Lehman sued for 'fraudulent bidding process' in Connecticut property sale; $100 million sought

By Lisa Kerner

Charlotte, N.C., Nov. 22 - Lehman Brothers Holdings Inc. accepted a lower bid in a "flawed and fraudulent bidding process," according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of New York by The Carabetta Organization, Ltd.

Carabetta is asking the court to set aside the sale of a 64-unit apartment community on five acres known as Summit Ridge Apartments in Waterbury, Conn., to the lower bidder and allow Carabetta to purchase the property.

In the filing, Carabetta said it bid $3.2 million for the property, while the lower bidder submitted a bid of $3.05 million.

The lower bid was accepted "for the sole reason that the real estate broker involved is a friend of the lower bidder," the filing said.

Carabetta is seeking $100 million in punitive damages for the breach from Lehman and LB Summit Ridge 300 Schraffts Road, LLC.

New York-based Lehman Brothers Holdings was the fourth-largest investment bank in the United States. The company filed for bankruptcy on Sept. 15, 2008. Its Chapter 11 case number is 08-13555.

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