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F.D.I.C. v. Mahajan

United States District Court, N.D. Illinois, Eastern Division

February 12, 2013

FEDERAL DEPOSIT INSURANCE CORPORATION, as receiver for Mutual Bank, Plaintiff,
v.
Amrish MAHAJAN, Arun Veluchamy, Anu Veluchamy, Steven Lakner, Ronald Tucek, Patrick McCarthy, Paul Pappageorge, Richard Barth, Thomas Pacocha, James Regas, and Regas Frezados & Dallas LLP, Defendants.

Page 1134

F. Thomas Hecht, Alexander Jacob Darr, Dean J. Polales, Kristopher J. Stark, Richard Henry Tilghman, Tina B. Solis,

Page 1135

Ungaretti & Harris LLP, Chicago, IL, for Plaintiff.

Steven Marc Malina, Beth Anne Black, Greenberg Traurig, LLP, Chicago, IL, for Defendants, Amrish Mahajan, and Thomas Pacocha.

Randall Marc Lending, Chad Allen Schiefelbein, Joshua David Nichols, Vedder Price PC, Chicago, IL, for Defendants, Arun Veluchamy, and Anu Veluchamy.

Kim M. Ruckdaschel-Haley, Kirstin Dawn Kanski, Susan E. Barnes, Lindquist & Vennum, PLLP, Minneapolis, MN, Michael S. Loeffler, Todd H. Thomas, Loeffler Thomas Touzalin LLP, Northbrook, IL, for Defendants, Steven Lakner, Ronald Tucek, Patrick McCarthy, and Paul Pappageorge.

Jeffrey R. Tone, John M. George, Nancy Anne Temple, Katten & Temple, LLP, Chicago, IL, for Defendants, Richard Barth, and James Regas.

Geoffrey Alexander Belzer, Michael P. Tone, Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, Chicago, IL, for Defendants, James Regas.

Alvin R. Becker, Deane B. Brown, Beermann Swerdlove, Woloshin, Barezky, Becker, Et Al, Edward Fitzsimmons Dunne, Newton C. Marshall, Karbal Cohen Economou Silk Dunne LLC, Chicago, IL, for Defendant, Regas, Frezados & Dallas LLP.

MEMORANDUM OPINION AND ORDER

VIRGINIA M. KENDALL, District Judge.

Plaintiff Federal Deposit Insurance Corporation(the " FDIC" ) as receiver for Mutual Bank (the " Bank" ) sued the Defendants for gross negligence under the Financial Institutions Reform, Recovery and Enforcement Act (" FIRREA" ), together with various state law claims including negligence, breach of fiduciary duty, and the wasting of corporate assets. The claims arise from the Bank's loss of $115 million and subsequent business failure allegedly as a result of risky construction and commercial real estate loans and the improper expenditure of corporate assets for personal use by the Defendants. Defendants have asserted numerous affirmative defenses, including the defenses of failure to mitigate, comparative fault, superseding/intervening cause, lack of proximate cause, and waiver and estoppel. FDIC moves to strike these affirmative defenses [1] and to strike Defendants' reservation of rights to assert additional defenses. For the reasons stated herein, FDIC's motion is granted.

BACKGROUND [2]

Starting in 2005, the Illinois Department of Financial and Professional Regulations (the " IDFPR" ) began conducting examinations of the investment practices of the Bank and delivering written reports about the results of those examinations and recommended changes to the board of directors of the Bank. Starting in 2006, the FDIC also began examining the Bank and delivering written reports of its findings. After several years of examinations and the delivery of increasingly dire reports and recommendations from both the IDFPR and the FDIC about the Bank's risk management ...


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