FILED: NEW YORK COUNTY CLERK 09/14/2010
NYSCEF DOC. NO. 3

INDEX NO. 650478/2010
RECEIVED NYSCEF: 09/14/2010

 (as successor in interest to LaSalle Bank, National Association) and IRA L. BRODY
allege as follows:

Preliminary Statement

1. This action arises from a shocking scheme, involving fraud, forgery, and bribery,
in which a renegade group of executives of plaintiff Concord (the ?Insiders?), a life insurance
premium ?nance company -- aided and abetted by Concord?s bank, defendant Fifth Third 
looted the assets of Concord. Fifth Third?s participation in and assistance to the fraudulent
scheme was substantial. Among other things, Fifth Third: knowingly funded loans that it knew
posed unacceptable credit risks or were fraudulent, but that generated millions of dollars in
fraudulent fees; knowingly and repeatedly covered overdrafts on Concord?s bank accounts,
which the renegade executives, led by Brody, looted to make huge illegal payments to
themselves and Fifth Third; and otherwise participated in the misapprOpriation of assets. In
addition, BofA, the loan servicer and collateral agent charged with monitoring compliance with
loan criteria, utterly failed to do so in breach of its contractual obligations to Concord. Indeed,
this fraudulent scheme would not have been accomplished without the active and illegal
participation and assistance of Fifth Third and BofA.

2. As a result of the looting and the bogus loans generated by the Concord
executives, Concord lost hundreds of millions of dollars, and its business was destroyed.
Accordingly, Concord, now controlled by its largest equity holder, Nina Investments LLC
brings this action to recover the damages it has suffered as a result of Brody and the
Insiders? breaches of ?duciary duty, Fifth Third?s aiding and abetting those breaches, and
BofA?s gross negligence and egregious breaches of contract to service the premium loans.

3. Brody and the Insiders executed their unlawful scheme by, among other things,

portraying as successful a defective new loan product known as ?Ultra? -- that they and other

 

Concord executives, in conjunction with Fifth Third, conceived and developed in 2007. Pursuant
to Ultra, high net worth individuals would (through trusts) purchase life insurance policies and
?nance the premiums and origination fees with loans originated by Concord, ?nanced by Fifth
Third, and secured by the market value of the policies (unlike traditional life insurance premium
loans, which were secured by policy cash surrender values and letters of credit). Because of the
stringent Ultra underwriting requirements as speci?ed in the facility documents, the Concord
executives could not generate meaningful legitimate business with quali?ed insureds, so they
embarked on a criminal campaign to secure for Concord bogus business from unquali?ed
insureds and to charge and generate excessively high fees -- fees which were included in the
borrowers? premium loan balances -- which they then misappropriated for themselves and for
Fifth Third. Brody and the Insiders implemented their fraudulent scheme by, among other
things, falsifying loan documentation and manipulating collateral valuations.

4. Defendants? scheme began to unravel in 2009 when Concord?s legal department
and newly appointed Chief Operating Of?cer discovered indications that the executives had
looted the Company and forged documentation for Ultra loans. In response, the outside Concord
directors appointed by Nina created a special committee and retained outside counsel to
investigate the extent of the malfeasance and to recommend remedial action. The special
committee uncovered, among other things, forgery of purported insureds? signatures and the
generation of fraudulent and excessive fees, amounting to $19.5 million, charged to insureds?
trusts. The defendants succeeded in concealing from the special committee not only the
participation of Fifth Third and BofA in Concord?s losses, but also their systemic fraud in
underwriting Ultra loans that did not qualify under the applicable underwriting criteria -- loans

that were doomed to default and which amounted to substantially all of the Ultra loan portfolio.

 

5. In 2009, Fifth Third, aware that Concord was on the verge of collapse and would
be unable to repay debts stemming from the fraud in the Ultra facility, set about to locate a ?deep
pocket? to limit its losses on the Ultra facility. Fifth Third convinced Columbus Nova
Investments IV, Ltd. another investment vehicle under common management with
Nina, to guarantee a new $19.5 million loan from Fifth Third to Concord to be used to ?nance
refunds to the defrauded trusts, by falsely representing to CNI that, among other things, Fifth
Third was negotiating and would continue to negotiate in good faith to fund a new $50-$100
million facility comparable to Ultra, which it falsely represented would be free of Ultra?s
forgeries and fraud and would enable Concord to earn its way out of its liabilities and resuscitate
its business. However, Fifth Third fraudulently concealed from CNI that: it had participated in
the unlawful scheme that resulted in the very liabilities requiring the $19.5 million loan; Ultra
had been a sham because virtually no Ultra loans met the underwriting criteria; and that it was
not acting and had no intention of acting in good faith to negotiate the funding of a new facility
of at least $50 million.

6. In early 2010, the outside directors and CNI discovered that substantially all of
the Ultra loans were fraudulent and that, as a result of defendants? egregious misconduct,
Concord could not be salvaged. This action followed.

PARTIES

7. Plaintiff Concord Capital Management, LLC (?Concord Management?) is a
Delaware limited liability company, with its principal place of business in New York.

8. Plaintiff Concord Partners, LLC (?Concord Partners?) is a Delaware limited
liability company, with its principal place of business in New York.

9. Plaintiff Concord Capital Funding, LLC is a Delaware limited liability company,

with its principal place of business in New York.

 

10. Plaintiff Concord Capital Funding, Inc. is a California corporation, with its
principal place of business in New York.

11. Concord Management is the sole member of Concord Partners, which in turn is
the sole member of Concord Capital Funding, LLC and sole shareholder of Concord Capital
Funding, Inc. Concord Management manages and controls Concord Partners, Concord Capital
Funding, LLC, and Concord Capital Funding, Inc.

12. Defendant Fifth Third Bank is an Ohio banking corporation with its principal
place of business in Ohio. Fifth Third Bank is the successor in interest to Fifth Third Bank,
National Association, which was, until September 30, 2009, a national banking association, with
its principal place of business and main of?ce in Tennessee.

13. Defendant Bank of America, NA. is a national banking association with its
principal place of business and main of?ce in North Carolina. Bank of America, N.A. is the
successor in interest to LaSalle Bank, National Association, which was, until October 17, 2008, a
national banking association, with its principal place of business in Illinois.

14. Defendant Ira L. Brody is a citizen of Tennessee, and at all relevant times, was the
Chief Financial Of?cer, and from August 2007, the Chief Operating Of?cer, of Concord
Management.

JURISDICTION AND VENUE

15. This Court has personal jurisdiction over the defendants pursuant to C.P.L.R. 
301 and 302, and has personal jurisdiction over Fifth Third and BofA because they consented to
jurisdiction in this State pursuant to the Master Funding Agreement and Participation and
Servicing Agreement identi?ed in paragraph 23 hereof.

