FDIC Files Suit Against Two Developers Over Silverado Loan
DENVER (AP) _ Two Denver developers who defaulted on a $26 million loan from Silverado Banking savings and loan are being sued by the Federal Deposit Insurance Corp.
Howard L. Farkas and Burt R. Heimlich are named as defendants in the suit filed Tuesday by the FDIC, which now controls the assets of defunct Silverado.
The suit claims that Farkas and Heimlich borrowed $26 million from Silverado in 1985 to fund development of 4,000 acres in Adams and Douglas counties, including key land parcels north of the new Denver International Airport.
Farkas and Heimlich, in addition to borrowing $26 million, signed documents in which they promised to personally guarantee repayment of up to $3.9 million of the loan amount.
As a result, the FDIC, if successful in its legal action, can repossess the 4,000 acres of real estate as well as attach the personal assets of Farkas and Heimlich to a value of $3.9 million.
A 2,348-acre development known as Bromley Park was planned to provide housing and commercial support for a subdivision of 25,000 residents, nearly tripling the size of Brighton, a community 20 miles northeast of downtown Denver.
No development has ever taken place on the Bromley Park project.
Silverado never obtained independent appraisals on the 4,000 acres that secured the Farkas-Heimlich loan. Land experts believe that the $26 million failed loan - now part of the $500 billion thrift bailout - may cost taxpayers as much as $20 million.
Today the Bromley Park land likely would fetch between $3.5 million and $8.2 million, or $1,000 to $3,500 per acre, analysts said.
Farkas, former president of Environmental Developers Inc., said Tuesday that he was never involved in the development proposals, but simply signed the loan document and guarantee as a favor to Heimlich.
″I was an accommodation endorser,″ Farkas said.
″Heimlich was a friend, he said he had problems, and he said this would solve all his problems.
″It was bad judgment on my part and I’ve regretted doing it now for seven years,″ he said.
Heimlich now lives in Arizona, according to the suit, and was not available for comment.