Pearland State Bank, their officers, Randall Lee Ferguson John M Rizzo Sr. and with the aid of their attorney L.David Smith took $1,800,000. in property by false and misleading statements, claims and filings, including to the IRS and credit bureaus and in a Federal Court. Pearland Texas
Pearland State Bank is quite possibly the most despicable bank in the great State of Texas.
What kind of bank would;
Send “certified demand notices” stating default for being 3 days late? (see attached)
Raise your payments 25%?
Make conflicting demands in an effort to get additional $20,000 in interest payments to circumvent the then current note?
Refuse to release the lien on one of the properties after I had arranged third party financing on the improved property which was a breach of the note/court approved plan.
Make false and misleading statements in a Federal court?
Make false claims to the IRS?
Make False claims to the three credit reporting agencies?
Pearland State Bank would and did!
In the following I will give a brief time line on how this nightmare played out. You will see actual emails to and from Pearland State Bank’s officers, Randal Lee Ferguson, president, John Rizzo Sr, vice president and the Banks attorney David Smith.
I will then include excerpts of these same officer’s actual court testimony in a Federal Court, which I believe to be mostly false and misleading and I believe the reader will agree.
Additionally, you will see after this bank took two properties worth $1,800,000. They then attempted to made false statements to the IRS to deprive me of my tax deduction for property taxes that I escrowed in their bank.
They also refused a contract from one of my customers that I had a contract with before they foreclosed then sold it to them after the foreclosure.
Keep this excerpt from an email I’ll call the, “in lieu of” email, directed to the Banks attorney David Smith, in mind when reading the following chain of events and testimony in this case. ( full email to follow)
As previously requested in email we would like you to prepare a modification agreement of our note – you have the current note in file. As per prior emails we have accepted a $20,000 payment in lieu of the required $280,000 payment that was due on January 1, 2012. The $20,000 has been applied toward accrued interest on the note and payments are current with the next one being due on April 1, 2012. This modification should “NOT” extend the current maturity date of June 1, 2012. In discussions with Mr. MXXXXXX we have stipulated that this Note must be paid off at maturity and we have advised to move very quickly on the sale!
------------------------
While doing my income taxes in 2017, I realized that the Bank had reported the $20,000. interest payment made “in lieu of” the $280,000. balloon payment to the IRS as interest which validates this email. yet before the foreclosure they claimed that this payment was only a partial principal reduction.
The banks attorney, David Smith, insinuated to the good Judge that this was a forbearance and the note was in default.
Mr. Ferguson, stated it would have needed board approval yet both were in receipt of this email and it was receipted and Accepted by the Bank. The fact that they reported the $20,000 as interest was a Breach of the note since all the scheduled interest payments had been made per the note. (explanation and emails to verify these facts to follow)
For the year 2011, I had deposited over $19,000 into an escrow account to be paid to the property taxing authorities in January, 2012, yet when it came to getting the form I needed to report the payment to the IRS in 2013, the bank sent me a letter claiming the bank had paid them, see exhibit 2
Then came the escrowed tax payments for the year 2012. Those they kept, plus no IRS form and they also seemed to forget a regular monthly interest payment that was made when reporting to the IRS.
So how did Pearland State Bank steal two properties worth $1,800,000.?
The following is a time line on how they did it.
The first of these loans originated in 1998 at another bank with my banker of over twenty years, It was a construction loan to build a 10,800. Sq. ft. office, showroom, warehouse facility on an owned 2 acre site located one block from the main entrance to the Bush Intercontinental Airport, the other property was 2+ acres on Beltway 8 directly across the freeway from Haliburton’s new world headquarters (which had just started their one million plus sq. ft. expansion.
My banker quit the original bank and went to Pearland State Bank in 2002 and I moved my loan to the new Bank at his request.
My banker then quit Pearland Bank and went to a new bank in 2007.
Pearland state Bank immediately raised my monthly payments approximately 25%. The increase in monthly payments totaling in excess of $17,000. per year was more than my yearly combined property taxes and/or more than my yearly mortgage payments on my house.
