Updated Friday 10A with comments from Lineberry's attorney
A federal grand jury has indicted Mark Lineberry, developer of the troubled Hotel Indigo downtown, for fraud, money laundering and conspiracy.
According to an indictment posted Thursday, Lineberry and Delaina Thompson — his partner in 1st Trust Title — face charges of defrauding a financial institution, as well as wire fraud, mail fraud, money laundering and conspiracy.
The federal charges are the culmination of a dispute which began in the fall of 2010 when BB&T and Federal National Title Insurance alleged Hotel Indigo and 1st Trust were co-mingling assets and holding back money dued to their lenders and insurers.
The grand jury alleges Lineberry and Thompson commited as much as $9.25 million in fraud.
Specifically, the grand jury charges the pair with communicating — as 1st Trust — that payments were being made on the loan and into escrow when, in fact, they were not. BB&T has maintained throughout the dispute it was unaware of Lineberry's involvement in both Hotel Indigo and 1st Trust — a relationship which lasted until at least October 2010.
Further, the indictment — download it here — says Lineberry sought loans from BB&T, using Thompson to communicate to the bank that the title of the Indigo property was unencumbered.
In addition to the criminal charges, the grand jury seeks forfeiture of property and the $9.25 million after conviction.
Lineberry's attorney, David Raybin said Lineberry will "vigourously contest" the charges.
"Mr. Lineberry is an attorney and respected businessman in Nashville," he said. "He did not intend to defraud anybody. ... Mr. Lineberry is innocent of these charges. He didn't profit from these loans; he built the hotel. You can see the hotel."
Lineberry also faces a civil case brought by his Indigo partner, Keith Worsham. The development company the pair started — 315 Union Street Holdings — went into bankruptcy in December 2010. The hotel itself was purchased by the local arm of North Carolina-based Winston Hospitality in November 2011, a sale prematurely described by the Post as "the final chapter" in the hotel's troubled history.