Elgin State Bank sues developers

The Elgin State Bank has sued a local developer, claiming two business partners purposefully divested themselves of assets so they wouldn't be on the hook for $2.5 million of a $4.6 million loan that is in default, according to a lawsuit filed last week in Kane County.

An attorney representing the men says the bank already may seize the property which he says has a value of at least $3.25 million through foreclosure and the bank is trying to look tough after being reprimanded by the federal government.

In the lawsuit, Elgin State Bank states that Casey Panichi of Campton Hills and Scott Crompton of South Barrington took out a $4.6 million loan in October 2006 to build a one-story retail and office complex at 2371-2385 Bowes Road in Elgin.

The bank, according to the lawsuit, says the pair still owes $2.5 million on the loan. Two extensions were granted to the men, who are the co-founders of Centerline Equity Partners LLC of Elgin. The suit alleges that Panichi and Crompton reduced their multimillion-dollar portfolios to less than $250,000 so the bank couldn't seize their assets, such as their homes.

Scott Redman, a Chicago attorney hired by the bank, declined to comment Thursday. The bank's legal department did not return a message.

The 42,600-square-foot property is about one-third occupied.

Robert Villa, attorney for Panichi and Crompton, called the lawsuit an “unnecessary and extremely heavy-handed action.”

The bank is already trying to take back the building through foreclosure and Villa said the building has been appraised at more than $3.25 million, which is more than the loan balance.

The Federal Deposit Insurance Corp. and state regulators in September cited Elgin State Bank for “unsafe or unsound banking practices,” according to the website fdic.gov.

Villa denied any attempts by his clients to defraud the bank. Villa said each man used the accepted and long-standing legal practice of putting their respective homes into co-ownership with their spouse.

“I think the bank is under strict federal scrutiny and will do what it needs to do to save itself,” Villa said. “(The bank) needs to justify its mismanagement to the FDIC. All they really need to do is take back the property that's been valued in excess of the (outstanding) loan amount.”

The suit seeks repayment of the loan, along with attorney fees, interest and damages. The case is set for a hearing before Judge Robert Spence on Jan. 20.