Sahni

In the late 1970’s Sahni, the plaintiff-appellant, formed and was the sole general partner of over 50 limited partnerships whose purpose was to build apartment projects financed largely by the Department of Housing and Urban Development (the “HUD partnerships”).

In 1983, Sahni purchased Tokay Bank, intending to merge it with another one of his corporations to form American Diversified Savings Bank (ADSB or “the Bank”). California banking authorities required that Sah-ni divest his partnership interests in the HUD partnerships. Sahni completed a series of complex transactions in an attempt to satisfy the banking authorities’ request that he divest his partnership interests. First, Sahni formed ADSB (the Bank), and installed himself as Chairman and CEO. He also formed ADP, a limited partnership, and made himself the sole limited partner. ADIC, a wholly owned subsidiary of the Bank was then formed, and ADIC became ADP’s general partner. Lastly, Sahni substituted ADP as general partner of the HUD partnerships. The FDIC has implied that Sahni completed these transactions in order to evade the banking authorities’ request that he divest his interests in the HUD partnerships.

In 1986,…