A bank the size of Flagship National Bank is not supposed to lend more than $5 million to one customer — but that did not stop the Bradenton institution from extending $9 million to an influential Manatee County businessman.
A real estate investor and former Manatee Republican Party chairman, Paul Sharff once sat on the airport board and is a close friend of former Sheriff Charlie Wells.
Sharff received more money from Flagship than any other customer despite his past financial problems. In 1987, he filed for bankruptcy in West Virginia and listed gambling debts in court filings.
After moving to Florida, Sharff made no secret of his continued affinity for games of chance and chartered private planes to fly friends down to the Atlantis casino in the Bahamas.
When he filed for bankruptcy again in 2009, he listed $200,000 in debt to Atlantis and $190,000 to a casino in Atlantic City, N.J.
Sharff later sued Flagship and accused it of breaking the law by giving him too much money.
Sharff said the bank suggested he pretend to transfer properties to friends and relatives and take out loans in their names in order to keep borrowing above the $5 million limit.
Flagship's attorneys denied the accusations in U.S. District Court; the case was dismissed a year after it was filed.
According to federal regulators
, the loans to Sharff were not the only ones that defied safe lending standards.
The U.S. Treasury Department's Office of the Inspector General said in its May 2011 report that Flagship regularly approved loans to borrowers who were known to have severe financial weaknesses.
The report said developers got loans without having to prove they had secured enough tenants or buyers to make their projects viable.
Loans were processed "without sufficient documentation or thorough evaluation of borrowers' loan repayment abilities," the report said.