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New Jersey business litigation: Citibank settles dispute

New Jersey residents may have been aware of a lawsuit against Citibank alleging fraudulent loan practices. Much of the business litigation has been dealt with, and the outcome of the latest dispute is no exception. A partner with the now defunct firm of Dewey & LeBoeuf has settled his dispute with Citibank regarding a loan given to the firm.

The controversy surrounded a loan for approximately $209,000 that Citibank made to partners of the firm in an effort to save it. In May 2012, Citibank filed suit against the partner for alleging that he defaulted on the loan. The partner filed a counter complaint that Citibank failed to tell the partners just how precarious the firm's financial situation really was at the time.

This was not the first lawsuit filed by partners of a firm against Citibank for nondisclosure. The lawsuit filed by partners of a firm in California alleged that they were scammed by the financial giant into taking out loans. In that case, the judge ruled that Citibank wasn't required to disclose any information about the firm's financial state to its partners.

Partners in New Jersey firms that are looking to infuse more capital into the business may want to conduct their own due diligence before committing to any loans. When the survival of a business is at stake, relying on a bank for information may not be enough to win any subsequent business litigation. Taking the time to find out exactly what the financial state of the business is may help in making decisions that could potentially save the business from failure.

Source: Fox Business, "Citibank and former Dewey partner resolve loan dispute," Casey Sullivan, May 9, 2013

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