McNall Case Trustee Sues European American Bank

In an unusual but not unexpected move, the trustee in the Bruce McNall case has filed a lawsuit in U.S. Bankruptcy Court in Los Angeles against European American Bank, seeking to invalidate the Dutch-owned bank’s $30-million claim against the estate and attempting to recover $20 million from the bank.

The court papers were filed Monday, but the move was foreshadowed in January, when trustee R. Todd Neilson issued a report and took critical aim at EAB. In the same report, he called the former sole owner of the Kings “a visionary” and praised him for his cooperation.

At issue were events going back to 1988 in which the complaint alleges that the bank orchestrated a complicated circular loan to get EAB off the hook for a $20-million loan, a transaction designed to deceive the French bank, Credit Lyonnais.

Court papers criticized the actions of former EAB chairman Raymond J. Dempsey and Conrad J. Gunther Jr., executive vice president. The trustee wrote that Dempsey and Gunther sought to further their “personal interests in obtaining increased compensation from EAB.” Additionally the trustee called the bank’s conduct “inequitable and prejudicial.”

“The trustee intends to vigorously pursue this matter and EAB has told us it is without merit and the court will decide who is correct,” said Leonard Gumport, a lawyer for Neilson.

A lawyer for McNall praised the trustee’s latest move.

“It’s really vindication for Bruce in that he’s taken responsibility for his own actions, but those actions by the banks that are inappropriate are being looked at by the bankruptcy trustee,” said Richard Wynne, McNall’s bankruptcy lawyer.

McNall pleaded guilty in December to two counts of bank fraud and single counts of wire fraud and conspiracy. His sentencing is set for July.