16. Venue is proper in this Court pursuant to C.P.L.R. 503 because one or more of

the parties reside in this County, and because Fifth Third and BofA consented to venue in this

 

County in the Master Funding Agreement and Participation and Servicing Agreement identi?ed

in paragraph 23 hereof.

 

STATEMENT OF FACTS
I. Background
A. Concord
17. Concord Management, through its subsidiaries, engaged in, among other things,

traditional premium ?nance 116., originating loans to high net worth individuals to pay their life
insurance premiums, collateralized by the cash surrender value of their policies and a letter of
credit in an amount equal to the difference between the cash surrender value and the loan.
Concord was typically compensated by a relatively modest structuring fee and interest on the
loan.

18. Concord Capital Funding, LLC and Concord Capital Funding, Inc. were the
subsidiaries that originated premium ?nance loans for Concord. Although traditional premium
?nance was a stable source of business for Concord, the margins were low.

19. To raise capital in order to develop other lines of business, Concord Management
convinced Columbus Nova Partners a private investment management ?rm, to invest in
Concord. In April 2005, CN caused Nina, an investment vehicle, to make a capital contribution
of approximately $6.7 million to Concord Management, with an option to contribute more, and
$74 million to Concord Partners. In connection with its investment, Nina later appointed Jason
Epstein (?Epstein?) and Michael Sloan (?Sloan,? and together with Epstein, the ?Outside
Directors?) to Concord?s board of directors. The Outside Directors held no other positions with

Concord and did not participate in Concord?s day?to?day business.

 

B. The Creation of the Ultra Facility

20. In 2007, Concord, in conjunction with Fifth Third, developed a new, more
complex, premium ?nance product called ?Ultra.? Premium ?nance loans made under the Ultra
facility enabled wealthy individuals, through trusts (?Trusts?), to obtain life insurance policies
for up to ?ve years without any cash outlay, which were secured by the market value, rather than
the cash surrender value (as in traditional premium ?nance, where cash values were higher), of
the policies. At the end of the term of the loan, the borrowers (the Trusts) could pay off the
loan and accrued interest and keep the policy or (ii) surrender the policy by selling the policy in
the secondary market, paying off the loan and interest and keeping any remaining amount as
pro?t. The market value of their policies was supposed to be suf?cient or increase enough to
pay off the loan balances and potentially generate pro?t. As a commercial lender in the
insurance and life settlement industries, Fifth Third understood premium ?nance and the
secondary market for life insurance policies, and worked hand-in?hand with the Concord
executives on the terms of the Ultra facility, eligibility, and underwriting criteria needed to
satisfy the bank?s credit requirements.

21. To be eligible for Ultra, the potential insured had to meet age, net worth, liquidity,
credit, and other ?nancial and insurance underwriting requirements. For example, the insured
had to meet carrier risk ratings, and the insured?s life expectancy had to be between 2 and 12.5
years. Life expectancies were to be provided by one of three life expectancy providers -- ta,
Specialized, independent companies with actuarial and medical expertise that issue reports
estimating the life expectancy of the individual on whose life the insurance policy is written.
Finally, the market value of the policy had to be suf?cient to meet the minimum collateral
requirement for the term of the loan, absent secondary collateral. Although secondary collateral

was often required under the loan documents because the insured?s net worth fell within the

 

lower range of acceptability, additional collateral was never secured. The enforcement of these
requirements was critical to ensuring that Ultra loans were adequately collateralized.

22. The Ultra program required upfront payments by the borrowing Trusts of
substantial fees to Concord and Fifth Third, which were ?nanced by the loans and included in
the loan balances. Under the original Ultra documentation, the borrower paid Concord a
?structuring fee? equal to 1.5% of the face amount of the insurance policy, an ?arrangement fee?
of 1.55% of the total projected loan amount, and potentially a ?credit fee.? Because these fees
were ?nanced, they greatly increased the size of the loan and, on average, amounted to
approximately 35% of the loan balance. Initially, Concord paid approximately 97% of the
arrangement fee to Fifth Third as a ?facility? or other fee and kept the structuring fee for itself.
The ?credit fee? or ?service fee? charged by Concord was essentially the maximum amount that
Concord could charge before the loan balance would exceed the collateral value. Brody and the
Insiders aimed to collect up to 5% of the face amount of the policy in such credit fees. After
meeting resistance to credit fees, Concord eliminated the arrangement fee and increased the
structuring fee to 2.5% of the policy face amount, of which 40% (amounting to 1% of the policy
face amount) now went to Fifth Third, thereby dramatically increasing Fifth Third?s share of the
fees.

23. The Ultra transaction closed on September 27, 2007. The Ultra facility was a
$100 million credit facility from Fifth Third that enabled Concord to make premium ?nance
loans, and was implemented primarily through three interdependent agreements: (1) a Master
Funding Agreement among Fifth Third, BofA, and LIPF Funding Program II, LLC a

special purpose vehicle formed by Fifth Third (the (2) a Participation and Servicing

 

Agreement among Concord, BofA, and LIPF (the and (3) a Loan and Security
Agreement among Concord, each Trust, and the insured (as guarantor) (each an 

24. Pursuant to the Ultra structure, Concord acted as the originator of the premium
?nance loan; Fifth Third was the ultimate lender. The insured would form the irrevocable life
insurance Trust to purchase a life insurance policy, with BofA as trustee. The Trust would
borrow from Concord the money to purchase the policy, and Concord would obtain the money to
make the loan by selling a 100% participation interest in the loan to LIPF. LIPF, in turn, would
borrow from Fifth Third an amount equal to the premiums payable on an eligible insurance
policy, plus all related ?nancing fees and expenses for making the loan.

25. Pursuant to the LSA, to obtain the loan, the Trust would submit a ?borrowing
request? to Concord. Pursuant to the PSA, Concord would then submit a ?participation request?
to LIPF, and if certain loan and collateral conditions were met, LIPF would accept the request
and purchase a 100% participation interest in the loan originated by Concord. Pursuant to the
MFA, LIPF, in turn, would ?nance its purchase of the participation by submitting a ?funding
request? to Fifth Third. Pursuant to the MFA, Fifth Third then would advance the funds through
LIPF to Concord. Subject to satisfactory trust and policy documentation certi?ed by BofA,
Concord would advance the loan funds to the Trust, and to secure its payment obligations, the
Trust would assign the policy and other collateral to Concord. BofA, in turn, would pay the
premiums to the insurance carrier on behalf of the Trust and disburse the ?nancing fees and
expenses to Concord and Fifth Third.

