Suit says lenders preyed
Second developer alleges land grab
A Marshfield man has filed a lawsuit in US District Court accusing a top official at Commerce Bank & Trust Co. of being part of an organized crime ring - the second South Shore developer to do so.
The lawsuit filed July 1 by Bernard J. Laverty Jr. of Marshfield alleges that bank chairman David "Duddie" Massad of Westborough and nine of his associates violated the Racketeer Influenced and Corrupt Organizations Act, commonly known as RICO. Laverty's 38-page complaint describes Massad, Commerce Bank & Trust, and three Marlborough-based investment firms as an "organized crime group" that "used the threat of foreclosure and bodily harm to force the borrowers to agree to their fraudulent loan terms" and "used their position to force borrowers to pay them kickbacks."
The charges echo those in a separate suit filed in May by a Kingston real estate developer, Charles T. Sanderson III.
A status conference on Sanderson's case is scheduled for today before a federal judge in Worcester.
Sanderson's 25-page complaint accuses Massad; Worcester-based Commerce Bank & Trust Co.; Gemstone Investment Co. Inc.; and Massad's daughter Pamela, who is an attorney and sole shareholder of Gemstone, of using loan-sharking tactics to obtain Boston Hill, a 118-acre parcel west of Boston that Sanderson once owned and planned to develop. That property, portions of which are in Northborough, Shrewsbury, and Westborough, was acquired by Gemstone Investment through a foreclosure sale on July 14. Sanderson also has filed for bankruptcy.
David H. Rich, an attorney represent ing the Massads and Gemstone, said the lawsuits were groundless.
According to court documents filed by Gemstone, Sanderson and his son borrowed more than $7.7 million since 2000 from the investment company and "failed to pay back a single penny." The documents state that the Sandersons now owe Gemstone over $14 million, due to accrued interest.
"These are borrowers who have not paid back their obligations," said Rich.
The Massads and Gemstone Investment filed a motion to dismiss the suit and to send the case to state court. A hearing was scheduled before US District Court Judge F. Dennis Saylor IV on July 22, but neither Sanderson nor his lawyer showed up for the hearing, according to Rich.
James D. O'Brien Jr., a lawyer representing Commerce Bank & Trust Co., also filed a motion to dismiss Sanderson's lawsuit, saying the four-year statute of limitations expired.
"I don't think there's any liability on the part of the bank based upon the claims alleged" in Sanderson's complaint, said O'Brien.
Sanderson is seeking $38 million in damages, and had tried unsuccessfully to stop the foreclosure on his Boston Hill property.
Neither Sanderson nor his attorney, Earl D. Munroe, could be reached for comment.
In February, Sanderson filed a petition for Chapter 11 protection in US Bankruptcy Court in Boston. It's not the first time Sanderson has run into financial trouble. In 1991, he pleaded guilty in federal court to organizing a scheme to get over $730,000 in fraudulent loans from
O'Brien said he is still reviewing Laverty's complaint, and will file a response soon.
Laverty is seeking up to $100 million in damages and a preliminary injunction to stop foreclosures on his properties, according to his lawyer, Ronald W. Dunbar Jr.
Laverty claims that Commerce Bank, along with three lending entities based in Marlborough - LBM Financial LLC, Wolfpen Financial LLC, and Stone Services Inc. - forced his development projects in Hyannis, South Boston, and West Roxbury into bankruptcy so they could foreclose on the properties. Laverty also alleges that a lawyer working for LBM extorted money from him.
"Financially, he's devastated," said Dunbar. According to court records, Laverty filed for bankruptcy in 1999 and in 2006, although Laverty said he later withdrew the 2006 filing.
Laverty ran a successful security company before getting into the real estate business, according to Dunbar. Records filed with the Massachusetts secretary of state's office show that Laverty ran a security consulting business called P.L. Consulting, headquartered in Mansfield.
Emily Sweeney can be reached at esweeney@globe.com.
