Lawsuit: Bankers diluted investors

The October 2014 acquisition of Tampa-based Florida Bank Group, a $90 million deal, seemed like a classic “win-win,” at the time. The buyer, Lafayette, La.-based IberiaBank, continued its broad expansion into Florida, while Florida Bank Group board members and some investors received a lucrative payday.

But according to a lawsuit filed last month, the deal was a loss-loss for a large group of prominent Tampa investors in the bank. The list of alleged wronged investors, including former Tampa Rays Manager Lou Piniella and relatives of former Tampa Mayor Dick Greco, filed the lawsuit in the 13th Judicial Circuit Court in Hillsborough County. Other plaintiffs include criminal defense attorney and longtime area bank investor Anthony Gonzalez and banking and real estate lawyer Walton McMichael.

The lawsuit contends several Florida Bank board members and executives worked together to dilute the plaintiffs' shares from a $7 million stake to barely $100,000. “This was a group of shareholders that was targeted,” says Tampa attorney Isaac Ruiz-Carus, who filed the lawsuit. “The defendants realized enormous gains at expense of the plantiffs.”

IberiaBank officials, through a spokeswoman, declined to comment on the lawsuit or allegations, citing bank policy.

Florida Bank Group, according to the lawsuit, was in “poor financial condition, operating at losses for years and even receiving federal TARP money.” From 2007-2013 it lost $137 million, the lawsuit adds. That's why the plantiffs balked at a stock offering in 2013, says Ruiz-Carus in an interview, “not wanting to chase good money after bad.”

Florida Bank insider officers and directors, however, had a plan to improve their equity position in the bank, the lawsuit alleges. They used their IRAs to buy more shares, brought in additional investors and “this small group took over control of the bank,” the lawsuit states.

“Shortly after the offering, the insider officers and directors changed the terms of the shares sold, implemented a reverse stick split and created a new compensation scheme for themselves,” the lawsuit states. “The result of these machinations was that the minority shareholders/plantiffs that did not participate in the offering were left incredibly diluted...when the bank sold a year later the defendants realized a 121% return on their investment. The minority shareholders/plantiffs were left with a worthless investment.”

The list of defendants in the case includes Florida Bank Group's top officials at the time: Chairman Robert Rothman and President and CEO Susie Martinez, in addition to 10 other board members and executives. Rothman, a minority owner of the Washington Redskins, is a private-equity investor and onetime chairman of the Moffitt Cancer Center board. Martinez, who has held executive positions at Regions, AmSouth and Barnett Bank, was named Florida regional president for IberiaBank in October 2015, after the Florida Bank Group deal closed.