Bank settles fraud lawsuit against Carinalli

North Coast Bank has settled its lawsuit against developer Clem Carinalli after suing him last year for financial fraud and demanding repayment of a $2 million loan.

Carinalli, who filed the largest personal bankruptcy case in Sonoma County history in 2009, denied doing anything wrong.

Both sides agreed to dismiss the case, with each side paying their own legal costs, according to documents filed in U.S. Bankruptcy Court last Thursday. They did not disclose further details of the settlement.

"They dropped the lawsuit and that's the end of it," Carinalli said Wednesday.

He declined further comment.

The lawsuit, filed last April in U.S. Bankruptcy Court, alleged Carinalli provided false financial statements that overstated his worth and understated his debts in order to increase a $2 million line of credit from the bank.

Ray Byrne, president of North Coast Bank, did not return calls Wednesday seeking comment about the settlement. Nor did a spokeswoman for the bank's parent company, American River Bank in Sacramento.

Carinalli's attorney declined to discuss terms of the settlement.

"We're pleased to have it resolved," said Merle Meyers, a San Francisco bankruptcy attorney. "There is no remaining dispute between the parties."

The bank had accused Carinalli of listing ownership in assets he had already sold, such as a $5 million stake in a subsidiary of the Sonoma County garbage company North Bay Corp. and at least $5.5 million in real estate. It also claims he did not list more than $5 million in debts he had with other lenders.

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