Tea Party Rep's $2.2M Default Is Bank's Fault

Bank shouldn't have loaned Rep. Tom Graves the money: attorney
By Evann Gastaldo,  Newser Staff
Posted Aug 12, 2011 8:17 AM CDT
Tea Party Rep's $2.2M Default Is Bank's Fault
Congressman Tom Graves declares victory speach at his headquarters in Cumming, Ga. on Tuesday, Aug. 10, 2010.   (AP Photo/Jenni Girtman)

US Rep. Tom Graves is a Tea Party favorite and has argued for fiscal responsibility in Washington. But according to his attorney, he should not be held responsible for defaulting on a $2.2 million loan because the bank should never have issued it to him in the first place. The Georgia lawmaker and Chip Rogers, his business partner/Georgia's state Senate majority leader, used the loan to purchase a motel they planned to refurbish, but the project went under. The Atlanta Journal-Constitution points to court documents filed in June, in which a lawyer for Graves and Rogers said the bank knew the pair could not repay the loan. (The politicians say they were not aware of that filing.)

The bank had them sign personal guarantees in order to "'have some skin in the game' presumably meaning a sense of personal obligation for the debts ... even though they clearly could not fulfill the obligation," the attorney said. Graves and Rogers were sued by the bank, but the politicians countersued, claiming the loan was improperly declared to be in default. Both claims were dismissed this week, and a spokesman for Graves says the case was "fully resolved in an equitable and fair manner." Back taxes, penalties, and interest to the tune of $41,500 is still owed, but Graves and Rogers say they transferred ownership and aren't responsible; now officials may gut the building at an expense of more than $100,000 to taxpayers. (More Tom Graves stories.)

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