Haven Trust Bank Florida is one of three banks owned and operated by Indian-American hotel magnates Mukesh "Mike" Patel and brother Rajesh, known as "RC."
All three banks failed during the recession, and the reasons were all the same: Key executives made risky loans without doing enough research on the borrowers.
Examiners also found that the bank broke the law by making loans to insiders and family members.
In July 2011, the FDIC sued the Patel brothers and other directors for their practices at a sister bank in Duluth, Ga. The suit says bankers made or renewed $175 million in risky development loans in 2008, after the economy had begun to sour.
Attorneys for the bank officials denied the claims in court; the case is pending.
The bulk of these loans, the FDIC said, were poorly vetted. The government also says the bank lent the Patels and their relatives $12 million and may have broken the law by not getting the the approval of directors and assurances that the relatives could repay.
Four of the Patels' children received lines of credit totaling $2 million, though none made more than $20,000 per year.
A separate lawsuit by bank shareholders claims that a company owned by RC Patel's children received additional loans in 2008 — some for more than $1 million. One of the loans was used to buy a custom Maserati, the suit says.
Many of the loans to Mike and RC Patel went bad and cost the bank more than $7 million.
A U.S. District Court judge dismissed the shareholder suit a year after it was filed.
Three calls left with the Patel brothers at home and business numbers were not returned over the last month.
In court documents, the brothers have denied charges against them, saying that no one — regulators included — could have foreseen the downturn that killed their banks.
Founded in August 2006, Haven Trust in Ponte Vedra Beach followed a strategy similar to its Georgia sister and participated in funding many of the same real estate development loans.
In fact, the Florida bank had so much interaction with Haven Trust in Georgia that examiners say it broke the law limiting transactions with an affiliate in 2008.
Like the Georgia bank, Haven Trust of Florida was not shy about loans to insiders.
By June 2009
, it had nearly $11 million in insider loans on its books, representing 8 percent of its entire loan portfolio; most went to Narendra Patel's family.
Members of the Patel family lost judgments totaling $3.3 million.