Citibank disputes it hid Dewey's financial woes from ex-partners

Sat Sep 15, 2012 12:24am EDT
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(Reuters) - Citibank C.UL is fighting claims the bank "fraudulently induced" former Dewey & LeBouef partners into signing up for a loan program that financed their capital in the failed law firm, despite knowing of Dewey's dire financial situation.

Former Dewey partner Steven Otillar made the claims in New York federal court last month in response to a Citibank lawsuit against him for defaulting on a $209,000 loan that financed his capital in the now defunct firm.

Citibank sued Otillar, who is now a partner at Akin Gump Strauss Hauer & Feld, in May for defaulting on the loan.

Otillar filed an opposing motion, after Citibank asked a judge to grant summary judgment, claiming Citibank had a duty to disclose its alleged knowledge of Dewey's true financial condition to Otillar and other partners who received loans from Citibank.

But Citibank fired back in a motion filed Wednesday, saying Otillar had failed to provide any factual basis for his claims that Citibank hid Dewey's financial condition from the partners.

"Otillar offers only his speculation that because Citibank was Dewey's longtime lender, it must have had information that was unknown and unavailable to Otillar," Citibank said in its motion.

Citibank argued that, even if the bank had knowledge of the firm's true financial condition, it had no fiduciary duty to disclose confidential information it had obtained from Dewey to Otillar.

The bank said it was incumbent upon Otillar to look into the financial stability of Dewey upon joining the firm in 2011.

"Having failed to ensure that the firm's finances were in order, Otillar cannot now be heard to complain that he was defrauded by Citibank for failing to disclose the firm's allegedly deteriorating financial condition," the bank said.   Continued...

People walk past a Citibank branch in New York August 21, 2012. REUTERS/Brendan McDermid