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Case Studies of Recent Big Deals Handled by Johnston Clem Gifford

Qui Tam Defense Case Study

When a qui tam whistleblower accused one of the largest banks in the country of covering up a massive fraud in a $16 billion commercial loan portfolio, the bank turned to Johnston Clem Gifford for defense. The case presented litigation, credit, and regulatory risks, not to mention the reputational harm that the bank could suffer if the allegations reached the media.

The plaintiff’s team had a plan to impose maximum pressure: seek early discovery into the entire portfolio, asking the bank to produce financial records for thousands of borrowers. We reversed the leverage and eased the pressure by securing an order staying discovery pending resolution of the bank’s motion to dismiss. The discovery briefing had a peripheral advantage: it gave the bank the first opportunity to criticize the plaintiff’s case. We pressed the advantage with a robust “Rule 12” motion—ultimately winning complete dismissal for the bank.

Real Estate Lender Litigation Case Study

In 2005, a group borrowed $36,000,000 to build a mixed-use development in the Florida panhandle. The lender found a 23% participant in the loan, retaining the “lead bank” role for itself. The financial crisis killed the development—the borrowers defaulted, collateral values sank, guarantors lost liquidity, and a governmental agency threatened to wipe out part of the lenders’ collateral. In this distressed environment, the lead bank prosecuted the defaults and secured a reasonable settlement, paying the participant its 23% share.

The participant wasn’t satisfied—it used the settlement payment to fund litigation against the lead bank, claiming it should be paid 100 cents on the dollar.  Johnston Clem Gifford defended the lead bank in the case, arguing that it had acted in a commercially reasonable manner and that the participant received the full benefit of its bargain. The parties had vastly different ideas about the value of the case, dooming settlement efforts. After a five-day bench trial, the court vindicated the lead bank’s position—ruling that the participant had suffered zero damages.

When the participant tried again on appeal, the lead bank kept Johnston Clem Gifford on the case. After briefing and oral argument, the Eleventh Circuit Court of Appeals found in favor of the lead bank, upholding the trial victory.

Syndication Loan Litigation Defense Case Study

A large bank organized a multimillion-dollar syndicated loan to a prominent national company. Unknown to the lenders, the borrower’s financial statements grossly overstated the company’s assets. Meanwhile, the investment banker promoting the deal conspired with the company’s management, their outside attorney, and possibly a bank insider to hide the overstatement and convince the lenders to advance funds.

Johnston Clem Gifford guided the bank out of this potentially hugely expensive pickle. First, we ran the internal investigation necessary to discover the truth and marshal the bank’s best offense and defense. Then we helped establish the liability of the company’s outside audit firm, which should have reported the financial overstatement. Next, we proved that the third-party investment banker and law firm knew the truth and steered the lenders away from it. Finally, we protected the bank from vicarious liability by rigorously examining the actions and motivations of the alleged insider. The loan and resulting multi-front litigation presented critical risks to the bank—but our guidance produced offensive and defensive victories, and a cumulative result that the client called “terrific.”

Real Estate Development Transaction Case Study

Johnston Clem Gifford represents the real estate developer in a major mixed-use project near the Dallas Galleria—the largest project in that area in more than a decade. The 14-acre development replaced a vacant big box retail store on the west side of the Dallas North Tollway. Called Alpha + Inwood, the project will include apartments, retail, and restaurant spaces, a boutique hotel, and a full-block office building. Johnston Clem Gifford has guided all legal aspects of the transaction, including entity formation, contracts, construction loan documents, title and survey matters, zoning, platting, and entitlement matters.

Lender Financing RICO Defense Case Study

A foreign physician sold a majority interest in his clinical practice to a U.S.-based medical group, forming a joint venture partnership to operate new clinics. A multinational bank financed the purchase. The new partnership was fraught with internal strife and was ultimately sold to a third party. During the sale, the physician discovered—allegedly for the first time—that the U.S. buyer had leveraged the joint venture’s assets to finance their purchase. Incensed, the physician sued everyone, accusing the bank and his business partners of a vast RICO conspiracy.

Johnston Clem Gifford believed the bank’s conduct was completely proper—that routine banking and lending activities cannot support a RICO claim. Our Rule 12 Motion to Dismiss persuasively advanced that argument. The physician tried to avoid dismissal by amending his complaint and adding new claims. We responded with a new Rule 12 motion that emphasized the bank’s role as a neutral lender with no knowledge of wrongdoing by the co-defendants. The other defendants moved for dismissal as well. When the dust settled, the court granted the bank’s motion entirely, dismissing every claim against the bank with prejudice and charging its costs against the plaintiff. The court granted the other motions in part only, so the conspiracy case continued against the remaining defendants.