26. As a result of these transactions, the Trust would be indebted to Concord, LIPF
would have a participation interest in the loan made by Concord, and LIPF would be indebted to

Fifth Third. Concord would assign its bene?cial interest in the collateral to LIPF, and LIPF

 

would grant Fifth Third a security interest in its participations and related securities. The
collateral test which was supposed to be satis?ed for the entire term of the loan -- required that
the outstanding loan balance not exceed 85% of the policy?s market value for loans with
balances of less than $10 million, or 60% for loans with balances over $10 million.

27. Pursuant to the PSA and MFA, funding would only be provided for ?Eligible
Premium Loans,? which required, among other things, that the loan be secured by an eligible life
insurance policy; the insured meet certain requirements (6. g. age, net worth, etc); a valid life
expectancy evaluation, life settlement evaluation, and funding model analysis be delivered; and
the minimum collateral requirements be met and continue to be met for the life of the loan.
BofA, as servicer, was to certify that all required documentation had been received and was in
compliance. Pursuant to the PSA, if a funded premium ?nance loan did not qualify for Ultra,
Concord could be forced to repurchase the participation, and LIPF would pay the money back to
Fifth Third. In addition, Concord agreed to indemnify Fifth Third with respect to such ineligible
transactions. Thus, concord -- not Fifth Third bore the risk of poor underwriting.

C. The Ultra Facility Was Doomed from the Start

28. Ultra thus differed from traditional premium ?nance in two critical respects.
First, in Ultra, the market value of the policies served as the primary collateral for the loans,
rather than the cash surrender value, and the policies were expected to be sold at maturity to pay
off the outstanding loan balance. Second, in Ultra, borrowers would agree often unwittingly
because they were not required to pay anything out of pocket to incur loans which included
much larger fees to Concord and Fifth Third, ?nanced by the premium loans. Thus, from the
lender?s perspective, the transaction was designed for the upfront fees, not to obtain the death
bene?t, and the market value of the policy had to be high enough to pay off the loan in case of

default during the term of the loan and at maturity. An accurate estimation of the market value 

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5.6. the present value of the expected death bene?t less the present value of the expected periodic
premium payments until the insured?s death for each policy was thus critical to Ultra. The
longer the insured?s life expectancy, the lower the current market value of the policy; the longer
an insured lives, the more premiums would be paid before receipt of the death bene?t.

29. Ultra attracted inferior loan applicants. Brokers steered individuals with higher
net worth, liquidity, and good credit to traditional premium ?nance because such individuals
posed little risk to the lenders; they had the ability to pay off the loans, could put up the
necessary letters of credit, and otherwise easily met the requirements for the traditional loans. In
other words, the better loan applicants did not need to rely on the market value of their policies
and therefore did not need to pay higher fees to secure the type of ?free? insurance provided by
Ultra. Those who might need to do so were referred to Concord for Ultra.

30. Most importantly, the fact that the defendants charged exorbitant fees and
included them in the loan balances ensured that almost no cases could qualify for funding
because the loan would be undercollateralized from the start. The size of the fees, and thus the
size of the loan, meant that the market value of a policy would rarely be high enough or
appreciate fast enough to support the loan. Indeed, the defendants, including Fifth Third, knew
or were reckless in not knowing that the success of Ultra was highly sensitive to policy
valuations and fee expenses, but structured and implemented Ultra to glean as much in upfront
fees as possible. As set forth below, Fifth Third dictated that non?market-based assumptions be
used in preparing the valuations with full knowledge that this would result in in?ated values,
which, in turn, would allow Fifth Third, Brody, and the Insiders to charge higher fees.

31. While structuring the terms of Ultra, Fifth Third had insisted that the policy

valuations be performed by Life Asset Group then headed by Gary E. Brecka

ll

 

(?Brecka?), even though LAG was unquali?ed to do so because it was a life settlement broker,
not an expert valuation provider. Moreover, using LAG posed a con?ict of interest because for
some time LAG had been soliciting Concord to make an investment in LAG. Indeed, just
months before the Ultra facility closed, Fifth Third?s attorneys at McDerrnott Will Emery
told Fifth Third?s Matt Ross Managing Director of the Insurance Finance
Group, that the valuation company could not be an af?liate of Concord and had to use proper
actuarial estimates in valuing policies. Fifth Third ignored advice and replaced MWE
with the Mayer Brown law ?rm just before closing the Ultra facility. In early 2008, Brody and
the Insiders arranged for Concord to invest in LAG. Notwithstanding the advice it received from
the MWE law ?rm, Fifth Third permitted the Insiders to continue using LAG as the valuation
company until March 2009, ten months after Concord invested in LAG using funds loaned by
Fifth Third.

32. The combination of Concord?s using its control over LAG to manipulate policy
valuations and the changes to the Ultra fee structure yielded huge ?nancial bene?ts for Fifth
Third, Brody, and the Insiders. The valuation manipulation and new fee structure meant that not
only would there be more fees as a result of the greater volume of loans, but that Concord and
Ultra would take a bigger piece of each loan as fees. Indeed, in the period before the changes,
Concord and Fifth Third took as fees on average 30% of the ?rst year premiums a total of
$2.9 million. Using the new fee structure, Concord and Fifth Third more than doubled their take,
paying themselves on average 78% of the ?rst year premiums -- a total of $31 million.

II. With Fifth Third?s Knowledge and Substantial Assistance,

Brody and the Insiders Generated Fraudulent Fees
Through Forgery, Fraud, and Misrepresentation

33. During the ?rst ?ve months that Ultra was available, Concord extended only ten

Ultra premium ?nance loans, seven of which were re?nancings of existing policies that had been

12

 

made to two members of one family, and it became clear to Brody and the Insiders that Ultra was
a failure.

A. Brody and the Insiders Manipulated and Falsi?ed Policy Valuations

34. After arranging for Brecka to join Concord in May 2008 and investing in his
company LAG, Fifth Third, Brody, and the Insiders accelerated their campaign to generate
fraudulent business and collect exorbitant fees. Although there was no material increase in sales
leads for Ultra, after Brecka joined Concord?s payroll, deals suddenly started closing. To
accomplish this, Fifth Third directed and encouraged Brody, the Insiders, and the valuation
provider to manipulate and falsify valuations to satisfy loan criteria, which they did. Their
tactics included, but were not limited to:

using an unreasonable discount rate, as speci?cally dictated by Fifth
Third;

(ii) understating expected mortality rates, as speci?cally dictated by Fifth
Third, by using VBT 2001, an outdated actuarial table, instead of the
market-standard VBT 2008, which lengthened life expectancies;

shopping for the shortest life expectancy from several providers, even if
the number was an extreme outlier;

(iv) using life expectancies from providers not approved under the 
using stale life expectancy data for particular insureds;

(vi) updating life expectancies by merely subtracting the number of months
that had passed since the last report, rather than performing an actual
analysis;

(vii) providing valuations to LAG for approval, rather than the reverse;
falsifying the outputs in the valuation model to make loans qualify; and
(ix) forging signatures on LAG valuations.

