U.S. Rep. Tom Graves.A federal agency will decide whether to pursue a lawsuit against a North Georgia congressman after it took over the bank that had sued the legislator, claiming he defaulted on a loan.
A spokesman for the Federal Deposit Insurance Corp. said Tuesday that the agency will decide in the next 30 to 60 days whether to pursue the lawsuit originally filed by Bartow County Bank against U.S. Rep. Tom Graves, a Republican, and state Sen. Chip Rogers, R-Woodstock.
The suit, filed in January 2010, alleges that a motel and hospitality company that Graves and Rogers ran defaulted on a loan for $2.25 million. It also claims that Graves moved some of his property to a trust to make it more difficult for the bank to collect.
A counterclaim filed by Graves and Rogers in March 2010 states the bank had allowed the company, Tich Hospitalities, to refinance the loan in November 2009. The lawmakers say the bank then reneged on the agreement.
The FDIC announced Friday it had taken over Bartow County Bank and was transferring the assets to Hamilton State Bank, based in Northeast Georgia. As with most takeovers, the FDIC retained the pending lawsuits, including the one against Graves and Rogers.
FDIC spokesman Greg Hernandez said the agency now will decide whether to pursue the suit or write the loan off as a loss.
"It'll look at the merits of the suit and make a determination," Hernandez said.
In an emailed statement, Graves, who's from Gordon County, said there wasn't much he could say.
"We remain committed to working out a positive solution for all parties involved, and since this process is pending, we are still unable to discuss any details," he wrote.
Attempts to reach Graves' attorney, an attorney for Bartow County Bank and a representative for Hamilton State Bank were unsuccessful and messages were not returned.
Georgia led the nation in failed banks in 2009 and was second behind Florida on that list in 2010.
Analysts have said many of the failures were caused by banks holding too many loans in failed construction and development projects, such as the Oglethorpe Inn operated by Graves' and Rogers' Tich Hospitalities.
During the recession, many of those companies, including Tich, have been unable to pay back the banks.
The FDIC estimates seizing the bank will cost the Deposit Insurance Fund about $69.5 million.
News of the banks closure came about the time Graves' case was set to move forward.
He and Rogers gave depositions in December and the case was scheduled for summary judgment in January. Rogers' attorneys invoked a stipulation in the Georgia code that excuses state lawmakers from legal proceedings while the Legislature is in session. The session closed Thursday, the day before the FDIC took over the bank.
It's not the first time the case has reached a slowdown.
Depositions initially were scheduled for June, then August and then September 2010 while Graves was waging an election campaign. The meetings were pushed back each time during the election, and critics accused the congressman of working the system to avoid negative publicity during the campaign.
As for what happens next, Hernandez said it was "too early in the process" to say whether the FDIC would pursue the case. He said the fact that a member of Congress is involved would not affect the federal agency's decision.
"This will be treated the same way as the other lawsuits," he said.
The continuance granted for Rogers lasts for three weeks after the legislative session ends, which means proceedings could begin again on May 5.
According to court documents, Graves attorney Simon Bloom has notified court officials he will be unavailable for action on May 5 and 6 as well as May 27 to June 3.
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