Home New Cases First Interstate Bank and Prairie Mountain Bank Sued for Damages Worth $10 M in Shoot the Moon, LLC Bankruptcy Case

First Interstate Bank and Prairie Mountain Bank Sued for Damages Worth $10 M in Shoot the Moon, LLC Bankruptcy Case


August 3, 2021, District of Montana – Trustee Jeremiah Foster of the STM Liquidating Trust for the estate of Shoot the Moon, LLC (STM) brings a twelve-count adversary complaint against Defendants First Interstate Bank (FIB) and Prairie Mountain Bank (PMB) under sections 541 through 550 the Bankruptcy Code and Rules 3007 and 7001 of the Federal Rules of Bankruptcy Procedure, seeking a declaratory judgment, damages, claims for unjust enrichment, fraud, conspiracy, conversion and avoidance & recovery of fraudulent transfers.

As alleged in the complaint, due to global economic recession, the financial condition of STM began to deteriorate, and in desperation to address troubles, its owner, Hatzenbeller commenced a “check-kiting scheme”. FIB and PMB also “participated in and facilitated” Debtor’s “fraudulent check-kiting scheme” and “concealed their knowledge and participation” to evade discovery by Trustee and others. FIB and PMB allegedly also entered into a settlement agreement with the Trustee without disclosing their respective involvement in “facilitating the check-kiting scheme”. As consideration for the settlement agreement and without knowledge of the “check-kiting scheme”, the Trustee granted FIB and PMB the release of all claims, liabilities, and causes of action.

Trustee Foster accordingly seeks declaratory judgment that FIB and PMB are prohibited from asserting the protections of the release within the settlement agreement as the Trustee’s consent to the settlement agreement and release was obtained through “fraud”. The Trustee also argues that as a direct and proximate result of FIB and PMB’s “negligence”, STM incurred significant damages and paid overdraft fees allegedly arising under FIB’s and PMB’s loans for “insufficient consideration”. Thus, the Trustee contends that STM allegedly “received less than reasonably equivalent value” in exchange for incurring, granting, and/or making the transfers and that the Trustee is entitled to avoid the transfers under 11 U.S.C. § 548. The Trustee also seeks damages worth $10 million from FIB and PMB.