35. Fifth Third was well aware that the sole valuation provider was highly con?icted,

and despite the issue being raised several times, did nothing about it. For example, when Brecka

13

 

was ?rst hiredin May 2008, Ross informed BofA: ?We are also going to have to get a new
appraiser (Maple Life) for all life settlement valuations going forward, as Gary Brecka Life
Asset Group is now con?icted out.? Then in September 2008, Ross told Brody: ?Going
forward, we will be requiring someone other than Gary [Brecka] to do the life settlement
valuations. This will be for all new policies as well as updates on existing policies? because
Ross was ?getting heat about this straight from the top.? Nonetheless, LAG was not replaced as
the valuation provider until March 2009.

36. Further, Fifth Third, as an institution experienced in the life insurance market,
knew or was reckless in not knowing that the valuations applied to the Ultra policies were false.
For example, in one instance, Fifth Third provided a loan of $1.86 million to fund the purchase
of an insurance policy. Of that loan, only $140,000 was used to pay actual premiums while
approximately $1.7 million was paid out in fees to Concord and Fifth Third. To qualify that loan
for the Ultra program, LAG had to represent, and Fifth Third and LaSalle had to accept, that the
insurance policy collateralizing the loan, which had a paid premium of only $140,000 could, on
the day of issuance, be sold for $2.2 million 1,570% of the premium paid. Fifth Third
accepted such absurd valuations, and collected its fees.

B. Brody Forged Required Ultra Documentation

37. Moreover, because insurance carriers and agents balked at allowing Concord to
charge credit fees, Brody and the Insiders charged credit fees to Trusts without the insureds?
consent, based on forged documents. Brody used software to electronically cut and paste the
insureds? signatures onto loan models and altered executed LSAs by inserting different fee
schedules into the agreement from what had been agreed upon by the Trusts. Thus, two sets of
loan documents were maintained in and/or transmitted from Concord?s New York of?ces to the

carriers, Fifth Third, and BofA. In at least one instance, the documents submitted to the carriers

14

 

falsely showed that no credit fees had been charged, while the Insiders submitted a second,
forged, set to Fifth Third and BofA which included the fees. Fifth Third knowingly participated
in this fraud against carriers as it was fully aware that carriers would not accept the excess credit
fees and would not accept loan models that showed the loans being under water in less than ?ve
years. Yet Fifth Third regularly waived these requirements, knowing that Brody and the Insiders
were not disclosing these facts to the insurers.

38. Brody and the Insiders also decided to collect, through forged consent letters,
additional unexplained and post-closing ?service fees? not authorized by the governing
documents. In total, Brody forged at least six fee letters by ?Photo-shopping? the insureds?
signatures on letters approving the addition to the loan balance of such bogus secondary ?service
fees? to Concord, after the loan had already closed, for no additional services rendered. Fifth
Third approved these fees even though the facility documents did not allow for them, and there
was no reasonable basis to believe that a borrower would approve of these additional fees after
their loans had already ?mded.

39. The long list of forgeries included forged letters from accountants. As a
precondition to an Ultra loan, Concord was required to obtain a letter from a CPA con?rming the
net worth of the potential insured. At least twenty Ultra loans were predicated on CPA letters
that Brody forged, some of which involved cutting and pasting the signatures onto the
letters.

40. In addition to the forgeries, Brody and the Insiders also collected illegitimate fees
million) from bogus loans extended to empty trusts (126., trusts that had not purchased
policies) and illegitimate fees million) based on higher policy face amounts than those of

the policies actually purchased by the Trusts.

15

'wt'ha.

 

41. Fifth Third was aware that the ?nancing it was extending to Concord was, in
many cases, based on illegitimate, bogus documentation. For example, in one case, in March
2008, a loan to an empty Trust was approved, notwithstanding that not all required documents
had been provided and there was no policy collateral for the loan. In fact, Brody forged the
documents that needed the insured?s signature (6. g. the LSA, loan model, trust agreement, and
disclosure statement). In an email exchange, Fifth Third?s Ross asked Brody about a missing
acknowledgement of policy assignment ?om the carrier, to which Brody reSponded: ?We are at
risk for [rescission], just like with [another previous case] we cover it. Remember.? Ross
replied: Not so loud,? while Brody reassured him: did not cc everyone else. I went
[to] Spitzer school of secrecy.? Indeed, the defendants used the fraudulently-obtained loan not
only to generate fees, but also to cover a $250,000 overdraft in a Concord account at Fifth Third.
The day before, Fifth Third?s Ross had complained by email to Brody about the overdraft: ?You
are making it very dif?cult for me to help you when you have me tell everyone that it was going
to be cleared yesterday and it wasn?t.? Brody assured Ross that the bogus deal he was working
on would cure the problem: ?Just so you don?t freek [sic] out that means the overdraft is ?xed
?rst thing in the morning.?

42. In this example, of the $6.5 million loan to the Trust, $3.8 million went to
Concord and Fifth Third as fees. When BofA wired the remaining $2.7 million to the carrier to
pay premiums, the carrier returned the money because no policy was pending to be issued. No
one enforced the requirement that the premium ?nance loan actually be used for its intended
purpose to pay premiums. Instead, with Ross?s and BofA?s knowledge, the $2.7 million sat in
the Trust for months before Fifth Third and the Insiders misapprOpriated it, as alleged in

paragraph 47 hereof. As this loan had no policy and no collateral, the facility documents

16

 

required that Fifth Third and BofA declare an event of default in March 2008, which would have
unveiled the ?-aud. There were four cases where loans were made, fees were paid, and no
policies were issued, and Fifth Third and BofA concealed the events of default.

43. Also in March 2008, there was a signi?cant change in the industry: the
publication of VBT 2008, a new actuarial table that lengthened life expectancies, which
decreased the market value of the Ultra policies. Thus, the collateral values in the reports
prepared by BofA thereafter should have re?ected lower collateral values. Despite the
signi?cance of this industry-wide change, Fifth Third did not require that LAG or Concord
utilize VBT 2008 going forward or that existing policies be revalued based on VBT 2008.
Instead, Ross permitted Brody and the Insiders to shop for and use the shortest life expectancy
estimates among various life settlement providers, even if the number was an outlier by several
years.

