Daily Record Legal Affairs Writer//November 1, 2011
//Daily Record Legal Affairs Writer
//November 1, 2011
The Harbor Bank of Maryland and three of its employees have been named in a federal lawsuit on allegations of fraud and negligence over an unpaid $2.5 million loan to make a sports movie starring Martin Lawrence.
According to the lawsuit filed Monday in U.S. District Court in Baltimore, Harbor Bank and three employees lied about having $13 million in two escrow accounts. That money would have been used to pay back a short-term loan that would have gotten the film project, tentatively titled “Season Tickets” off of the ground.
“In reality, there were no escrow accounts at Harbor although Harbor made repeated misrepresentations affirming their existence,” the complaint reads.
The lawsuit was filed on behalf of Santa Monica, Calif.-based Blue Rider Finance Inc., which specializes in short-term “bridge loans” for the film industry. Bridge loans are usually used by movie producers to get the money to sign talent, which then lets them shop the project with a star, or stars, attached to secure the bulk of the financing. Blue Rider has provided financing for more than 100 movies, including “Rescue Dawn,” “Flawless” and “Children of the Corn V.”
Named in the lawsuit are three employees from Harbor Bank’s Riverdale branch. Calls to Harbor Bank CEO Joseph Haskins Jr., who is mentioned but not named individually in the lawsuit, were not returned.
Robert A. Gaumont, with Womble Carlyle Sandridge & Rice PLLC in Baltimore, who is co-counsel for Blue Rider, declined to comment on pending litigation.
According to the complaint, Blue Rider agreed to give the bridge loan to Illinois-based CityScope Productions, which was producing the estimated $13 million movie. Blue Rider said it would not have granted the bridge loan without the escrow accounts from long-term backers that would have secured their being paid back.
Blue Rider claims in the lawsuit that after it provided the bridge loan, it was to have been repaid within 45 days from the two escrow counts, which bank employees confirmed were open and had a combined $13 million. The company said after 45 days, the money was not wired to them, despite the bank saying that it had been sent. Blue Rider said a bank official later confirmed to them that the two escrow accounts did not exist.
In a related action, Blue Rider sued CityScope in state courts in California and Illinois this year and received part of the $2.5 million bridge loan back. The financer claims that it is still owed principal, interest and fees, which amounts to more than $2 million, which is what it is seeking from Harbor Bank.
Harbor Bankshares, the parent company of Harbor Bank, continues to operate under a consent order from federal regulators that required the bank to hire a qualified management team, increase board participation in bank affairs and improve capital levels.-