Opinion ID: 199023
Heading Depth: 2
Heading Rank: 3

Heading: DGB Realty Trust

Text: 16 In September 1985, Ober formed the DGB Realty Trust with WCB Treasurer Glenn Gates and William Upton, a retired local police officer. DGB bought three condominium units in Hudson, Massachusetts, and financed the purchases through Greater Boston Bank. DGB lost money from the start, and its checking account at WCB soon contained insufficient money to pay the trust's bills. To cover the shortfall, Ober decided to issue a demand loan from WCB to DGB for $15,000 on December 4, 1986. On December 11, 1987, the amount of the demand loan was increased to $25,000. Although there was testimony that some bank employees, and possibly some members of the Board of Directors, knew of the interest of Ober and Gates in DGB, three directors testified that Ober did not disclose the demand loan to the Board. In January 1988, the DGB demand loan was paid off with the proceeds of a new demand loan in the name of William Upton. Although the new loan was in Upton's name alone, Ober and Gates were still each responsible for one-third of the debt. Ober and Upton paid off their shares, but Gates still owed money on his at the time of trial. 17 The demand loans did not turn DGB into a profitable venture, and on multiple occasions checks were written on DGB's account at WCB although there were insufficient funds to cover them. At that time WCB did not offer its customers overdraft protection or lines of credit. If a check was presented for payment with insufficient funds in the account, customers were typically allowed to make it good by depositing funds on the same day the check was presented; if they could not, the check bounced. Apparently checks were sometimes held for longer periods for bank employees or Board members. On Ober's instructions, however, DGB checks were held for unprecedented lengths of time, after the checks were paid and without sufficient funds in DGB's account to cover them. Fourteen checks, totaling over $36,000, were held for a total of 576 days; no checks bounced, and DGB payed no interest or fees. The last of these was the largest: check number 182, in the amount of $6,780.42, was presented for payment, and paid, on March 17, 1988, but there were insufficient funds in the DGB account to cover it until January 6, 1989.