The improved property alone was worth $1,2 million at the time The combined loan balance at the time was $550,000.+/- which was less than the construction costs to build this facility.
I had started a new relationship with my banker at his new bank and by the end of 2008 was in the process of finalizing the requirements to transfer the existing real estate loans to his new bank in Jan of 2009.
About the same time Hurricane Ike hit Texas, I was without power for over two weeks and sustained major roof damage at my home
Chase mortgage offered a "90 day moratorium” on home loans to customers in the affected areas with there to be no negative reporting to the credit bureaus.
I received Chase’s approved "Moratorium” for my loan in mid October, 2008.
Jan 1 2009, I paid my regular house payment
I was called for a meeting with my banker in the first week of 2009 and was told that Chase mortgage had reported my mortgage 90 days late, which damaged my credit rating and was told the real estate loans could not be moved until the problem with Chase bank's "Moratorium" could be resolved.
In the second week of the same January I received notice that one of my Chase credit cards had been cancelled due to the automatic mortgage reporting and a few days later my other Chase credit cards limit had been reduced to balance due, I had one of the credit cards 38 years and the other for 27 years. I had paid these two Chase credit cards a total of $5,900 on January 1, neither were late and the minimum required payments were less than $500. ea.
In Jan 2009 I took copies of the "Moratorium letter" and credit card statements to Pearland State Bank to show them the errors made and explain what had happened.
Pearland State Bank knew I could not move the loan with the negative reporting and guess what this wonderful bank did?
My payments were increased even further, to approximately 30% above the original contract amount in the worst recession since the Great Depression.
The FDIC had directives in place at the time which allowed for interest only on commercial loans with no negative consequences to the bank or the customers due to the poor economy at the time. I was told it did not apply to Pearland State Bank.
Due to the increased payments and in an effort to save the million plus dollar equity I had in these two properties I filed for Chapter 11 bankruptcy in March or April 2010 after three years of increased payments.
From 2007 to the time of the original Ch11 filing I requested on numerous occasions of Rizzo and Ferguson to modify my notes by reducing the monthly principal reductions back to the original contract terms and or change my monthly payments to quarterly payments as the economy was getting worse and it was getting harder to collect monthly for services I had rendered and sales were intermittent yet I still had the yearly income to meet the debt.
By the time of my chapter 11 filing my payments had been increased to a total of over $7,500. per month totaling approximately $90,000. per year on a debt of only $550,000. with an equity of over $1,200,000.
For the three years 2007, 2008 and 2009 I had paid almost four years of payments, approximately $50,000. extra.
In 2011, I had a plan and a note that were both approved by the court, the bank and the attorneys, everyone but me. This was due to the fact that the term was only for 17 months and included a provision for a principal reduction of $280,000. (approx. 50% of the principal balance at the time of filing) by selling/refinancing one of the properties in a very down market. I was told to sign it or lose everything. So I signed.
Then it got worse!
In early January 2012 the $280,000 balloon payment was due.
I had over paid my tax escrow for 2011 and I had already paid the regular payment for the following month 30 days early.
I talked with Ferguson and discussed a 24 Month “extension/Modification” of the note that was part of the chapter 11 filing. I was asked for updated financials which I provided and a meeting was scheduled last days of the month with Rizzo, Ferguson and myself.
It was planned by Rizzo as the meeting could not take place without Ferguson in attendance.
During this meeting we discussed the fact that I had overpaid the estimated 2011 property taxes by $3300. which I had applied to tax arrearages, also discussed was the fact that I had already paid the following months regular interest payment a month early. At the end of this meeting, I was asked by Ferguson if I could come up with a $10,000. ”good faith” payment to extend the $280,000 balloon payment, to which I indicated that it was possible but I would need thirty days. (this is a common practice on loans with balloon payments)
Ferguson then stated that it would have to be approved by committee.
I was told by Rizzo in mid Feb. that the $10,000.” good faith”
payment would be accepted but that I was only to be given 2
weeks, not the 30 days needed.
