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This article originally appeared in the Friday May 10, 2019 issue of the Progress Times.
PlainsCapital Bank filed a lawsuit against former Mission Mayor Norberto “Beto” Salinas last week, attempting to collect $4 million.
Salinas and corporations he controls – 3 Diamonds Inc., El Toro Builders Inc., Saltillo Group LLC and S&F Developers & Builders — borrowed nearly $8.5 million from First National Bank of Edinburg.
The federal government closed First National Bank in September 2013, concerned about risky commercial real estate loans and poor management. PlainsCapital Bank struck a deal with the government to acquire First National Bank’s assets.
After the acquisition, PlainsCapital Bank contacted Salinas about 15 loans approved between 2003 and 2013.
“PlainsCapital gave notice of default to and made demand for payment upon Defendants; however, Defendants failed to pay sums due,” according to the lawsuit.
Attempts to resolve the dispute failed, which prompted PlainsCapital Bank to invoke an arbitration clause.
Attorneys for Salinas and PlainsCapital Bank argued the case in February before a panel of three arbitrators.
PlainsCapital Bank claimed that Salinas and the corporations had defaulted on the loans.
Attorneys for Salinas claimed he borrowed $1 million in July 2009 to buy First National Bank stock, which made that loan void and uncollectable.
“A review of the record indicates, however, that the Salinas Note was secured by 400 acres of real property and is not a stock loan,” according to the arbitration award. “Similarly, the evidence conclusively establishes that none of the proceeds of the fifteen notes was for the purchase of First National Bank’s other owned real estate (OREO loans).”
Attorneys for Salinas also argued that PlainsCapital Bank defrauded him.
“Respondents allege the Bank committed fraud in obtaining Salinas’ execution of four discount payoff agreements that apply to at least twelve of the fifteen notes,” according to the arbitration award.
Salinas signed the agreements during a brief meeting with Gregory Harris, who served as senior vice president for commercial loans at PlainsCapital Bank.
“Based on their interactions, Harris concluded that Salinas, an astute businessman with decades of experience as a real estate developer, understood that the agreements did not eliminate the entire amount due on the notes,” according to the arbitration award.
Iliana Castillo-Garza, who works for Salinas, testified that her boss met with Harris for a maximum of 20 minutes.
“She also testified that both she and Salinas believed the partial payments made by Salinas in accordance with the agreements were intended and accepted as payment in full on the notes,” according to the arbitration award.
Salinas didn’t testify at the arbitration hearing and declined to comment. With litigation pending, a spokesman for PlainsCapital Bank also declined to comment.
The arbitrators sided with PlainsCapital Bank. They directed Salinas to pay $125,000 in attorney’s fees, about $4 million owed to PlainsCapital Bank and about $60,000 in arbitration costs.
Salinas hadn’t paid any portion of the arbitration award by May 3, when PlainsCapital Bank filed the lawsuit against him.