National Bank of Arizona has sued bankrupt Pathway Holdings LLC and its president, Michael F. Teufel, seeking a balance of more than $1.3 million worth of loans it had provided to the failed homebuilder.
Between November 2005 and April 2007, National Bank of Arizona provided nearly $6.3 million in loans to Teufel for a variety of development projects, according to a claim the bank filed Friday in Pathway's bankruptcy case. But Teufel defaulted on each of the loans, and earlier in the year each of the properties were sold in trustee sales.
Despite the sales, Teufel still owes the bank $1,373,324.73, which he personally guaranteed, the claim says.
The bank says it made the loans to Teufel after he falsely represented his financial position — an assertion Teufel disputes.
Teufel "falsely represented his financial condition in the statements he provided ... and such false representations were reasonably relied upon by National Bank of Arizona to loan" the builder funds, the claim says.
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A message left with attorney Michael Woodlock, who is representing National Bank of Arizona, was not returned.
But Teufel said he never falsified any financial statements, calling the allegation "an excuse" the bank used to file the claim before a deadline.
"There is not one shred of evidence to the claim, to any of their claims, that I have falsified any documents," Teufel said.
Once an acclaimed developer with projects all over Tucson, Teufel filed for both personal and business Chapter 7 bankruptcy liquidation in September. His company, Pathway, along with other affiliated companies, have been the subject of more than two dozen lawsuits.
The debt for Teufel and his companies could range from $55 million to $150 million, according to court documents.
Teufel said the failing housing market led to his company's collapse. He had chosen to personally guarantee his loans because at the time he had substantial assets and didn't see the housing downturn coming.
"We had considerable net worth, and with the crumbling of the market that net worth went from a positive to a negative in a short period of time," he said. "Ultimately, I made the wrong decisions, and ultimately it (caused) me to lose everything.