Please see the following email exchange;
(from me to Rizzo)
March 1 2012
John,
>>>I am trying to hurry the CPA to finalize my 2011 income tax statement per your request.
>>>I have not forgotten the $10,000. payment you and Randy requested for the march extension and modification.
>>>I am awaiting funding on two different deals, both of which gives me enough to pay the obligation, I should recieve funding on at least one by friday the 2nd or monday the 5th.
>>>I appreciate all you and Randy have done.
John
(Next email, dated Mar 2 from Rizzo to myself, cc to David Smith)
John,
>>>
>>>I am sure that by now you have received our attorney's demand letter and any further communication should be through David Smith's offices. We decided delaying the inevitable any further was not in our best interest.
>>>
>>>That said, a larger payment in lieu of the defaulted $280,000 which was due on January 1, 2012 and an Earnest Money Contract for the sale of one of the two properties with a substantial hard money deposit in escrow, might bear some consideration!
>>>
>>>Sincerely,
>>>
>>>John M. Rizzo, Sr.
>>>Executive Vice President
( March 8 Email to Rizzo from myself)
John,
>>Per your Feb 13th email I can wire the $10,000. payment you and Randy requested for the modification.
>>My CPA has finished my 2011 Income tax and I can forward that as well.
>>Please advise
>>John
Now see the following email where Demand is made for an additional $10,000. (for a total of $20,000) principal payment with the threat of immediate Foreclosure.
(dated Mar 9, cc to Ferguson and Smith)
John,
Randy and I have discussed this matter and I've talked with our attorney David Smith and we are prepared to extend today's deadline one final time for and additional 14 days. But it is conditional upon you make a principal reduction of not less than $20,000.00 plus payment of our attorney's fee up to today plus the cost of preparation of modification agreement and the cost of filing fees.
This is our final offer to you to prevent a foreclosure on both properties. Your wire will need to be received no later than noon on Friday, March 23, 2012. I will inform you what the costs of the demand and modification fee will be just as soon as Mr. Smith provides me that figure. Upon your wire of $20,000.00 we direct Mr. Smith move forward to prepare the papers for your signature and we will accept your payment reimbursement for our attorneys demand letter, modification preparation fee and recording costs upon your execution of this document.
Be advised that we will in no case extend the current maturity date on your defaulted note beyond June 1, 2012. We will expect this loan and all costs associated with it to be paid in full on or before that date. Therefore it is imperative that you expedite your ongoing conversations with the interested buyer(s) for the sale of one or both properties. Without a hard earnest money contract in escrow of at least $50,000.00 we will proceed to take the property.
Please feel free to contact me to discuss this should you have any questions but be advised we are not prepared to negotiate this further.
Sincerely,
John M. Rizzo, Sr.
Executive Vice President
So was the extra $10,000. A late fee for being 7 days late
I paid the $20,000. before the deadline.
(now see the following “In Lieu of “ email dated Mar 29, 2012 from Rizzo to atty Smith with cc to Ferguson and myself) I altered this email by putting X's through the spelling of my name but that is all that is altered. I have the original email.
Importance: High
John,
First, I have forwarded an email from John MXXXXXX’s realtor expressing an interest in whether we might entertain the sale of our note. I’ve discussed this potential with Randy and we are willing to listen but in order to move forward to that end we must modify the current note.
As previously requested in email we would like you to prepare a modification agreement of our note – you have the current note in file. As per prior emails we have accepted a $20,000 payment in lieu of the required $280,000 payment that was due on January 1, 2012. The $20,000 has been applied toward accrued interest on the note and payments are current with the next one being due on April 1, 2012. This modification should “NOT” extend the current maturity date of June 1, 2012. In discussions with Mr. MXXXXXX we have stipulated that this Note must be paid off at maturity and we have advised to move very quickly on the sale!
Please advise as to further requirements needed to prepare this agreement.
Thanks,
John M. Rizzo, Sr.
There are no ambiguities in this email.
In the first sentence, Smith is requested to prepare a
modification agreement of the note per the terms set forth in the
remainder of the paragraph.
