The Man Who Personally Owes Citigroup $126 Million

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http://blogs.forbes.com/nathanvardi/2010/11/02/the-man-who-personally-owes-citigroup-126-million/

The Man Who Personally Owes Citigroup $126 Million
Nov. 2 2010 - 9:20 am
By NATHAN VARDI
Citigroup


Moses “Mark” Stern, a little-known 37-year-old commercial real estate investor, personally owes Citigroup $126 million. It’s a staggering amount of money for a single individual to owe the bank, which has obtained court judgments against Stern in recent months. The personal liability, perhaps the largest of its kind, stems from two guarantees Stern pledged as part of a 2007 shopping mall deal that went awry. The dealings between Citigroup and Stern have resulted in a federal criminal investigation, sparked an allegation of forgery, and embroiled a Manhattan rabbi in nasty litigation. The unholy mess is yet another reminder of Citigroup’s reckless lending in the years leading up to the credit crisis, which resulted with Citigroup being bailed out with $45 billion and currently 12% owned by U.S. taxpayers.

Born in Argentina, Stern moved to the U.S. and became a member of the Orthodox Jewish community in Monsey, N.Y., where he lives with his pregnant wife and eight children. In the late 1990s he operated distribution companies that imported clothes from Mexico. Stern claims his mentor was the late Mexican billionaire Isaac Saba Raffoul. Earlier this decade two companies Stern ran, Grupo Xtra of New York and Clothestime Stores, ended up in contentious bankruptcy proceedings.

Nevertheless, at the age of 34, Stern knocked on Citigroup’s door in 2007 to get a loan. He had an opportunity to purchase 11 shopping malls in the U.S. southeast and needed some $130 million to buy them. Stern had never done a commercial real estate deal of anywhere close to that size, but figured the bank would loan him nearly the entire amount. “Several banks were pitching me at the same time,” says Stern. “Every bank including JPMorgan Chase and Deutsche Bank wanted product.”

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