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7th Circuit affirms District Court in mortgage dispute

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The 7th Circuit Court of Appeals held that financier Morgan Stanley acted lawfully when selling a loan to another party.

In 2005, 20 limited liability companies joined together to invest in property in Indianapolis. They formed a new company – IP of A Fund Manager – and vested in that company the authority to negotiate and execute a loan on their behalf with Morgan Stanley, naming Edward Okun as the manager. Okun executed a loan, mortgage and reserve security agreement with Morgan Stanley.

The group had already secured a loan in 2004 for $7.1 million, which Morgan Stanley refinanced, lending the investors $6.1 million to refinance the property, with the additional $1 million placed into escrow accounts.

Morgan Stanley decided to sell the loan, ultimately agreeing to sell it to an Okun-controlled entity, IP of A 5201 Lender LLC. As it structured the sale, Morgan Stanley agreed to offset the purchase price of the loan by the amount of funds available in several escrow, reserve and impound accounts, in which it held a security interest and which were, under the terms of the loan with the investors, required to reimburse the investors for maintenance, taxes and other property-related expenses. IP of A 5201 Lender, now holding the loan, never re-established the escrow accounts, depriving the investors of $1,361,184.63 in which they, too, had an interest.

In 2008, Okun was convicted of wire and mail fraud, conspiracy and other crimes.

In IP of A West 86th Street 1, LLC, et al., v. Morgan Stanley Worldwide Capital Holdings, LLC, No. 11-2891, the investors alleged Morgan Stanley breached its agreement and committed conversion when it allowed Okun’s company to use escrow funds to finance the purchase of the loan. But the 7th Circuit found that nothing in the loan’s promissory note, mortgage agreement or reserve security agreement precluded Morgan Stanley from structuring the sale of the loan as it wished.

 

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  1. A traditional parade of attorneys? Really Evansville? Y'all need to get out more. When is the traditional parade of notaries? Nurses? Sanitation workers? Pole dancers? I gotta wonder, do throngs of admiring citizens gather to laud these marching servants of the constitution? "Show us your billing records!!!" Hoping some video gets posted. Ours is not a narcissistic profession by any chance, is it? Nah .....

  2. My previous comment not an aside at court. I agree with smith. Good call. Just thought posting here a bit on the if it bleeds it leads side. Most attorneys need to think of last lines of story above.

  3. Hello everyone I'm Gina and I'm here for the exact same thing you are. I have the wonderful joy of waking up every morning to my heart being pulled out and sheer terror of what DCS is going to Throw at me and my family today.Let me start from the !bebeginning.My daughter lost all rights to her 3beautiful children due to Severe mental issues she no longer lives in our state and has cut all ties.DCS led her to belive that once she done signed over her right the babies would be with their family. We have faught screamed begged and anything else we could possibly due I hired a lawyer five grand down the drain.You know all I want is my babies home.I've done everything they have even asked me to do.Now their saying I can't see my grandchildren cause I'M on a prescription for paipain.I have a very rare blood disease it causes cellulitis a form of blood poisoning to stay dormant in my tissues and nervous system it also causes a ,blood clotting disorder.even with the two blood thinners I'm on I still Continue to develop them them also.DCS knows about my illness and still they refuse to let me see my grandchildren. I Love and miss them so much Please can anyone help Us my grandchildren and I they should be worrying about what toy there going to play with but instead there worrying about if there ever coming home again.THANK YOU DCS FOR ALL YOU'VE DONE. ( And if anyone at all has any ideals or knows who can help. Please contact (765)960~5096.only serious callers

  4. He must be a Rethuglican, for if from the other side of the aisle such acts would be merely personal and thus not something that attaches to his professional life. AND ... gotta love this ... oh, and on top of talking dirty on the phone, he also, as an aside, guess we should mention, might be important, not sure, but .... "In addition to these allegations, Keaton was accused of failing to file an appeal after he collected advance payment from a client seeking to challenge a ruling that the client repay benefits because of unreported income." rimshot

  5. I am not a fan of some of the 8.4 discipline we have seen for private conduct-- but this was so egregious and abusive and had so many points of bad conduct relates to the law and the lawyer's status as a lawyer that it is clearly a proper and just disbarment. A truly despicable account of bad acts showing unfit character to practice law. I applaud the outcome.

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