By Douglas Gillison, Saeed Azhar, Anirban Sen and Chris Prentice WASHINGTON/NEW YORK (Reuters) -A little-known California real estate investor behind bad loans disclosed by Zions Bancorp and Western Alliance also faces lawsuits by Banc of California and two other lenders, with his involvement in troubled debt totaling around $270 million, court filings show. In separate actions between April and August, Banc of California, Enterprise Bank & Trust and Nano Banc sued the investor, Andrew Stupin, seeking to collect on loans worth a combined $108 million. Stupin, a long-time California real estate investor who owns a high school football team, is listed as a guarantor on loans and is one of the defendants in those cases. PMF CA REIT, a real estate investment firm, has also sued Stupin and others to recover nearly $7 million, the filings show. An attorney for Stupin said the Western Alliance claims against his client were unfounded and misrepresented the facts. Enterprise, Nano and Banc of California declined to comment. Jennifer Tullius, a lawyer representing PMF, said her client had no comment. The lawsuits shine new light on the surprise losses last week at Zions and Western Alliance that spooked markets, with investors already on edge after the bankruptcies of U.S. auto parts supplier First Brands and car dealership Tricolor. The auto companies saddled big Wall Street names, including Jefferies and JPMorgan Chase, with losses, and prompted Jamie Dimon, the largest U.S. bank’s CEO, to warn of more "cockroaches,” or bad loans in banks' books. While shares rebounded, investors remain jittery. They fear a searing rally in stocks, driven by euphoria about artificial intelligence, has stretched valuations and created asset price bubbles, while the effects of the Trump administration’s tariffs and other policies are yet to work through the economy. In such an environment, bad surprises and signs of trouble that are not fully understood can quickly snowball, analysts said. Regional banks tend to lend in concentrated local geographies and typically have a higher exposure to commercial real estate compared with the country's largest lenders. "We wouldn't be surprised if more boards are asking bank management teams to scrub through their loan portfolios for similar issues," said Manan Gosalia, banking analyst at Morgan Stanley, in a note. Zions is set to report third-quarter results after market close on Monday. BANKS' LOSSES TRIGGER SELLOFF The selloff in regional banks rippled through global markets after Zions disclosed on Wednesday that it was suing two Cantor Group funds to recover $60 million in soured commercial and industrial loans. The next day, Western Alliance flagged that it had sued a different Cantor Group fund in August to recover nearly $100 million, alleging fraud on the part of the borrower. Both suits make similar allegations — that investment funds tied to the little-known California-based Cantor Group misrepresented the collateral they pledged against real estate loans, exposing the banks to losses. The properties in the cases largely involve California commercial real estate, such as store-fronts and office buildings. Zions alleged that the funds and guarantors "orchestrated a scheme" to secretly transfer or subordinate the collateral on the loans. Western Alliance alleged that the Cantor fund forged title insurance policies to obscure the fact other banks already had a claim on the underlying properties pledged as collateral. Stupin is involved as a defendant in both the Zions and Western Alliance cases. His co-defendants also include another individual, named Gerald Marcil. Marcil is also a real estate developer in California and a licensed real estate salesperson, according to public records. Cantor Group LLC, which has no relationship to the Wall Street investment bank Cantor Fitzgerald, does not appear to have a website. Its registration shows it was incorporated in 2015 and is currently based in Newport Beach, California. Stupin did not respond to Reuters' emails and calls seeking comment. His attorney, Brandon Tran, addressed the Western Alliance allegations, saying the claims against Stupin and Marcil were unfounded and misrepresented the facts. Tran did not comment on the other cases involving Stupin. Marcil did not respond to calls seeking comment. Spokespeople for Zions did not respond to a Reuters request for comment. Western Alliance declined to comment beyond the litigation. OTHER LAWSUITS TIED TO CALIFORNIA PROPERTIES In a regulatory filing, Zions said it became aware of legal actions by "several banks and other lenders against parties that appeared to be affiliated," but did not elaborate. A Reuters review of outstanding cases against Cantor Group, Stupin and Marcil revealed the other five lawsuits this year. Those five suits allege Stupin guaranteed the roughly $115 million in loans, which are now in default, tied to properties near Los Angeles and San Francisco. Combined with the Western Alliance and Zions loans, that puts Stupin's ties to bad loans at more than $270 million, the Reuters review of the filings found. During a Laguna Beach, California, city council meeting in May 2023, Stupin said he "been doing real estate ventures for almost 50 years," and had lived in the area for most of his life. Stupin — along with Marcil — is also one of the largest investors in Continuum Analytics, an entity that invests in distressed real estate assets, the legal filings show. A representative for Continuum could not be reached for comment. Outside of his real estate interests, Stupin owns a high school touch football club team, according to the club's website. (Writing by Michelle Price; Editing by Paritosh Bansal and Nick Zieminski)
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