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Lawsuit dismissed vs husband, business partner, law firm over alleged fraud scheme

By Jonathan Bilyk | Aug 10, 2015

A federal judge has dismissed a lawsuit brought by an Evanston woman against her husband, his business partner and a law firm, who she accused of leaving her "holding the bag" in an alleged scheme to defraud two failed suburban banks.

On Aug. 6, plaintiff  Diane Goldring Nesbitt voluntarily withdrew her lawsuit against her developer husband Christian Nesbitt and attorney James Regas, after court documents indicated she had settled the final vestiges of her litigation. 

In March, a federal judge had tossed Goldring Nesbitt's complaint against the law firm of Regas, Frezados and Dallas LLP, saying, while it appeared she could pursue a claim against her husband and James Regas, the lawyers at  Regas, Frezados and Dallas played only the role of "hirelings" in the alleged scheme, and had no knowledge of what Nesbitt and his partner were actually doing.

Goldring Nesbitt had filed suit on Nov. 15, 2013, in Chicago federal court against Nesbitt, Regas and the law firm, alleging violations of the Racketeer Influenced Corrupt Organizations (RICO) Act. It also named Douglas Adams, an appraiser and owner of the real estate appraisal company, Adams Valuation Co., as a defendant, along with his company.

Goldring Nesbitt was represented by attorneys Stuart J. Chanen and Margot Klein of Valorem Law Group LLC in Chicago.

She alleged in her suit that she was among others unwittingly “left holding the bag” when a scheme allegedly concocted by her husband and Regas, with the assistance of Adams and others, to defraud two collapsed banks – Willow Springs Bank and Mutual Bank of Harvey.

During the time the scheme is alleged to have occurred, Regas and his family owned 50 percent of Western Springs Bank and Trust Co., where he also served as chairman of the bank’s board of directors and its outside general legal counsel. He was also vice chairman and general counsel to Mutual Bank.

The scheme, which may have continued for a decade or more, focused on using Regas’ position at the banks to improperly issue millions of dollars in loans and other extensions of credit to various corporate entities created by Regas and Nesbitt.

The two men had been business partners for about 25 years, according to the complaint.

Goldring Nesbitt claimed the two men listed family members, including herself, as officers in the various corporate entities, using those family members to sign personal guarantees for the loans.

While she contended some family members may have willfully participated in aiding and abetting the scheme, Goldring Nesbitt asserted she was duped into signing her name to the legal and financial documents used to support the plot.

Regas and Nesbitt, the suit stated, allegedly profited from the scheme by issuing loans to the companies to purchase land, but in artificially and unnecessarily large sums, based on inflated land value appraisals issued by Adams’ company.

Regas’ and Nesbitt’s companies then purchased land at the true market values and pocketed the difference, according to the complaint.

In short, Goldring Nesbitt claimed the two men treated the banks and the associated assets as their “personal piggy banks.”

Ultimately, the banks were closed by federal regulators in 2009. Multiple rounds of litigation have followed in the years since against those involved in the alleged scheme.

Regas pleaded guilty in 2012 to lying to federal banking regulators, and was sentenced to a year in prison, but others, including Goldring Nesbitt, are still dealing with the aftermath of the plot’s collapse.

She noted in her suit that she had “several multi-million dollar judgments against her” and had already settled two lawsuits against her for $200,000.

In all, she estimated she had suffered $600,000 in damages, as of November 2013, with more being incurred as the legal actions against her dragged on.

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