44. During the period from June to October 2008, Brody and the Insiders generated
millions of dollars in fees from additional bogus Ultra loan transactions, which required Fifth
Third to waive such critical underwriting requirements as the insureds? life expectancy, net
worth, and liquidity, involved additional forgeries by Brody and the Insiders, and/or involved,
with Fifth Third?s and BofA?s knowledge, additional empty trusts.

45. By September 2008, Brody, the Insiders, and Fifth Third were faced with the
issue of what to do about low collateral values, empty trusts, and continuing Concord overdrafts
(due, in large part, to looting by Brody and the Insiders). To mask these problems, on September
9, Ross told Brody to fraudulently in?ate the Ultra loan portfolio value: ?Let?s only project

default dates for those that we anticipate will blow up in 12 months or less.? Shortly thereafter,

I7

 

they reduced 12 months to 6 months. If the portfolio reports had projected default dates for the
entire term of the loans, the high default rates would have revealed the underwriting de?ciencies.

46. In the fall of 2008, Brody and the Insiders also continued manipulating the policy
valuations in the portfolio. The fraudulent portfolio collateral reports started to re?ect just
enough appreciation to make the loans stay a?oat, and Brody and the Insiders manipulated
valuations to get more deals done, to generate more fees, and to cover Concord overdrafts, which
were continuing despite Ross?s complaints. For example, on September 23, Ross approved a
loan to a Trust after the Insiders had supervised the alteration of data to make the loan qualify.
Brecka supervised and signed off on a valuation process in which the Insiders shortened the
insured?s life expectancy by 6 months. Notably, the loan would have qualified without falsifying
the data if the Brody and the Insiders had not insisted on the full 2.5% structuring fee.

C. Brody and the Insiders Misappropriated Trust Assets

47. Because of Concord?s liquidity problems -- and especially to cover an existing $2
million overdraft -- the Insiders approached Ross in or about September 2008 about increasing
the size of Concord?s revolving loan from $2 million to $4 million. To collateralize this
increase, Ross and the Insiders brie?y discussed the possibility of a corporate of?cer pledging
his personal securities. Instead, they jointly decided to use assets of the Trust containing $2.7
million, as alleged in paragraph 42 hereof To implement this fraud, the corporate of?cer Opened
up a personal pledge account with Fifth Third, and Fifth Third had $2 million wired into that
account. The $2 million that was wired into the account came from the Trust?s account as
directed by Ross. On October 1, 2008, Brody emailed BofA?s Bob Bockrath, instructing him to
?[p]lease repay to Concord (our account at 5/3 [account number]) two million dollars out of the
Trust. This will constitute a partial prepayment [of the Ultra loan] by [the] Trust. Matt [Ross]

will confirm this transaction.? Ross replied to all, ?Con?rmed,? thereby misrepresenting the use

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of proceeds and intentionally deceiving BofA into making the wire transfer. Ross further
covered up the misappropriation of Trust assets when he con?rmed to a colleague that he had
received the $2 million to pay down the Trust?s Ultra loan. Nonetheless, BofA breached its
duties in making the transfer, because the account number given was not an Ultra collection or
expense account. Thus, the Trust?s money was wired into the personal pledge account to support
a Concord payment obligation. Fifth Third thus piled more debt (by increasing the revolver)
onto what it knew to be a ?nancially troubled company, and then covered its exposure by
misappropriating Trust assets.

48. Concord?s situation continued to worsen into November 2008, with overdrafts
continuing to the point where Concord?s cash ?ow problems prevented Fifth Third from taking
its share of Ultra fees. On December 5, Ross complained to Brody: ?These seemingly
continuous ?timing? issues are wearing thin with the powers that be. I have promised for the 
time that we could absolutely take the fee today, but once again you guys are asking me to wait
until the 17th at the earliest. I can?t express to you enough how these broken promises have
damaged both my reputation and yours.?

49. In December, 21 Ultra loans were approved, with Fifth Third indiscriminately
granting waivers in all 21 cases to get business done regardless of the risks: in 20 cases, Ross
waived the minimum liquidity; in 11 cases, the minimum net worth; in 5 cases, the life
expectancy requirement; in 19 cases, the loan commitment amount; and in 1 case, the minimum
age. In 14 cases, Ross permitted Concord to use life expectancies from unapproved providers,
AVS Underwriting and EMSI. The fees generated in December alone amounted to almost $4.3

million. Fifth Third?s share of that was approximately $1.7 million.

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D. Brody and the Insiders Made Misrepresentations to the
Outside Directors to Hide Their Misconduct

50. Concord?s Insiders made clear that they did not care whether the loans were
viable. Indeed, Concord?s Credit Committee regularly approved clearly ineligible loans. In
addition to Brody?s forgeries, in which he was assisted by other Insiders, Brecka, in conjunction
with some of the Credit Committee members, supervised and directed faulty valuations to make
ineligible loans pass the models.

51. Unbeknownst to the Outside Directors, the majority of funded cases did not
qualify and/or were the subject of fraud committed by Brody, the Insiders, and Fifth Third, with
the assistance of BofA. The defendants repeatedly made oral and written misrepresentations to
the Outside Directors, including at periodic status meetings, that the revenues generated from
Ultra were legitimate. Brody, the Insiders, and Fifth Third concealed from the Outside Directors
the facts that: almost none of the funded loans quali?ed for Ultra; waivers of loan requirements
occurred in 66 out of 67 cases; and Fifth Third was only approving and ?mding Ultra loans to
generate excess fees for itself, Brody, and the Insiders.

52. In total, approximately $80 million of fraudulent loans were made under the Ultra
facility.

BofA Breached Its Duties to Concord

53. In connection with the Ultra facility, BofA served as collateral agent, servicer,
and trustee. In its role as servicer under the PSA, BofA was responsible for reviewing and
certifying that the premium ?nance loans complied with all the requirements of the Ultra facility
before any loans were advanced. For each loan, BofA was required to verify, among other
things, that: the insured met eligibility requirements; a life insurance policy existed or was

pending; the policy was from an eligible carrier with the required ratings; the life insurance

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policy had been assigned as collateral for the loan; the minimum collateral requirement was
satis?ed; original documents had been obtained; and all deliverables had been received and
reviewed, including life expectancy and life settlement evaluations. As such, BofA?s role in the
Ultra facility was to act as an independent review mechanism in order to prevent fraud and
ensure full compliance with the Ultra facility documents.

