A Florida company with ties to Lennar Corp. and the Federal Deposit Insurance Corp. is suing developer William Plise and City Crossing 3 for a $18 million deficiency on a loan that failed Silver State Bank made in 2007.
CML-NV ONE, a Florida limited liability company controlled by the FDIC and another limited liability company, on Thursday filed a lawsuit in federal court over the deficiency. The second limited liability company has two members, an entity controlled by Jeffrey Krasnoff of Florida and a company controlled by Lennar Corp.
Attempts to reach Plise for comment Friday failed.
His Las Vegas company, Plise Development, announced in 2007 that it broke ground on the $2 billion City Crossing at St. Rose Parkway and Executive Airport Drive in Henderson. The developer planned 1 million square feet of office space, 1 million square of retail and restaurants, two hotels, and 2,500 residential units on a total of 126 acres.
The land remains vacant.
City Crossing filed for Chapter 11 bankruptcy but the case was dismissed in November of 2008 because all of the assets were encumbered and there was no possibility of recovering money through restructuring, said Lenard Schwartzer, an attorney for the City Crossing.
The development stalled because many lenders stopped making construction loans in Southern Nevada, he said. Various lenders already had made other loans secured by the separate parcels that comprised the project.
First National Bank, which regulators seized in July 2008, was the largest lender at $69 million, according to the Las Vegas Business Press.
Silver State Bank made a loan to City Crossing 3 for $16 million in April 2007, and Plise personally guaranteed the loan, according to the lawsuit. City Crossing defaulted on the loan, and the FDIC took over as receiver for failed Silver State Bank in September 2008.
In February 2010, the loan was sold to an entity owned by CML-NV One, which foreclosed on the loan with a $880,000 credit bid. The foreclosure sale price was insufficient to satisfy the amount owed.
Attorney Ketan Bhirud of Lionel Sawyer & Collins filed the lawsuit for the plaintiff but couldn’t be reached for comment.
A former employee of Plise Development familiar with company financials said Plise was able to get several appraisals for a piece of land he had purchased in 2002 near St. Rose Parkway and Eastern Avenue for Siena office park.
The market was taking off then and Plise was able to pull cash from the bank based on the appraisals, the source said.
“Anybody today knows you don’t lend money on dirt. He was a good talker with the bank,” the former employee said. “He made connections with the city of Henderson and fought to get the zoning changed.”
Silver State Bank and First National Bank were the first to loan money to Plise and took the biggest hit when City Crossing filed for bankruptcy. He also caused contractors, framers and landscapers to go out of business because he failed to pay them, the source said.
“He wasn’t the only one, but he was probably one of the bigger crooked people in town,” the source said. “He got greedy. He knew money was coming easy and things started to boom. It wasn’t just getting an appraisal on a piece of property. It was like robbing Peter to pay Paul.”
Review-Journal writer Hubble Smith contributed to this report. Contact reporter Hubble Smith at firstname.lastname@example.org or 702-383-0491.
Contact reporter John G. Edwards at
email@example.com or 702-383-0420.