As investor, Tampa philanthropist Kiran Patel sues struggling Superior Bank for claims it was stable
Wake up and good morning. One of Tampa Bay's more prominent philanthropists, Dr. Kiran Patel (photo, below, left), finds himself back in the news -- not for his latest generosity but for his lawsuit against a bank he says mislead him into investing $10 million.
In U.S District Court in Birmingham, Ala., according to the Birmingham News here, the Tampa physician has sued Superior Bancorp, saying Alabama's largest savings and loan institution fraudulently induced him to invest $10 million in what was a failing enterprise. Patel filed the suit Friday. The suit says Birmingham-based Superior sold him $10 million of preferred shares last year, describing the bank as stable and in possession of a solid loan portfolio. In addition, the suit said, Superior agreed to extend Patel $8 million of loans, the newspaper reports.
Superior owns Tampa-based Superior Bank. It's rated "zero" stars by Bauer Financial, which means Superior's among the weakest financial institutions operating in Florida. It operates Superior Bank operates 67 offices between Alabama and Florida, with more than $2.8 billion in deposits between them. In the Tampa Bay area, Superior has three offices in Hillsborough County, three in Pasco, two in Pinellas, and one each in Manatee and Sarasota. Those 10 offices carry $539 million in deposits, according to the latest information from the FDIC.
The suit says Superior executives traveled to Patel's house in Tampa in May 2010, as part of their attempts to raise $25 million from investors. The bank's business was described as "strong and healthy," according to the suit.
Here's where the circumstances of the investment get a but fuzzy. Superior's financial decline was pretty clear -- just look at its one-year stock price decline above -- for those who bothered to look. Perhaps Patel thought that buying "preferred" shares would give him adequate protection over basic Superior shareholders if things went bad. Still, where was the due diligence of those (assuming he received some professional help for such a sum to invest) assisting Patel in investing?
Patel's suit comes after Superior has fallen on hard times. Loans not being paid as agreed have risen for the past seven quarters, to 10.6 percent of loans and other assets, the Birmingham News reports. Shares have fallen 88 percent in the past year, and closed Friday at 36 cents. The company is operating under an agreement with the Office of Thrift Supervision to improve capital reserves and reform lending practices. The bank even sued BP for the economic damages inflicted by the Gulf oil spill on one of Superior's main markets in the Florida Panhandle.
"Dr. Patel made the $10 million investment based on representations that the bank was strong and in compliance with banking regulations and laws," said Jeff Schreiber, lawyer for Patel from the New Jersey firm Meister Seelig & Fein. Superior had no comment on ongoing litigation. But Ronald Reagan's comment comes to mind: Trust. But verify.
Superior's chairman and CEO stepped down, effective immediately, in late March. More here.
Patel's suit argues the bank was aware that it was in trouble with its regulator and a recent report from that federal regulator cites the company as undercapitalized. In November 2010, the company agreed to the stipulations of a government cease and desist order to reform lending and business practices.
The lawsuit seeks unspecified damages and a jury trial. Patel is represented in Alabama by Peter Burke (photo, right) of the Birmingham firm Burke Harvey & Frankowksi, the Birmingham newspaper says.
Patel's money is behind such prominent Tampa institutions as the Patel Conservatory, part of the David A. Straz, Jr. Center for the Performing Arts, as well as the USF-affiliated Dr. Kiran C. Patel Center for Global Solutions (whose old web site is, interestingly, gone with a new one "coming soon.")
-- Robert Trigaux, Business Columnist, St. Petersburg Times