54. Under the PSA, BofA was also required, for the bene?t of Concord, to: issue
portfolio reports, stating the minimum collateral requirement, policy collateral value,
and the value of any additional credit support supporting each periodically obtain updated
collateral valuations to determine whether the collateral complied with the minimum collateral
requirements, and if not, to collect additional credit support necessary for such compliance; and
act as custodian of records and obtain originals of all transaction documents. In servicing the
premium loans, BofA was required to use the degree of skill and care that it exercises with
respect to payment obligations that it services for itself, and it was not empowered to waive any
covenant in an LSA or amend or modify it without the prior written consent of Concord. As
collateral agent under the MFA, BofA assumed similar duties.

55. BofA breached its contractual duties to Concord and was grossly negligent by,
among other things, failing to obtain and maintain original documents, falsely certifying loan
compliance, af?rmatively and purposely misreporting collateral values in portfolio summary and
collateral reports, failing to mandate the receipt of letters of credit or additional collateral needed
to satisfy the minimum collateral requirements, failing to verify the issuance of insurance
policies for Trusts and subsequently failing to prOperly report the absence of insurance policies,
failing to take appropriate action to investigate what BofA knew were suspicious looking letters

and signatures, failing to question the charging of fees which were not supported by the Ultra

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facility documents, and failing to designate events of default or termination events under the
Ultra facility documents.

56. BofA has even acknowledged that it was in breach of the facility documents. In
September 2008, BofA?s Bob Donaldson wrote to Fifth Third?s Ross regarding four empty
trusts: ?It is our understanding that you have been kept informed by Concord of the situation we
have with several of the advances taken under the LIPF II facility that have not yet been used to
purchase policies. . .. In our servicing capacity, we should be re?ecting on our collateral reports
the fact that there is effectively a policy valuation of zero and therefore the Minimum Collateral
Requirement is not satisfied for these loans. I?m not sure what the fallout on your end will be
when we start reporting in this manner. . . 

IV. Brody and the Insiders Looted Concord
With Fifth Third?s Knowledge and Assistance

57. Brody and the Insiders looted Concord of millions of dollars in corporate assets.
They used the funds to pay for their personal extravagant lifestyles without any bene?t to
Concord. They used Concord?s funds to, among other things, pay for personal expenses, engage
in undisclosed related-party transactions, award themselves excessive and unearned
compensation, incur unnecessary and inappropriate business expenses, and purchase huge life
insurance policies for themselves and other Concord executives.

58. As alleged above, in May 2008, Brody and the Insiders arranged for Concord to
invest $2.5 million in Brecka?s insolvent brokerage company, LAG, and to hire, with Fifth
Third?s knowledge, Brecka as the head of origination at Concord. Brody and the Insiders caused
Concord to borrow the money from Fifth Third, of which $1 million went directly to Brecka.

The ?investmen was nothing more than a payoff to Brecka that provided no bene?t to Concord.

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S9. The diversion of Concord?s assets by Brody and the Insiders for personal use
included payments of, among other things, tuition at Rye Country Day School, a Disney World
vacation, 200 computers, home furnishings, outings to Miami night clubs, limousines, sports
tickets, jewelry, and other luxury goods. Brody and the Insiders bought others? silence by
buying them gifts, as well, or not questioning their personal expenses -- for example, by using
Concord funds to pay for spa retreats at Canyon Ranch, vacations in Miami and Las Vegas,
electronics, and Sports equipment.

60. Fifth Third knew that Concord continually was overdrawn because of the looting
by Brody and the Insiders. Among other things, Fifth Third issued and maintained records for all
of Concord?s credit cards on which many of the expenses were charged. As Concord?s long-time
banker, Fifth Third monitored Concord?s ability to repay the loans it had extended to Concord
and knew that the Insiders? spending outpaced Concord?s revenue sources. Moreover, Ross
himself was a direct bene?ciary of the looting, as he was showered with gifts of travel, sports,
concert and theater tickets, and political access, among other things. Further, the exorbitant fees
Fifth Third was receiving via Ultra cemented Ross?s reputation within Fifth Third as a top
revenue producer, with Concord as his principal client.

61. Brody and the Insiders also looted the Company by engaging in undisclosed
related-party transactions. One vendor purportedly used by Concord was Lone Star Volunteers
LLC (?Lone Star?), a lobbying ?rm owned and controlled by Brody. From 2005 through 2008,
payments to Lone Star totaled approximately $4.5 million, millions of which were ?inneled to
Brody and the Insiders, including hundreds of thousands of dollars to Brody?s bank accounts.

62. Brody and the Insiders further enriched themselves by increasing their

compensation and awarding themselves excessive, unearned bonuses. The executive

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compensation structure was such that base salaries and bonuses were tied to revenue
benchmarks. Because Brody and the Insiders concealed their fraudulent scheme, Concord?s
board approved enormous pay packages to the Insiders based on fraudulent revenues.

63. Brody and the Insiders also wasted corporate assets on such extravagances as
private jets, limousines, ticket brokers, boxes at sports arenas, and of?ce leases in New York and
Tennessee that were priced well above market and were unnecessary to support Concord?s bona
?de business activities.

64. Although Concord was a struggling business, Brody, the Insiders, and Fifth Third
presented the false picture to the Outside Directors that, because of Ultra, Concord was thriving.
In fact, over a period of 12 months, Concord?s accounts were overdrawn 45 times for a total of
71 days, in an aggregate amount of over $47 million.

V. Concord?s Outside Directors Discover the Looting and Fraud

65. Brody resigned, as of December 31, 2008, to pursue a government appointment as
treasurer of Tennessee. After Brody left -- and he could no longer block access to Concord?s
books and records the forgeries, empty trusts, and looting were discovered.

66. In January 2009, even after his departure, Brody tried to charge a $2 million
service fee on an existing loan to an insurance Trust by forging a letter to BofA. For the ?rst
time, however, despite later acknowledging that it had been suspicious of such letters, BofA
forwarded the forged letter to Concord?s legal department. The legal department was baf?ed by
the letter as the Ultra facility did not permit such secondary fees. When the legal department told
. BofA that the letter looked unusual and that it was investigating, BofA volunteered that it had
received and disbursed monies after receiving other such secondary fee letters. After an
investigation, the legal department discovered that the letters purportedly signed by the insureds

had all been forged.

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67. Consequently, the Outside Directors caused Concord?s board of directors to form
a Special investigation committee and to retain the law ?rm of Skadden, Arps, Slate, Meagher 
Flom (?Skadden?), which prepared a report detailing Brody and the Insiders? fraud in generating
fees. Because Skadden?s investigation was limited and directed towards the fee fraud and the
looting, Skadden did not investigate or uncover the Insiders? underwriting fraud or Fifth Third?s
integral role in the fraud.

