Others Were ‘Fraudulently Induced’ to Get Citibank Loans"
ABAJournal.com: "Former Dewey Partner’s Suit Compares Firm Leaders’ Lateral Partner Recruitment to ‘Ponzi Scheme’"
ABAJournal.com: "Defendant Dewey Leader Calls Ex-Partner’s ‘Ponzi Scheme’ Suit ‘Sad,’ Says Plaintiff Got Bigger Bucks"