ST. PETERSBURG — Bill Edwards has honed an image in St. Petersburg as a civic do-gooder. He paid for a giant column marking the Interstate 275 entrance to the city. He put the city-owned Mahaffey Theater on solid financial footing. He turned the failing BayWalk entertainment plaza into the glittery Sundial St. Pete.But as Edwards pushes ahead with plans to make St. Petersburg home to a Major League Soccer team, he continues to be dogged by a lawsuit that paints a less flattering picture of the 72-year-old entrepreneur. In a case filed in federal court in Atlanta, two whistleblowers who accuse Edwards of "looting" millions from his defunct mortgage company are asking the judge to freeze his assets or order him to post a sizable bond."Given what Edwards himself has done with MIC's assets during the course of this litigation, there is no question that a bond or asset freeze injunction is required," according to a motion filed this month.The lawsuit also says Edwards should be personally liable for any judgment in the case, which involves allegations that the company, Mortgage Investors Corp., cheated veterans and U.S. taxpayers in refinancing VA loans. U.S. District Judge Amy Totenberg has yet to act on the bond request but handed the whistleblowers a victory last fall. She will let them try to prove their argument that any judgment in the case — potentially more than $500 million — should be entered against Edwards personally. "There is sufficient evidence in the record that supports (plaintiffs') allegation that Edwards exercised near total control over MIC," the judge wrote. "In other words, (that) Edwards was effectively MIC and vice versa."In a brief interview Thursday, Edwards called the lawsuit a "non-event" and said he expects to "win hands down." His lawyers say allegations that he moved assets to shield Mortgage Investors from a judgment are "simply baseless.""Mr. Edwards declines to post a bond because such an extreme procedure is unnecessary and unwarranted," attorney Lesli C. Esposito wrote to the court in November. "He is a veteran of the U.S. Marine Corps, was awarded the Purple Heart, among other commendations, and he is a stalwart philanthropist in his community."With the case proceeding in an out-of-state courtroom, it has garnered little attention in the city where Edwards has become such a prominent player. The St. Petersburg City Council must decide by early March whether to hold a referendum on his plan to upgrade the city-owned Al Lang Stadium if his Tampa Bay Rowdies join the nation's premier soccer league.Although Edwards says no public money would be needed for the $80 million upgrade, civic activist Vince Cocks voiced concern at a recent council meeting about what would happen if Edwards were hit with a whopping judgment midway through construction."This is a huge endeavour, and if it fails in any way we need to be assured that citizens and our waterfront are protected," Cocks recalled telling council members. He got no response."You could hear crickets," he said. "There's kind of fear of the man because of his power and his wealth."• • • Edwards bought Ohio-based Mortgage Investors Corp. in the mid 1990s, moved the corporate headquarters to St. Petersburg and turned it into a juggernaut in its niche of the lending industry.The company specialized in Interest Rate Reduction Refinancing Loans, used to reduce the interest rate on VA loans or change an adjustable rate mortgage to a fixed rate. To protect veterans from excessive costs, lenders are limited on the amount and type of fees they can charge or the loan will not qualify for a VA-guarantee if the borrower defaults.Two Georgia mortgage brokers, Victor E. Bibby and Brian J. Donnelly, accused lenders of routinely violating the rules and charging veterans for fees that were not permitted. Unallowable fees typically averaged at least $400 per loan, money that was "stolen'' from vets, the men said. Additionally, taxpayers were on the hook for thousands of VA loans that went into default.Acting on behalf of the U.S. government in 2006, the two brokers sued Edwards' Mortgage Investors Corp. and eight other lenders under the federal False Claims Act. The law provides for penalties against individuals and companies that defraud the government.Six of the lenders settled for a total of $172 million, leaving only Wells Fargo and Mortgage Investors as defendants. In 2012, the judge agreed to separate Mortgage Investors' case from the original one.The whisteblowers allege that Edwards' company violated the False Claims Act by over-charging veterans, charging unallowable fees and then deliberately concealing those from the VA to obtain taxpayer-backed guarantees for the loans. The suit says that "virtually all" of the 450,000 loans Mortgage Investors Corp. handled were VA-backed refinancings."If MIC cheated on all those loans, its profits were inflated by at least $180 million," the suit says.The whistleblowers also accused Edwards of fraudulently transferring MIC's assets to himself and his other companies to shield MIC from a huge potential judgment. Dollar amounts of the transfers — which Edwards has said were normal "shareholder distributions'' — have been