Wells Fargo sues to collect from Fergusons

Allen Mead Ferguson and Mary R. M. Ferguson

A second bank claims the Fergusons lied about their wealth to borrow money.

Wells Fargo filed a lawsuit Tuesday against Allen Mead Ferguson and his wife, Mary Rutherfoord Ferguson, claiming the bankrupt socialites intentionally overstated their assets and income and understated their debt on loan documents with the intent to deceive the bank.

Wells Fargo’s suit comes just months after Union First Market filed similar claims against the couple.

A third bank, locally-based EVB, also filed extensions with the court to consider a possible claim.

Wells Fargo has asked the federal court not to allow the Fergusons to discharge the debt through bankruptcy.

The couple filed Chapter 11 bankruptcy last March to reorganize their debts. The case was later converted to Chapter 7 liquidation. Many of their business and personal assets have since been sold off.

The Fergusons first obtained a $500,000 credit line from what was then SouthTrust Bank. That bank was eventually merged into Wachovia and subsequently Wells Fargo.

The couple asked the bank for more money in 2009, according to the suit, and claimed they had $9 million in total assets and annual income in excess of $475,000.

The bank agreed to give the Fergusons $655,000 through a promissory note.

The Fergusons defaulted on the note, and the bank demanded payment in full, according to the suit. The bank eventually agreed to put the loans into forbearance based on the supposed existence of other assets.

Banks discovered during the bankruptcy process, however, that the couple did not have $2 million in bonds and a $1.4 million stock portfolio as they claimed in loan documents.

Those nonexistent assets were also the crux of Union First Market’s case against the Fergusons. According to that case, Allen Ferguson, who is the former chief executive of the bond firm Craigie Inc., admitted at a creditors meeting that the bonds and stock portfolio did not exist.

Mary Ferguson never made that admission.

Wells Fargo claims in its suit that it was discovered that the couple liquidated their stock account to pay off another lender, had not owned any of the bonds in a long time and were receiving far less money from Mary Ferguson’s family fortune than originally listed in loan applications.

The couple did not contest Union’s claims and the bank has since won a default judgment in its case, leaving the Fergusons on the hook for $800,000 owed.

However, the prospect of the bank being able to collect in full is uncertain.

Roy Terry, an attorney with Sands Anderson representing Mr. and Mrs. Ferguson, said his clients are aware of the latest suit and he will be reviewing it with them to see how each wants to proceed.

“Mr. Ferguson will not be seeking to preserve his bankruptcy discharge with respect to Wells Fargo,” Terry said. “But I will need to discuss with Mrs. Ferguson whether she wishes to contest the suit or not.

“Mrs. Ferguson is not admitting at this stage any liability whatsoever based on the allegations in this suit with respect to financial statements.”

Attorneys Loc Pfeiffer and Jeremy Williams of the firm Kutak Rock are representing Wells Fargo in the case.

Allen Mead Ferguson and Mary R. M. Ferguson

A second bank claims the Fergusons lied about their wealth to borrow money.

Wells Fargo filed a lawsuit Tuesday against Allen Mead Ferguson and his wife, Mary Rutherfoord Ferguson, claiming the bankrupt socialites intentionally overstated their assets and income and understated their debt on loan documents with the intent to deceive the bank.

Wells Fargo’s suit comes just months after Union First Market filed similar claims against the couple.

A third bank, locally-based EVB, also filed extensions with the court to consider a possible claim.

Wells Fargo has asked the federal court not to allow the Fergusons to discharge the debt through bankruptcy.

The couple filed Chapter 11 bankruptcy last March to reorganize their debts. The case was later converted to Chapter 7 liquidation. Many of their business and personal assets have since been sold off.

The Fergusons first obtained a $500,000 credit line from what was then SouthTrust Bank. That bank was eventually merged into Wachovia and subsequently Wells Fargo.

The couple asked the bank for more money in 2009, according to the suit, and claimed they had $9 million in total assets and annual income in excess of $475,000.

The bank agreed to give the Fergusons $655,000 through a promissory note.

The Fergusons defaulted on the note, and the bank demanded payment in full, according to the suit. The bank eventually agreed to put the loans into forbearance based on the supposed existence of other assets.

Banks discovered during the bankruptcy process, however, that the couple did not have $2 million in bonds and a $1.4 million stock portfolio as they claimed in loan documents.

Those nonexistent assets were also the crux of Union First Market’s case against the Fergusons. According to that case, Allen Ferguson, who is the former chief executive of the bond firm Craigie Inc., admitted at a creditors meeting that the bonds and stock portfolio did not exist.

Mary Ferguson never made that admission.

Wells Fargo claims in its suit that it was discovered that the couple liquidated their stock account to pay off another lender, had not owned any of the bonds in a long time and were receiving far less money from Mary Ferguson’s family fortune than originally listed in loan applications.

The couple did not contest Union’s claims and the bank has since won a default judgment in its case, leaving the Fergusons on the hook for $800,000 owed.

However, the prospect of the bank being able to collect in full is uncertain.

Roy Terry, an attorney with Sands Anderson representing Mr. and Mrs. Ferguson, said his clients are aware of the latest suit and he will be reviewing it with them to see how each wants to proceed.

“Mr. Ferguson will not be seeking to preserve his bankruptcy discharge with respect to Wells Fargo,” Terry said. “But I will need to discuss with Mrs. Ferguson whether she wishes to contest the suit or not.

“Mrs. Ferguson is not admitting at this stage any liability whatsoever based on the allegations in this suit with respect to financial statements.”

Attorneys Loc Pfeiffer and Jeremy Williams of the firm Kutak Rock are representing Wells Fargo in the case.

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Beth
Beth
10 years ago

What did they spend all the money on?

probably
probably
10 years ago

Lifestyle. A lot of the net worth evaported when real estate values dropped drastically. This is not an uncommon story here, or all around the country for that matter.