Jury clears former BankAtlantic CEO

2017-05-09 - By Marcia Heroux Pounds Staff writer

After nearly a decade of civil trials, former BankAtlantic CEO Alan Levan was cleared Monday of all charges brought by the Securities and Exchange Commission, which accused him of misleading investors during the financial crisis. “I am pleased this regrettable nine-year ordeal is finally over,” Levan said.

“I am pleased this regrettable nine-year ordeal is finally over and has ended in complete exoneration,” Levan, currently CEO of BBX Capital in Fort Lauderdale, said in a statement.

Being cleared “feels fantastic,” Levan later said in an interview late Monday afternoon. He said he was heading back to his office in Fort Lauderdale to celebrate with his BBX staff. “We have been absolutely confident for 10 years. There’s never been any evidence in this case, only a lot of smoke and mirrors.”

The six-week trial in federal court in Miami concerned civil fraud charges that were remanded back to the court by an appellate panel due to trial error.

In emailed comment Monday, a commission spokesman said: “While we are disappointed with the outcome, we respect the jury’s verdict.”

The commission alleged in its complaint that Levan “defrauded investors by not timely disclosing” downgraded loans in its real estate land acquisition and development portfolio and “misled investors” on a conference call about the extent of the bad loans. The agency also said BankAtlantic should have disclosed the troubled loans earlier in 2007.

During the trial, the commission’s lawyers depicted BankAtlantic as a place where employees feared Levan. “This was Bank Levan. You don’t cross Alan Levan,” said government attorney Russell Koonin in closing arguments.

The trial was the latest chapter in a decade of civil trials arising from shareholder and then-SEC allegations that Levan misled investors during the financial crisis by underplaying the extent of troubled loans and fraudulently understated the loss at BankAtlantic, the $6.5 billion-asset financial institution built by Levan.

In an interview in March, Levan, 72, said he wanted a “complete exoneration” and an apology from the SEC. “This is a matter of principle and integrity,” he said.

Koonin told the jury in closing arguments last Friday that the case was “about lies. Alan Levan had the choice of whether to tell the truth or to tell lies. He cited two occasions in 2007 where Levan allegedly “held back information from investors” about the extent of the bank’s troubled loans.

The SEC also alleged Levan committed fraud by misrepresent-

ing the bank’s loan losses in BankAtlantic’s 2007 annual report.

Koonin pointed to emails exchanged among BankAtlantic employees about problem loans, including one in May 2007 that said, “check out the list of stinkers.”

But Eugene Stearns, a Miami lawyer representing BankAtlantic and Levan, told the jury the SEC’s claim that the losses were “hidden is false and fundamentally dishonest.” He pointed to a clean audit opinion for 2007 by the bank’s auditing firm, PricewaterhouseCoopers.

He also said the SEC failed to mention that in 2008, the bank wrote down $70 million in loan losses, and that unlike other banks during the financial crisis, BankAtlantic didn’t take any federal money.

Stearns said the SEC’s evidence focused on three sentences from a 2007 investor conference call in 2007 “out of a mountain of information that was given to investors.”

He said BankAtlantic’s stock plummeted because of its disclosures, “… because they were honest.”

“Nobody in this difficult period did it better, and he doesn’t deserve this lawsuit,” Stearns told the jury.

U.S. District Court Judge Darrin Gayles instructed the jury that for the SEC to prove its charges, there must be a “preponderance” of evidence that BBX or Levan made a “misrepresentation of material fact, or omitted a material fact to shareholders” and that BBX or Levan “acted knowingly or with severe recklessness.”

The SEC said while Levan selectively pointed investors to the bank’s builder land loans as problematic, that BankAtlantic had “massive exposure on bad loans.”

In 2012, the bulk of BankAtlantic’s assets were sold to North Carolinabased BB&T. The company that is now BBX Capital in Fort Lauderdale kept some real estate that it determined was “undervalued,” according to Levan.

Levan was banned for two years from leading the company after initially losing the first SEC trial. His son, Jarett Levan, became interim CEO and continues as president.

After his successful appeal of the 2014 judgment, Levan returned as top executive of BBX in February.

Jury clears former BankAtlantic CEO