(CN) – Three Yellow Cab companies and their 16 guarantors failed to repay $43.2 million in loans while their owner used corporate accounts as his “personal piggy bank,” leasing a Rolls Royce, paying off credit cards, and paying himself more than $150,000 a month, the Bank of Montreal claims in Chicago Federal Court.
The bank claims Cullan Meathe commingled his assets with those of his financially strapped businesses.
Meathe’s three Florida-based taxi businesses – Yellow Cab Service Corporation of Florida, West Florida Transportation Group fka Clearwater Yellow Can and St. Pete Yellow Cab – borrowed more than $40 million, the bank says.
Bank of Montreal says that while the borrowers, guarantors and nonborrower equities repeatedly extended credit, “Meathe has used the Florida operations as his personal checking account, supporting his lifestyle from the business.”
Meathe’s “fraudulent schemes” allegedly included diverting loans to himself, check kiting and fraudulent accounting practices involving separate sets of books. He used one corporate account to lease a Roll-Royce Phantom for his own personal use, and he used corporate funds to pay his personal credit card statements, according to the complaint.
“Despite the borrowers and guarantors’ defaults, Meathe has continued to draw large monthly distributions, at one time exceeding $152,000 a month,” the bank says.
The Bank of Montreal claims that Meathe’s companies suffer from “haphazard” management, lack adequate accounting controls, and cannot produce reliable financial statements.
Meathe also has been taking the collateral for the loans, the bank says. Meathe characterized a $750,000 check from a supplier that he deposited into a company account as an “expense reimbursement,” but it actually represents the proceeds of the bank’s collateral, according to the complaint.
The bank says a $1.9 million judgment was entered against Meathe in Michigan, which jeopardizes the bank’s security interests.
The bank seeks an accounting, an order to pierce the corporate veil, appointment of a receiver and a judgment compelling the defendants to immediately surrender the collateral and enter foreclosure. It alleges breach of contract, fraudulent conveyance and fraud. The bank is represented by James Heiser with Chapman and Cutler.