Aaron’s Founder Loudermilk Sued by FDIC Over Loans
R. Charles Loudermilk, the founder of furniture rental company Aaron’s Inc. (AAN), was sued by the Federal Deposit Insurance Corp. over $21.8 million in bad real estate loans made by the failed Buckhead Community Bank.
Loudermilk, 85, the bank’s founder and former chairman, and other directors and officers “knowingly or recklessly” approved commercial real estate loans that violated the bank’s underwriting policies, the FDIC said in a complaint filed Nov. 30 in federal court in Atlanta.
Buckhead Community Bank was started by Loudermilk in 1998 and failed on Dec. 4, 2009, the FDIC said. The Atlanta-based bank’s directors and executives “failed to follow the fundamental tenets of banking” in managing the loan portfolio, the FDIC said.
The FDIC is seeking $21.8 million in compensatory damages from the defendants. Losses to the Deposit Insurance Fund total $372.4 million, according to David Barr, a spokesman for the agency. Loudermilk was the largest shareholder of the bank’s parent company, Buckhead Community Bancorp, the FDIC said.
“The complaint and these allegations do not have merit, and we will demonstrate that in court,” Robert Long of Alston & Bird LLP, an attorney for Loudermilk and the other defendants in the lawsuit, said in a phone interview.
Loudermilk founded Aaron’s in 1958 and remains chairman emeritus. In 2008, a unit of Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), Cort Business Services, bought Aaron’s corporate furniture division for $72 million.
The case is Federal Deposit Insurance Corp. v. Loudermilk, 12-cv-04156, U.S. District Court, Northern District of Georgia (Atlanta).
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