blacked out in most court records. However, one document mentions a total figure of "more than $270 million.''In 2013, Edwards abruptly closed MIC, throwing 476 people out of work. He blamed the shutdown on new federal regulations, but the move raised eyebrows because other lenders didn't note similar problems.Moreover, company records later showed that MIC was "on track for having (a) huge year" in 2013, the suit says. "There is only one explanation for Edwards' decision," the suit says. "He knew MIC could no longer operate on its predatory model, saw a looming judgment in this case and set about to take and then hide MIC's assets."Edwards has been deposed once in the case, in 2015. The full transcript is sealed, but short excepts are quoted in motions and some of the judge's orders.While saying he made the final decision about shareholder distributions, Edwards called it a "collaborative effort" based on "analysis and accounting." But the judge found that some of Edwards' representations about his business and financial activities were "concerning." She also said that other MIC employees "testified that Edwards dominated MIC and operated it in a way that potentially abused the corporate form."Nonetheless, in August, the judge dismissed all claims against Edwards individually and as trustee of the William L. Edwards Revocable Trust on the grounds that the whistleblowers lacked standing to sue him. But in October, she partly reversed herself and ruled that they could pursue a false claims case against Edwards himself under the "pierce-the-veil theory." That theory says an individual is in reality the same as a corporation and thus can be held personally liable. Veil-piercing is "not easy" but can be done, said Theresa Pulley Radwan, a professor at Stetson University College of Law."The fact that the company is underfunded in some way to handle liability is not enough to pierce the veil, but the more they can show the money was taken out and then directly benefitted Edwards or his other enterprises, the closer they are to piercing," she said. "Under-funding is not the issue; it's where the money went."• • •The whistleblowers say MIC, shuttered now for three years, almost certainly is without assets to pay a potential judgment. Concern that Edwards might have put his own assets beyond reach increased in November when it was revealed he has an "irrevocable trust," a type of trust in which assets are generally untouchable. The judge herself noted a "lack of clarity" about whether Edwards or MIC could satisfy a judgment. As a result, she has put off at least temporarily the idea of "bifurcating," or splitting the case so the two sides would first battle over alleged false claims, then over piercing the corporate veil."I don't want to go through this whole exercise and consider a bifurcation . . . if then it means it is all smoke and mirrors because all the money is in the Bahamas or there is now an irrevocable trust that has been in place so that no one can reach it in any way," the judge said at a Nov. 16 hearing.Stetson professor Louis Virelli, a former federal prosecutor, said false claims cases can be "very hard to prosecute" because plaintiffs must prove every fraudulent claim individually plus prove that each false statement was submitted knowingly. But if defendants lose, they must pay back three times what they fraudulently got from the government plus an $11,000 penalty for each claim."Many of these cases settle because the risks on both side are high," Virelli said. "It's hard to prove all of these things at trial and very dangerous for defendants to take the risk because of the amount the government is likely to win."Based on the $182 million in unallowable charges that Mortgage Investors allegedly collected, the company and Edwards potentially could be liable for more than $549 million. On Thursday, Edwards said that while he expects to win, he personally could afford to pay a judgment. "I'm a 72-year-old successful businessman,'' he said.Many of Edwards' assets are in limited liability companies. Sundial has a taxable value of $21 million. (Edwards said it is not on the market, although a broker solicited bids last year to determine its true value.)He owns at least $12 million in other Pinellas County real estate, including his $6.2 million waterfront home and a $2 million Beach Drive condo. His Big3 Entertainment receives a $200,000-$300,000 annual fee from the city for managing the Mahaffey and makes money off the entertainment it books. It's not known how much the Rowdies are worth, but Edwards as part of an ownership group has said he is prepared to pay $150 million to join the nation's premier soccer league.On the liability side, his Treasure Island resort has a $25.6 million mortgage, though that's being reduced as condos are sold off.If the lawsuit results in a judgment that can be collected, the bulk would go to the U.S. government and 25 to 30 percent would go to the whistleblowers. Their take so far from settling with lenders in the original case? About $40 million. Times researcher Caryn Baird contributed to this report. Contact Susan Taylor Martin at [email protected] or (727) 893-8642. Follow @susanskate.