published Thursday, July 21st, 2011

U.S. Rep. Tom Graves' attorney: Bank was at fault

by Andy Johns
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U.S. Rep. Tom Graves' attorney says the disputed loan agreement between his client and a Northwest Georgia bank is not valid because the bank should have known the Georgia congressman couldn't repay the money and it cut the lawmaker some slack when his company couldn't make payments.

In court documents, attorney Simon Bloom contends Bartow County Bank never should have issued Graves and his business partner a loan, citing statements in a deposition in which a bank official admitted knowing the partners did not have the money to guarantee the loan.

Graves and state Senate Majority Leader Chip Rogers, R-Woodstock, took out a loan to go into the hotel business, running the Oglethorpe Inn off Interstate 75 in Calhoun. They were sued by the bank in January 2010, with the suit alleging that Graves' and Rogers' motel and hospitality company defaulted on a loan for $2.25 million.

The two filed a counterclaim in March 2010 stating that the bank had allowed Tich Hospitality to refinance the loan in November 2009, but then went back on its word. Documents indicate Tich Hospitality missed payments from June 4, 2009, until the bank formally declared default that December.

In the recent legal filings, Bartow County Bank's attorney said the default claim was based on Graves and Rogers selling the company without telling the lender. A hearing for summary judgment has been set for Aug. 11, but similar hearings in the past have been canceled.

Graves and bank attorney Edward Hine both declined to comment on the story Friday, in keeping with their practice of not doing so throughout the proceedings.

Bloom did not return messages, but in the court documents he says the bank is "simply wasting the court's time and resources in attempting to enforce personal guaranties against individuals it clearly knows to be unable to perform under those guaranties."

He argues that, based on legal precedents, if the loan is based on personal guarantees banks must ensure the borrowers are capable of repaying the money before agreeing on a loan. He argues the agreement never was valid to begin with because the bank knew that Rogers and Graves, a champion of fiscal responsibility in Washington, could not back up their personal guarantees. Bloom quotes the deposition from bank Vice President Alan Black in which Black acknowledges "I knew that they didn't have $2.2 million, no."

Bloom also contends that the bank's decision to let Graves and Rogers go a few weeks without paying on the loan constitutes a change of the terms and invalidates the agreement. After they missed their first payment, bank officials were lenient in letting them pay later. It was only after about five months of missed payments that the bank declared the account in default.

"If a party to a contract knows that the other party defaulted but does nothing to enforce the default, then the party's failure to enforce the default may waive the default," Bloom wrote.

Attorneys with Bartow County Bank assert Graves and Rogers defaulted on the loan when they sold Tich on Nov. 23, 2009, without notifying the bank. The loan documents required the borrowers to get written consent from the bank before selling the company, which gave the bank reason to declare a default, according to the filings.

In his deposition, Black said he and Graves spoke about the loan on Nov. 30 and Graves failed to mention that he and his partner had sold their interest in the company.

But in Black's deposition, he also said he talked to the bank president between Nov. 23 and Dec. 4 and was told the bank would not do the refinancing without more collateral from Graves and Rogers. Black says he and Graves spoke on Nov. 30 and Graves said neither he nor Rogers would be putting up any more collateral.

about Andy Johns...

Andy began working at the Times Free Press in July 2008 as a general assignment reporter before focusing on Northwest Georgia and Georgia politics in May of 2009. Before coming to the Times Free Press, Andy worked for the Anniston Star, the Rome News Tribune and the Campus Carrier at Berry College, where he graduated with a communications degree in 2006. He is pursuing a master’s degree in business administration at the University of Tennessee ...

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nucanuck said...

Why should a Congressman have to repay a business loan? Just because he signed a personal guarantee doesn't mean he really meant to give the bank any of HIS money.

Congressman Graves is one our fiscal conservatives in Washington, looking after the nations business.

No wonder this elevator is going down.

July 21, 2011 at 2:17 a.m.
politics said...

My question to the attorney would be did your client and his partner "KNOW" that they could not pay the money back. Is that theft by taking?

July 21, 2011 at 12:01 p.m.
nucanuck said...

A personal guarantee does not necessarily mean that a borrower can repay a loan, only that the borrower is willing to give up any assets he may have should he be unable to repay the original loan. The lender gets the mortgaged property back PLUS the borrower's personal assets up to the total of the loan deficiency.

Why does Graves have a leg to stand on? Why hasn't the judge laughed Graves and his attorney out of court?

July 21, 2011 at 12:46 p.m.
billevelyn said...

If this is the best defense his attorney can muster, he is in big trouble. I hope their not paying the lawyer for this defense.

July 25, 2011 at 5:47 a.m.
Leaf said...

How can someone who doesn't accept responsibility for his personal finances be trusted with the Nation's business? I feel revulsion for this smarmy sea lawyer.

July 25, 2011 at 11:13 a.m.
cartecay said...

I just returned from a visit to Rep. Graves' office in Dalton and his staffer told me that the reason Rep. Graves defaulted on the loan was because of this bad economy. Later, he told me that the reason the economy is in such bad shape is because banks were loaning money to folks who couldn't pay it back. Quite a circular argument there.

July 26, 2011 at 2:55 p.m.
onetinsoldier said...

Tom Graves latest crime is conspiracy, extortion,and treason. I'm curious to hear this Simon Blooms explanation of these crimes. It probably goes like this; The people of the 9th district never should have trusted this idiot to represent them in the first place so my client isn't responsible.

July 29, 2011 at 2:03 p.m.
kennybrown said...

Da Lawya sez that by signing the personal guarantee He has "skin in the game" DUH! Where did He get his Law Lic.- from a Cracker-Jack Box. To have "Skin in the game" you have to have $Money/down invested or something at stake to lose. And He had NONE, Nothing, NADA ! It appears that He Mortaged-out, i.e. borrowed more than the property was worth, exactly what he campaigned against. How do you spell: H Y P O C R I T E ? Remind me when He comes up for Re-election

September 20, 2011 at 5:15 p.m.
VictoriaSA said...

Personal guarantees should never have been made when such huge sums of money are being dealt with. When it comes to business, everything has to be in black and white, and if the congressman had sold the interest in the business without notifying the bank, then he was at fault as well.

Simon -

May 23, 2012 at 5:10 a.m.
Brandon7 said...

He can't even take care of his personal finances, what is there left to say about the US nation then? If you ever decide to take a loan, you must be sure you can pay evrything back. Have a few back up plans before apllying for somthing like that. Brandon:

September 18, 2012 at 7:59 a.m.
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