The second sentence states, “As per prior emails we have accepted a $20,000 payment in lieu of the required $280,000 payment that was due on January 1, 2012.”
A payment was made in the amount of $20,000 and accepted by “we” the Bank “in lieu of” (meaning “instead of” in everydictionary I have researched) the required $280,000. payment that was due on January 1, 2012.
This forgave the required $280,000. payment.
It also notes that payments are current. The $20,000 has been
applied toward accrued interest on the note and payments are
current with the next one being due on April 1, 2012.
The Bank accepted and acknowledged receipt of the required
payment that was due on January 1, 2012.,
Please also note there is no mention of a $260,000. remaining
balance.
There was no Default as Ferguson, Rizzo and Smith stated in their testimony.
The required $280,000 payment January 1, 2012 had been
satisfied and the June requirement of the same payment per later demands/emails had been met. (keep in mind this bank told me on multiple occasions that the property was not worth the loan balance and that I had no equity and also made the same claims in both of their court pleadings.)
In the following email a month later to; myself, from Rizzo, with cc to Paula, Mr. Ferguson’s secretary and Smith
You will see they decide to change the terms of the Mar
29th email agreement and now they are showing the $20,000
payment made in lieu of the entire $280,000. required payment, as only a partial principal payment.
-----Forwarded Message-----
From: John Rizzo
Sent: May 3, 2012 12:09 PM
To: mxxxxx
Cc: 'David Smith' , Paula Weeks
Subject: Loan Modification
John,
We have made the decision not to prepare a modification to your note due to the timing of it’s upcoming maturity on June 1, 2012.
To reiterate our stance upon our agreement not to foreclose in April and to accept the $20,000 partial payment made against the $280,000 payment due January 1, 2012 agreed and required under approval of the bankruptcy trustee, Pearland State Bank we “will not” renew this note upon it’s maturity of June 1, 2012!
That said, you need to make immediate plans to sell the property, move the loan, or make a substantial reduction i.e. in the remaining amount $260,000 you had agreed to pay on January 1st. If none of those scenarios happen we intend to post both properties for foreclosure with a sale date scheduled for July 3, 2102.
Sincerely,
John M. Rizzo, Sr.
Executive Vice President
NOTICE: This electronic mail message and any files transmitted with it are intended exclusively for the individual or entity to which it is addressed. The message, together with any attachment, may contain
Rizzo states if any one of three scenarios are met there will be no foreclosure.
Bank did not meet with court appointed realtor in reference to
paying of the entire note, by allowing me to refinance with a
third party, see afore mentioned email of March 29. 2012
The January 1, 2012 required payment had been satisfied by the Banks receipt and acceptance of the $20,000. “in lieu of”modification per Mar 29, 2012 email.
He also states that the $20,000. payment was approved by the court trustee.
This statement is not true as there would have been a
modification as previously discussed and it would have been
signed by me and recorded (which wouldn’t have happened after the bank receipted the $20,000. payment as I would have
demanded the 24 month extension I had originally asked for.) Modifications are supposed to benefit both parties to a contract.
In the next email to from me to Ferguson and Rizzo,
You will see the bank refused to allow me to refinance with one of my customers which would have paid off the improved property, an amount that would have reduced the balance by $400,000.
Sent: Tuesday, June 26, 2012 1:10 PM
To: Randall Ferguson; John Rizzo
Subject: Fw: Loans
Mr Ferguson,
In my efforts to obtain other financing it has come to my attention that Pearland state bank incorrectly reported my $627,000. loan past due for 120 days and 180 days to the credit bureau which has made refinancing at a Bank or other commercial lender impossible.
Could this be corrected in a timely fashion?
I have possibly found an individual that may loan me the money on the building only.
With that being said, Could you please give me an amount that would release all liens/interests in and to the building/property at the 3200 Greens rd location.
Also I would need a loan for the remaining property for approximately 18 months which would allow me time to rebuild my credit to be able to refinance at another bank and or sell the property.
