Opinion ID: 175882
Heading Depth: 1
Heading Rank: 3

Heading: KFI Loans $2.2 Million to Acklin

Text: In late January 1999, KFI closed on a $2.2 million bridge loan to Acklin. Acklin accepted steep terms, including a non-refundable 10% commitment fee and a laddered interest rate, which rose to as high as 36%. KFI agreed to hold $675,000 in reserve . . ., to be applied, at [KFI]'s sole discretion, on [Rest in Peace]. When finalizing the bridge loan, KFI provided its closing agent with a U.S. Department of Housing and Urban Development Form 1 Settlement Statement (Settlement Statement). The Settlement Statement itemized the costs associated with the bridge loan. Consistent with the Estoppel Certificate, the Settlement Statement calculated a $2.2 million loan from KFI to Acklin, with $675,000 of the principal to be disbursed to Shelton. KFI's closing agent was prepared to disburse the $675,000 to Shelton, but the day before the loan closed one of KFI's attorneys, Rochelle Moskowitz, appended a sticky note to the Settlement Statement. The sticky note cautioned, The $675,000 .. . is not being funded at closing. It's being held by KFI in the event of default or refinance by [Acklin]. The closing agent only dispersed approximately $1.1 million to Acklin$2.2 million in principal, minus $675,000 in reserve [5] and approximately $400,000 in fees and prepaid interest. KFI never placed the $675,000 in an escrow account for Shelton's benefit. KFI used the Shelton Estoppel Certificate in conjunction with its bridge loan to Acklin. In April 1999, KFI sent the Internal Revenue Service (IRS) a copy of the Estoppel Certificate after the IRS requested documentation of the loan. In 2001, KFI submitted the Estoppel Certificate as part of its application for title insurance on Rest in Peace. KFI's closing agent falsely represented to the title company that Counsel for [KFI] is holding the sum of $675,000.00 in trust for the benefit of [Shelton]. These funds were withheld by [KFI] at closing.