68. The Outside Directors held no other positions with Concord and did not
participate in Concord?s day-to-day business. Consequently, prior to 2009, the Outside Directors
lacked knowledge of the form, substance, or magnitude of Brody and the Insiders? fraudulent
scheme. The Outside Directors could have and would have stopped the fraudulent scheme prior
to 2009 had they become aware of it, by among other things: ?ring Brody and the Insiders;
replacing management; terminating the Ultra facility; allocating resources to other products; and
otherwise seeking relief in the courts.

VI. Fifth Third Fraudulentlv Induced a New Concord Loan and a CNI Guaranty

69. Having made $80 million of undercollateralized and ineligible loans to generate
fees, Fifth Third took steps to try to cover Fifth Third?s exposure to Concord.

70. In January 2009, when the fee fraud was uncovered, Concord recognized that it
may need to reimburse the Trusts for the fraudulent fees that had been included in their loan
balances. While, pursuant to the PSA, Fifth Third could seek to put ineligible loans back to
Concord, Fifth Third knew that would be futile because Concord lacked liquidity.

71. Fifth Third therefore concocted a fraudulent scheme to get Concord to incur a
debt to repay the fraudulent fees, and CNI, another investment vehicle managed by CN, rather

than Nina, to guarantee that debt, by a series of misrepresentations. As he explained in an email,

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Ross chose CNI as the guarantor because CNI, in contrast to Nina, had ?a shit?pile (this is a new
technical ?nancial term) of assets.?

72. To convince CNI to guarantee the loan, Fifth Third falsely represented to CNI,
among other things, that: Fifth Third was negotiating in good faith to extend to Concord a new
$130-$100 million facility to fund a new, improved premium ?nance loan program free of Ultra?s
forgeries and fraud, when in fact it was not acting and had no intention of acting in good faith;
and material facts concerning the new facility and its economics. Crucially, Fifth Third
fraudulently concealed from CNI its participation in and assistance to Brody and the Insiders?
breaches of ?duciary duty.

73. Thus, in or about January 2009, Ross knowingly misrepresented to Outside
Director Epstein that Concord could earn its way out -- e. generate enough revenues to pay
back the fraudulent fees and then start generating real pro?ts -- if Concord and Fifth Third were
able to structure the new credit facility (?Ultra Plus? or the ?Ultra Plus Facility?). What Ross
failed to disclose was that Ultra, and therefore Ultra Plus, was a sham because of the
underwriting fraud a, the manipulation of valuations and waiver of underwriting
requirements). Accordingly, the Outside Directors were unaware that lending opportunities
would be negligible or non-existent under Ultra Plus when the facility requirements were
actually followed. For Ultra Plus -- unlike Ultra -- loans could not be approved and ?indcd on
the basis of faulty policy valuations because an independent third party performed accurate
valuations and effectively screened out ineligible loans. Fifth Third had required that Ultra Plus
loans be secured with lender protection insurance coverage for the amount of the
collateral requirement; upon a loan default, the LPIC provider would pay Fifth Third, take

possession of the policy, and try to sell the policy in the secondary market. Because it bore the

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ultimate risk of loss, the LPIC insurer would perform its own valuations and would not provide
the necessary coverage unless the policy that served as collateral had suf?cient value to support
the size of the loans. As alleged above, the capitalization of enormous fees into the loan
balances made this virtually impossible.

74. To maintain the appearance that Ultra was fundamentally sound, Ross continued
to approve and fund Ultra deals that did not meet loan requirements during the ?rst few months
of 2009. In January and February, all nine loans that were funded to Trusts failed to meet
underwriting criteria including, among others, life expectancy range. To the Outside Directors,
however, it appeared that Concord?s business could survive if premium ?nance loans could be
funded similarly under Ultra Plus. In addition to this carrot, Ross threatened the stick of cutting
off Concord?s funding altogether unless the Outside Directors acceded to his demands.

75. When Concord agreed to take a $19.5 million loan to remediate the fee fraud and
CNI agreed to guarantee it, Concord?s independent decision makers and CNI did not know --
because Fifth Third had concealed that Fifth Third had aided and abetted Brody and the
Insiders? breaches of ?duciary duty and that Ultra was a sham. Had Concord and CNI known of
these facts and of Fifth Third?s complicity, they would not have executed a loan agreement or
guaranty.

76. Fifth Third did not establish a new facility for Concord until September 2009, and
then only for a wholly?insuf?cient $35 million. Further, because the LPIC provider valued the
insurance policies accurately and because Ross, unlike his arrangement with Brody, insisted that
each and every stringent restriction of the new facility be enforced to the letter, not one loan was

approved and ?mded under Ultra Plus. Even if Concord had used the entire facility to originate

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legitimate Ultra Plus loans, it would have been impossible for Concord to earn its way out; it
could not generate $19.5 million in fees from making $35 million worth of loans.

77. In October 2009, still hoping that the business could be salvaged, CN, on behalf
of Nina, engaged outside consultants to assist in restarting Concord?s business. With Brody and
the Insiders gone, consultants were able to view all of Concord?s records in connection
with their efforts, and it was then that they uncovered the massive, systemic underwriting fraud.
As CN discovered, the business model that Fifth Third developed for Concord generated
revenues through the use of fraudulent, vastly in?ated policy market values.

VII. Concord Collapsed from the Fraudulent Scheme

78. Defendants? scheme caused Concord to become insolvent and its investors to lose
their entire investment. Brody, the Insiders, and Fifth Third siphoned substantially all of
Concord?s cash to themselves and ruined Concord?s creditworthiness, preventing it from
engaging in other lines of business. The scheme destroyed the value of Concord?s traditional
premium ?nance business because Concord?s lender refused to renew the facility after
discovering the fraud, and it also destroyed the value of Concord?s asset management business,
which had previously been valued at $25 million. When new business could not be written
under Ultra Plus, Concord ?nally had to be put into runoff. Concord is unable to repay any of its
debts.

Fifth Third Tried to Cover UD Its Involvement

79. Having participated in and aided and abetted Brody and the Insiders? wrongdoing,
Fifth Third?s Ross sought to destroy and/or steal information from Concord when CN began to
suspect Fifth Third?s role in Brody and the Insiders? fraudulent scheme.

80. Thus, in April 2009, Ross asked Life Exchange, Inc., under the false premise of a

facility workout, to demand that Concord give Fifth Third unfettered access to Concord?s

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servers. There was no legitimate business reason for Fifth Third to need unlimited access to the
computer system.
81. Ross also contacted a former Concord employee to ask for help hacking into
Concord?s servers. On April 7, 2010, Ross asked:
Can you give me the name and contact info of the IT guy from
Inscap. We need to get in touch with him to help us get info off of

their servers. is trying to fuck us, so we are going to crush
them. (emphasis added)

82. When the former employee asked him what had happened, Ross explained:
?Jason the [an Outside Director] pushed things too far and the whole restructuring blew up as
a result. He then went to Cinci to accuse me of being involved with Ira [Brody] and the fraud
(bullshit diversion to try and weasel out of their gty. It?s going to get super ugly. I can?t say
more other than we want what is on their servers and I think the IT guy can (and may want to out
of spite for CNP assholes) help us.?