John Mxxxxx
________________________________________
PeoplePC Online
A better way to Internet
Please see the prompt reply, seven minutes later, from Rizzo with cc to Ferguson
below, stating foreclose on both properties
Cc: Randall Ferguson
Subject: RE: Loans
John,
Foreclose one both properties is set a week form today, next Tuesday, July 3rd!
John Rizzo
When I called Rizzo, I was told the Bank would not release their
lien on the building without paying off the other property as
both properties were cross collateralized.
This was a blatant breach of the court approved note/plan.
When I asked Rizzo about the Mar 29 email, I was told it meant
nothing as the bank had changed their minds and the
$20,000. payment was applied to principal not interest.
Also noted in this email is the incorrect credit reporting of 120
and 180 day late when in fact not one regular payment was thirty days late and if one looks at the effective date of the note, as referenced by the good Judge in this case on page 3 of his Memorandum Opinion, there are not any 10 day
late payments and most regular payments made in 2012 were 30 days early. Even the balloon payment wasn’t 90 day late.
Now I will give some of the high lights of the Banks testimony in Federal Court, as taken from the court transcript.
At this time I was again posted for foreclosure and I hired another law firm and back to court we went.
My attorneys were given copies the afore noted emails with explanations. In an effort to make this as short as possible I was told there was to be a ruling on an objection by the Bank and to be in court October 1, 2012.
I was told “if” there were any questions asked of me to answer as directly as possible and don’t try to give explanations.
I show up and much to my surprise it turns into a full hearing concerning what had previously transpired during the prior case.
Some of the testimony by Rizzo led the court to believe that the December payment might have been delinquent (pg 34)
Fact, two payments were paid in December the second payment was for February regular monthly mortgage/interest payment, over thirty days early.
He stated on page 31 that the last payment was made on April 12.
Fact, my bank statements shows the referenced April payment and a payment made on May 2 per the terms of the note, both were paid by wire transfer.
He also claimed that I “offered to make $20,000 to stay our foreclosure action” on page 36 (see above noted emails).
Fact; I never offered to pay $20,000. The $20,000 was demanded under the threat of foreclosure. When I questioned Rizzo about the demand, he stated the bank wanted the accrued interest paid before the end of the note and would agree to make it “in lieu of” the $280,000 required payment and the “in lieu of” email followed the payment. He initially asked if I could come up with $140,000 in lieu of the $280,000. When I told him no, he then asked if I could come up with $70,000 then $35,000. then I got the demand for the $20,000 principal reduction not interest.
After I paid the $20,000 I reminded him of the conversation concerning the “in lieu of” requests for interest and asked for him to clarify it in an email which he did but later tried to change it, over a month later.
He stated multiple times that the Bank was not given proof the tax arrearage payments had been made.
Fact, he was given proof on multiple occasions by email.
Additionally, I had the $3300.+ overage of escrowed taxes applied to tax arrearages during the meeting with both Rizzo and Fergusion in late January of 2012. (see exhibit 3, the 1/30/2012 payment of $3307.69)
Ferguson’s testimony indicated to the court that the Bank was not given verifications the 2011 taxes were paid and if they were they weren’t on time. Pg 54
Fact, Funds were wire transferred to an escrow account in their bank, see exhibit 3.
On page 49, (exhibit 4) Ferguson’s testimony, When he was asked “Do you agree or did the Bank agree that the $20,000 would be in lieu of the $280,000 payment”
He stated” Well, I don’t think the bank would agree because I think that would have to go to loan committee.” He then stated “I think there was some discussion about whether he came up with the $20,000 whether we would defer compliance.”
I will attach this page as well
Fact; The Bank “accepted” the $20,000 and stated that the $20,000 was in lieu of the $280,000 payment per the previously noted email from Rizzo, to David Smith, the Banks attorney and cc’d myself and Mr. Ferguson.
I will also attach page 74 (exhibit 5) which is the Court asking the Bank’s attorney, David Smith, about the $20,000 payment being a modification of the note/court approved plan.
