The head of Minnetonka’s Equity Bank contested accusations by five former colleagues.
Minnetonka banker and real estate investor Steven Liefschultz and five former employees who accused him of abusive behavior, including arson, have resolved their legal disputes.
The chairman and CEO of Equity Bank in Minnetonka and his companies had faced a barrage of lawsuits alleging misdeeds including vulgar remarks and fits of rage. The most unusual was a claim that Liefschultz arranged to burn down a former bank president’s home.
The last of the legal disputes came to a close last month when Hennepin County District Judge Laurie Miller dismissed a defamation lawsuit Liefschultz filed against the former bank president, Jon Pettengill, who had sued him for arson. The five employee lawsuits against Liefschultz have been dismissed, with court documents indicating most were settled.
The outbreak of hostility was unusual for the button-down Twin Cities banking community.
“Banking is pretty conservative. You just don’t run into problems like this,” said bank consultant Loren Prairie of Apple Valley. “You just don’t.”
Liefschultz and Pettengill declined to comment for this story.
George Eck, the Dorsey & Whitney partner who represented the five employees who sued Liefschultz, did not return several phone calls seeking comment.
Pettengill had accused Liefschultz of arranging to burn down his Medicine Lake home in 2006 after he quit the bank. The house was destroyed in a blaze while Pettengill was out of town. Investigators determined the fire was arson but a suspect was never identified. The Pettengills, cleared as suspects, were seeking $2 million.
Hennepin County District Judge Kerry Meyer dismissed Pettengill’s arson complaint last fall, concluding that “arson is not a recognized civil claim in Minnesota.”
Liefschultz had in turn sued Pettengill for defamation and alleged Pettengill was responsible for information leaked to the Star Tribune. The two sides eventually reached an agreement, court documents show.
Richard Ostlund, of Anthony Ostlund Baer & Louwagie, who represented Liefschultz only in the cases involving Pettengill, said those cases were settled to the “mutual satisfaction of the parties.”
Another plaintiff, Victoria Pederson, a St. Louis Park woman who worked for one of Liefschultz’s real estate companies, said she couldn’t discuss the matter.
“I’m just trying to go on with my life and live normally,” Pederson said.
The other three former employees either didn’t return phone calls or wouldn’t comment.
The discord became public in early 2011 when David Grzan, another former president of Equity Bank and a longtime business partner of Liefschultz, sued him for allegedly creating a “perversely hostile work environment.” He accused Liefschultz of threatening to kill him, dismember his children and burn down his house, among other things. Grzan and Liefschultz settled their dispute in 2012. The other lawsuits followed.
The flurry of lawsuits surprised some business associates, who described Liefschultz as a professional. Liefschultz, of Woodland, near Wayzata, is an active real estate investor around the Twin Cities in addition to running Equity Bank.
The bank, focused on business and real estate loans, has assets of just $47 million and has not fared well recently. It reported a loss through June of this year of $29,000 compared with a $33,000 profit a year earlier, regulatory documents show.