MANHATTAN (CN) - A Mexican businessman claims JP Morgan Chase Bank rejected a $500 million offer, against his specific orders, because the bank wanted to hold out for more money and bigger fees. Elias Sacal Cababie, a luxury condominium developer, says Chase exploited his lack of investing experience to try to score a big "payday."
When Sacal received a $400 million offer for his business, BVG World, he says, Chase allegedly "injected itself in the deal," promising a better offer.
In his complaint in New York County Court, Sacal says he and BVG are saddled with hundreds of millions in debt because Chase persuaded them to take out unnecessary loans.
"JP Morgan advised [Sacal] that BVG could not be sold unless approximately $40 million in inter-company liabilities were paid off and BVG had at least $20 million in cash in its corporate treasury, for which JP Morgan would loan BVG the funds," according to the complaint.
Sacal says he directed Chase to accept a buyer's offer of $500 million for BVG, but Chase refused, and Sacal lost a $50 million brokerage fee.
He claims Chase steered him into "exotic, highly risky" investments that cost him more than $30 million, though he sought a conservative investment strategy.
"Despite its representations to [Sacal] and BVG concerning its purported expertise and its commitment to their welfare, JP Morgan in fact was motivated by its own self-interest and desire to maximize its fees," according to the complaint.
"As a result, JP Morgan not only has deprived [Sacal] and BVG of the proceeds of the BVG sale, but has left them saddled with an enormous and unnecessary debt load and severe investment losses."
Sacal says Chase has frozen his accounts and demands repayment on the loans even though there has been no default. He claims the bank is angry that his latest contract provides less favorable terms for the bank, including a $1 million cap on the previously uncapped term loan maximum.
"In January 2010, JP Morgan sued [Sacal] and BVG in both New York and Mexico seeking immediate repayment of nearly $200 million which it claims is due and owing, despite the fact that BVG had never missed a single interest payment on any of its loan obligations to JP Morgan," according to the complaint.
Sacal says the bank is also trying to accelerate repayment of $92.5 million on three promissory notes.
Sacal and his businesses seek $500 million in damages, alleging breach of fiduciary duty and breach of contract. They are represented by Marc Kasowitz with Kasowitz, Benson, Torres & Friedman.
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