On line 14 thru 22;
The COURT: Okay. Is that not a modification of the terms of the plan that was confirmed previous to that?
Mr. SMITH: No, your Honor, because it’s not a waiver of default. You’re in default. If you pay us 20 we won’t foreclose now like we’re intitled to. We will wait until a time in the future in order to foreclose—to enforce the default. It doesn’t change the default whatsoever. And there’s no written amendment or modification to the promissory note.
Fact, Per the “in lieu of” email it states: The $20,000 has been applied toward accrued interest on the note and payments are current.
How can you be current and in default at the same time?
When you read this testimony again, “ you are in default, pay me 20k to avoid foreclosure but your still in default and when you put it with the demands threatening foreclosure, that statement was what I would expect a loan shark.
Then the different claims one being interest and a forgiveness of debt , then a principal reduction, then Smith also claims, in his testimony it’s a forbearance. Then it was claimed as a principal reduction prior to the foreclosure.
But after they foreclosed it was in fact reported as interest to the IRS which makes the “in lieu of” email valid including its forgiveness of debt and voids the later demands.
It also is a blatant BREACH of the note/plan as the note had specific language on how much interest the Bank was entitled to collect. This was a ploy by the Bank to collect more interest without modifying the note/plan. Which should Void/reverse the foreclosure.
Please keep in mind that David Smith was the main recipient of the “in lieu of” email and had quoted a price of $600. For preparing the modification that was never done.
The good judge ruled based on the testimony of Pearland State Banks officers and attorney that;
He also ruled that there were “no unanticipated changed circumstances”.
The fact that my attorney, Johnny Patterson” did not make “the offer to payoff the improved property” email or the “In lieu of” email an exhibit in this case is no reason nor excuse for the Banks officers to make false and misleading statements.
One thing should be noted here is the fact that when I walked out of the court room that day, the Judge had not made a ruling yet, Mr Patterson stated; “You just lost everything” when I asked for an explanation, I got nothing and after 10 plus phone calls I never got an answer and never got a return call even after the good Judge gave detailed instructions on how to cure my filing with the court, per his memorandum opinion.
Please keep in mind that this hearing was in October 2012, the Bank foreclosed in December 2012 and the tax and interest statements were issued in the first quarter of 2013.
The good Judge also ruled that the Bank acted in “good faith”
In summary,
I didn’t borrow more than I could afford but when the bank raised my payments by 25% with no reasonable explanation, just because my regular banker left, it made me late in paying payments and due to the most severe downturn in the economy in 75 years, refinancing with a different bank was near impossible.
Between 2007 and 2010, I had paid approximately $50,000. over the original contract loan amounts
Between 2010 and 2012, I had to pay over $50,000. In legal and professional fees in an effort to save my equity/retirement.
In 2012, I paid the Bank an extra $20,000. Interest (profit for the bank) that was charged under false pretense in an effort to circumvent the court approved note/plan.
2013, The Bank tried to deprive me of my interest and tax deductions and again I was ignored when I requested corrected interest statements in 2017.
Every single payment on this loan, including the payments that were made 30 days early were reported 120 to 180 days “late” in an effort to keep me from being able to obtain new financing during the proceedings.
None of this should have happened to me and hopefully not to anyone else
When I look back at this nightmare it appears this Banks actions were premeditated, with intent and malice that had one goal in the beginning, to suck as much cash out of me as possible then it became apparent with their continued demands that they wanted to put me out of business after 40 + years with a perfect record with both the Texas DMV Auto Dealers License Division and the BBB as a Classic Car dealer.
So where was Pearland State Banks “good faith”?
I am preparing a more detailed explanation with a lot more attachments that I am going to forward the court in this case and I am really interested to see what the good Judge’s opinion is going to be after comparing their testimony to the actual emails, bank statements and tax/interest statements.
If you have any contacts with the;
FDIC and or the Texas Department of Banking
Please have them contact me as this bank needs to lose its charter.
If not I will go through the their websites
I just wish I had found this website earlier.
Thank you, Rip Off Report!