Porter Bridge Loan Co., which has offices in Ridgefield and Birmingham, Ala., was ordered to pay $1.1 million and $450,000 in attorney”™s fees for engaging in a fraudulent scheme, according to a punitive damage judgment in U.S. District Court.
In a ruling issued June 25, U.S. District Judge Janet C. Hall issued the damage judgment and rescinded a $1,575,000 loan that Porter Bridge made to Ridgefield developer Emerald Investments L.L.C. in 2002, after a jury determined that Porter Bridge made the loan as part of a fraudulent scheme.
In addition to rescinding the loan, meaning Emerald Investments is released from liability on the loan documents, the court ordered the additional damages to “deter” such conduct in the future, Hall wrote in the judgment.
The lawsuit arose from the Ridgefield developer”™s efforts to have Porter Bridge finance a project in South Carolina. The suit alleged that Porter Bridge never intended to finance the project, but used the promise of such financing to extract substantial fees and high-interest loans out of Emerald Investments.
The lawsuit further alleged that Porter Bridge ultimately lent Emerald Investments $1.1 million, with fees and advance interest of more than $475,000, for a loan that expired in 60 days and charged interest at 12 percent per year, and 24 percent per year after the 60 days expired.
Emerald Investments”™ lawyer, Gary Klein, said Judge Hall “appropriately assessed” the substantial punitive damages in the case.
“Having a lender owe money to a borrower after four years of litigation is unprecedented,” said Klein, of the Stamford law firm Sandak Hennessey & Greco. “We have been unable to find any previous Connecticut case where a jury and judge imposed awards of punitive damages and attorney”™s fees on a lender for fraudulent conduct and believe that this is a precedent-setting decision.”
According to Klein, if the jury had sided with Porter Bridge, the developer would have owed almost $4 million, factoring in interest and expenses, instead the case ended with Porter Bridge owing nearly $500,000 net to the plaintiffs.
In her judgment, Hall wrote the damages reflect “the harm done by Porter Bridges”™ fraud.”
“It is sufficient to have the deterrent effect the statute was designed to create,” she wrote.
According to Porter Bridge”™s Web site, the lending company is “one of the most active bridge loan lenders in the country.”
Porter Bridge has been in business since 1994, and lends in all 50 states as well as in Mexico, and charges interest rates of between 12 percent and 18 percent. Porter Capital Corp., which is Porter Bridge”™s sister company and trade name, has more than $465 million in assets under management.
“These facts, taken from Porter Bridge”™s Web site, indicate to the court Porter Bridge”™s good financial status, which is a relevant factor in this court”™s determination of the amount of punitive damages to award the plaintiff,” Hall wrote.
