It isn’t just Arizona Banks being hurt by Arizona real estate problems:
A Minnesota bank, one of seven failed institutions taken over by the Federal Deposit Insurance Corp. this year, tanked in part because of a poorly performing real-estate investment in Surprise, a Spokane County, Wash., lawsuit alleges.
The Office of the Comptroller of the Currency shut down First Integrity Bank on May 30, costing the FDIC about $2.3 million.
Lawsuits brought by investors in Minnesota and Washington have alleged that First Integrity lost millions of dollars co-financing speculative real-estate projects, including one in Surprise.
The investors claim that First Integrity mismanaged loans made to developers, profiting from the securities they sold, while shorting investors when real-estate projects, including another in Florida, fell through.
In Surprise, First Integrity and Spokane-based investors, known as the DuPree group, co-financed a would-be hotel and retail center near Grand Avenue and Grand Marketplace Way, catty-corner to Sun Health Del E. Webb Hospital, in 2003.
The investors claim to have lost more than $1.5 million on the deal after the developer, Bob West of Spokane, defaulted on his construction loan, according to court documents. Another retail center has since broken ground at the site, city planner Bart Wingard said.