FIRST CAUSE OF ACTION
(Against Brody for Breach of Fiduciary Duty)

83. Plaintiffs repeat and reallege paragraphs 1 through 82 hereof as if fully set forth
herein.

84. Brody, as an of?cer, director, and/or agent, owed ?duciary duties of care, loyalty,
good faith, and trust to Concord. As set forth above, Brody violated his ?duciary duties to
Concord.

85. Brody?s conduct was outrageous, willful and wanton, and perpetrated with malice
and reckless indifference to the rights of Concord. At all relevant times, Brody?s conduct was
hostile and adverse to the interests of Concord, and was motivated solely by greed and self?

interest. Brody completely abandoned Concord?s interests.

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86. By reason of the foregoing, Concord has been damaged and is entitled to
compensatory damages, in an amount of at least $70 million, to be determined at trial, as well as
to punitive damages, in an amount of at least $250 million, to be determined at trial.

SECOND CAUSE OF ACTION
(Against Fifth Third for Aiding and Abetting Breach of Fiduciary Duty)

87. Plaintiffs repeat and reallege paragraphs 1 through 86 hereof as if fully set forth
herein.

88. Fifth Third knew or recklessly disregarded the fact that Brody and the Insiders
were breaching their ?duciary duties to Concord.

89. As alleged above, Fifth Third knowingly and substantially assisted Brody and the
Insiders? breaches of their ?duciary duties. Absent the participation of Fifth Third, Brody and
the Insiders? breaches of their ?duciary duties to Concord would have failed.

90. The conduct of Fifth Third was outrageous, willful and wanton, and perpetrated
with malice and a reckless indifference to the rights of Concord.

91. By reason of the foregoing, Concord has been damaged and is entitled to
compensatory damages, in an amount of at least $70 million, to be determined at trial, as well as
to punitive damages, in an amount of at least $250 million, to be determined at trial.

TI-HRD CAUSE OF ACTION
(Against Brodv for Conversion)

92. Plaintiffs repeat and reallege paragraphs 1 through 91 hereof as if fully set forth
herein.

93. Brody unlawfully converted Concord assets for his own bene?t.

94. Brody deprived Concord of its rights in diverted funds without Concord?s consent
and without lawful justi?cation. Brody intended to and did exercise dominion and control over

the diverted funds in a manner inconsistent with Concord?s interest in those funds. Because of

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Brody?s unlawful conversion of monies belonging to Concord, Concord has incurred signi?cant
losses.

95. By reason of the foregoing, Concord is entitled to compensatory damages, in an
amount of at least $70 million, to be determined at trial.

FOURTH CAUSE OF ACTION
[Against BofA for Breach of Contract)

96. Plaintiffs repeat and reallege paragraphs 1 through 95 hereof as if ?illy set forth
herein.

97. Concord and BofA entered into valid and binding contracts.

98. Concord is not in breach of any contractual obligation to BofA.

99. As alleged above, BofA has breached its contractual obligations to Concord by,
among other things: certifying compliance with the Ultra facility and disbursing loan
proceeds, when the requirements had not been met; issuing incorrect, false, and misleading
portfolio summaries and collateral reports; failing to obtain and keep original documents; and
failing to exercise the requisite degree of skill and care in performing its duties.

100. By reason of the foregoing, Concord has been damaged and is entitled to
judgment against BofA for compensatory damages, in an amount of at least $70 million, to be
determined at trial.

FIFTH CAUSE OF ACTION
(Against BofA for Gross Negligence)

101. Plaintiffs repeat and reallege paragraphs 1 through 100 hereof as if fully set forth
herein.
102. As servicer and collateral agent under the Ultra facility, BofA had a duty of care

to Concord and a duty to perform its obligations without gross negligence or recklessness.

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103. BofA breached its duties to Concord and was grossly negligent and reckless by,
among other things: misrepresenting that the premium ?nance loans requested, approved,
and funded were in compliance with the Ultra facility; misrepresenting that the minimum
collateral requirements had been met and continued to be met; disbursing funds to improper
accounts; disbursing fees that were not permitted under the Ultra facility; and failing to
obtain original documents.

104. The conduct of BofA was outrageous, willful and wanton, and perpetrated with
malice and a reckless indifference to the rights of Concord.

105. By reason of the foregoing, Concord has been damaged and is entitled to
compensatory damages, in an amount of at least $70 million, to be determined at trial.

SIXTH CAUSE OF ACTION
(Against Fifth Third for Breach of the Implied Covenant of Good Faith and Fair Dealing)

106. Plaintiffs repeat and reallege paragraphs 1 through 105 as if ?tlly set forth herein.

107. Concord and Fifth Third entered into a valid and binding agreement to provide
financing capacity to make premium ?nance loans.

108. As alleged above, Fifth Third exercised its discretion arbitrarily and capriciously
and deprived Concord of the bene?ts of the agreement and breached the implied covenant of
good faith in the agreement.

109. By reason of the foregoing, Concord has been damaged and is entitled to

compensatory damages, in an amount of at least $70 million, to be determined at trial.

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PRAYER FOR RELIEF

WHEREFORE, Plaintiffs demand judgment:

on the First Cause of Action against Brody, awarding compensatory and punitive
damages in amounts to be determined at trial, but at least $70 million and $250
million, respectively;

(ii) on the Second Cause of Action against Fifth Third, awarding compensatory and
punitive damages in amounts to be determined at trial, but at least $70 million and
$250 million, reSpectively;

on the Third Cause of Action against Brody, awarding compensatory damages in
an amount to be determined at trial, but at least $70 million;

(iv) on the Fourth and Fifth Causes of Action against BofA, awarding compensatory
damages in an amount to be determined at trial, but at least $70 million; and

on the Sixth Cause of Action against Fifth Third, awarding compensatory
damages in an amount to be determined at trial, but at least $70 million.

Dated: September 14, 2010

KASOWITZ, BENSON, TORRES
FRIEDMAN LLP

am

MEcMowitz (mkasowitz@kasowitz.com)
Andrew K. Glenn (aglenn@kasowitz.com)

Charles M. Miller (cmiller@kasowitz.com)
Kanchana Wangkeo Leung (kleung@kasowitz.com)

1633 Broadway

New York, New York 10019
Tel.: (212) 506?1700

Fax: (212) 506-1800

Attorneys for Plaintiffs

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