WEST PALM BEACH (CN) - A South Florida developer with political clout shuffled millions of dollars to relatives and his affiliated companies to duck more than $21 million in judgments, a bank claims in court.
PNC Bank sued Anthony V. Pugliese III in Palm Beach County Court.
The bank also sued his wife, Laura Pugliese, his ex-wife, two of Pugliese's sons, and 24 of his affiliated companies.
PNC Bank, principal subsidiary of the PNC Financial Services Group, of Pittsburgh, has more than 2,500 branches in 19 states and the District of Columbia.
Pugliese, a Delray Beach developer, is a member of Florida's 15th Judicial Circuit's Judicial Nominating Commission, which interviews candidates for judgeships and makes recommendations to the governor.
Pugliese, 65, was arrested in October and charged with conspiracy to commit organized scheme to defraud, money laundering and grand theft, according to the Palm Beach Post. Pugliese was accused of bilking billionaire Fred DeLuca, his former land development partner, of nearly $1.2 million while DeLuca invested in Pugliese's purported 41,000-acre "green" community south of Orlando, according to the Post.
PNC Bank claims that as Pugliese's debts came due, he transferred millions of dollars and real estate assets to family members and companies he controlled, to defraud the bank and other creditors.
"This lawsuit arises out of a series of loans made by PNC (through its predecessor banks) to Pugliese and corporate entities controlled by Pugliese (the 'Pugliese entities'), beginning in 2003 (collectively the 'PNC loans')," the complaint states. "Pugliese and the Pugliese entities failed to make payments on the PNC loans when due, leading PNC to initiate a total of six (6) lawsuits to exercise its rights under the loan documents. PNC has gone to trial, and prevailed, in all six lawsuits. To date, PNC has outstanding judgments against Pugliese, individually, worth a total of $21,382,425.41, plus accrued interest.
"As explained in more detail below, the total principal amount of the PNC loans was nearly $17,000,000.00. Of these loans, more than $14,000,000.00 worth came due between Dec. 27, 2008 and Oct. 6, 2009.
"Just as the PNC loans were coming due, Pugliese made substantial transfers of funds and property to insiders, including to his wife Laura Pugliese and his son Anthony V. Pugliese IV, and to corporate entities which he owned and served as an officer or managing member. Pugliese continued to make these transfers during the pendency of the PNC lawsuits, and even after judgments had been entered against him."
Twenty-two of the corporate defendants are owned and managed by Pugliese, and two others are owned or managed by a relative and by Pugliese's business partner, Joseph Reamer, according to the complaint. Reamer is not named as a defendant.
PNC claims Pugliese borrowed nearly $17 million from its predecessors between March 2005 and April 2007, and signed four promissory notes and several personal guarantees.
The bank says more than $14 million of the debt came due in late 2008 and 2009.
Pugliese stopped making payments on most loans in December 2008, and made the last payment to the bank in May 2009, according to the complaint.
"Upon information and belief, these obligations to PNC were not Pugliese's only debts that were to come due in 2008 and 2009," the complaint states.
"At the same time that Pugliese's debts were coming due pursuant to the above-referenced guarantees and notes, and at the same time he and his associated companies were failing to make any payments due thereunder, Pugliese was systematically transferring his assets to avoid creditors."
The bank claims Pugliese rescinded his prenuptial agreement and transferred millions of dollars and personal and real property, which he owned separately, to himself and his wife as "tenants-by-the-entirety."
Tenancy by the entirety allows spouses to own property together as a single legal unit and prevents creditors of an individual spouse from attaching or selling the property.
"Instead of making payments on his loans, or causing his companies to make payments on the loans he had personally guaranteed, Pugliese transferred millions of dollars from his personal accounts to accounts held as tenants-by-the-entirety with his wife, and to some 21 corporate entities of which he was (and still remains) the sole officer or member," the complaint states.
Pugliese withdrew millions of dollars from personal accounts and transferred them to accounts he owned jointly with his wife, and to relatives and affiliates, according to the complaint.
The bank claims he also transferred real property to family members, affiliated entities, and to a company he owned jointly with his wife.
It claims most of the transfers occurred after the PNC notes were due and after the bank sued Pugliese.
"According to Pugliese's sworn testimony, on Aug. 1, 2008, Pugliese had cash in his various bank accounts totaling $16,450,409.00," the complaint states. "By June 1, 2010 he had only $520,058 in cash. Questioned about this in an August 2011 deposition in aid in execution, Pugliese could not explain where this money - some $15.9 million - had gone. It is clear that it went to his family members and to corporate entities of which he was an officer, managing member, or the sole owner."
The bank claims the transfers were intended to defraud Pugliese's creditors.
It seeks damages for fraudulent transfers and wants the defendants stopped from transferring assets.
PNC Bank is represented by Cristopher Rapp with Jones, Foster, Johnston & Stubbs.
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