Bloomberg News

Wells Fargo Sues Medical Development Over $30 Million Loan

March 23, 2012

Wells Fargo & Co. (WFC), the fourth- largest U.S. bank by assets, sued prison-service provider Medical Development International Ltd. in Delaware Chancery Court (1400L) seeking to recover $30 million in loans.

Wells Fargo said in complaint filed today in Wilmington that Medical Development, based in Ponte Vedra, Florida, has been in default on the loans “for quite some time” and asked a judge to appoint a receiver.

The company and affiliates have “also engaged in a series of self-dealing transactions including, among other things, so- called ‘loans’ to executives” for a “working farm,” a biographical screenplay and payments for “a Tesla Roadster,” lawyers for San Francisco-based Wells Fargo said in the complaint.

Medical Development, with $55.3 million in assets and $74.9 million in liabilities as of Dec. 31, is headed by Chief Executive Officer Richard Willich and provides medical contracting, management and administration for federal prisons, according to the complaint.

Tracy Wenzel, a lawyer for Medical Development, said officials will review the case and had no immediate comment.

Medical Development sued Wells Fargo on March 21 in St. Johns County, Florida, Wenzel said. The company seeks at least $15 million in damages over claims the bank tried to dominate its business, she said.

Wells Fargo “abandoned its traditional role as lender and took up the role of corporate raider” to divert company assets, according to the complaint in Florida.

The Delaware case is Wells Fargo Bank v. Medical Development International Ltd., CA7352, Delaware Chancery Court (Wilmington). The Florida case is MDI v. Wells Fargo Bank, CA12-0570, Florida Circuit Court, Seventh Judicial Circuit, St. Johns County.

To contact the reporters on this story: Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net; Dawn McCarty in Wilmington at dmccarty@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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