Claymore awarded $40 million in Lake Las Vegas refinancing verdict

By Caroline Salls

Pittsburgh, Dec. 19 – A $40 million verdict was awarded in a case tied to the Lake Las Vegas development’s 2007 refinancing, according to a news release.

Specifically, Highland Capital Management LP announced that Highland-managed entity Claymore Holdings LLC won a $40 million verdict against Credit Suisse after a Texas State Court jury found the latter concealed key information in order to fraudulently induce Highland to participate in a 2007 refinancing of the Lake Las Vegas development, including concealing relevant facts and conspiring with appraisers to inflate valuation.

“The avarice and reckless disregard displayed by Credit Suisse for lenders to Lake Las Vegas and in other, similar deals, such as Yellowstone, Promontory, Tamarack, Ginn, Turtle Bay, Rhodes Homes, Flag (Anguilla) and North Las Vegas, was the most egregious behavior we had seen in 30 years,” Highland co-founder and president James Dondero said in the release.

Highland said Claymore Holdings accused Credit Suisse of fraudulently manipulating the property’s appraisal, artificially inflating the value of the Lake Las Vegas development.

According to the 2013 lawsuit, Claymore Holdings believes the appraisal methodology was concocted by David Miller, Credit Suisse’s co-head of global credit, and promoted by Credit Suisse managing director Dana Klein after previous appraisals failed to place sufficient value on the Lake Las Vegas collateral to warrant the $540 million refinancing.

Highland said evidence presented in the jury trial showed that Credit Suisse increased the value of the collateral by more than $230 million over a single weekend. Credit Suisse, as agent lender for the refinancing, never disclosed the change in the value to the lender group, Claymore Holdings said in the lawsuit.

Despite telling investors that Credit Suisse also was putting its own money into the investment, Highland said Credit Suisse began taking steps to exit its own position on the day the loan refinancing closed.

Months later, Lake Las Vegas filed for bankruptcy protection and the property ultimately sold for less than 2% of the original appraised value, the release said.

According to the release, the appraisal firms and the deal sponsor settled for a total of $150 million.

Lake at Las Vegas Joint Venture LLC is a 3,592-acre master-planned residential and resort community, which filed bankruptcy in July 2008.

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