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Medical company claims bank helped ex-CEO divert millions
By Susan R. Miller A small Pompano Beach health and diet products company whose former chief executive is alleged to have used the company as his “personal fiefdom” is laying blame for many of its financial problems on its former bank. Medical Research Industries Inc. (MRI) filed suit this week in Broward Circuit Court against Union Bank of Florida, a Fort Lauderdale-based privately held institution. The suit alleges that Union Bank and one of its account executives, Margaret Lassard, knowingly facilitated the diversion of millions of dollars from MRI’s corporate accounts to pay the casino gambling debts of William Tishman, the company’s former chief executive. The company, which is now in bankruptcy, is trying to recover company funds it says Tishman used without authority for gambling. The suit claims that Lassard, who also sat on MRI’s business board, “willfully turned a blind eye to this unusual activity” for the sake of keeping the MRI account. It goes on to allege that Lassard facilitated the casino’s “exploitation and looting” of MRI’s business accounts and that Union Bank “acted in concert” with various Las Vegas casinos by “diverting millions of dollars to casinos for obvious non-business purposes.” “It’s evident that Union Bank did not act reasonably in connection with highly irregular banking transactions,” said Samuel Burstyn who filed the suit on behalf of MRI, along with Miguel M. de la O. “Enormous losses have been caused by the bank’s misconduct.” William Cross, the Fort Lauderdale attorney who represents Union Bank, called Burstyn’s logic behind the suit “an interesting conclusion.” “I don’t think a bank has the obligation, legally or otherwise, to tell a corporation that they disagree with how their CEO is handling an account he is authorized to sign on,” said Cross of Doumar Allsworth Curtis Cross Laystrom Perloff Voight Wachs & Mac Iver. “I don’t know that a bank has an obligation to become a whistleblower,” he said. Tishman’s failure to pay off those “loans” ultimately led to the company’s demise, according to MRI. The maker of such products as Slim-Patch, Stress-Patch and Sex-Patch — creams the company claimed help to decrease appetite, relieve anxiety and enhance one’s sex life — filed for bankruptcy and is in the process of selling off its assets. A private company, MRI lost $6.1 million on $4.1 million in sales for the first three months of last year, according to financial statements obtained by the Review. Before filing for bankruptcy the company had lost about $60 million. Before the suit was filed, the bank had filed an action in Broward Circuit Court seeking guidance on whether it should make payments to the casinos. “The bank’s position was, ‘we have this money and we don’t know who to give it to,’ ” Burstyn said. “In the course of depositions and discovery, it became clear the bank had been acting improperly.” The suit is the second one MRI has filed that is designed to recover close to $18 million Tishman “borrowed” from the company between July 1996 and March 1999. As the Daily Business Review first reported last September, MRI sued Tishman in an effort to recover the money. That suit also alleges that Tishman not only used the company’s money to pay gambling debts at two Las Vegas casinos, but that the company paid his American Express tab that usually topped $50,000 a month. Tishman’s attorney, Abraham Galbut, was unavailable for comment. However in September he told the Review that the promissory notes Tishman signed were not enforceable. He argued that for them to be enforceable, documentary taxes had to be paid and the company failed to pay those taxes. Though he has not yet filed the paperwork, Burstyn said he also planned to file litigation against the casinos. “The casino’s have behaved outrageously in exploiting an opportunity to loot a company,” Burstyn said. Eric Roth of White & Case in Miami, who represents the casinos, said he could not imagine how either the bank or the casinos could be held accountable. “Mr. Tishman was an authorized signatory and I am not sure the facts will bear out their claims.” Web Published Thursday, January 13, 2000 Published in Daily Business Review on: Thursday, January 13, 2000 |
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