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CU System
Central States assigned receiver drops suit
MILWAUKEE, Wis. (4/10/09)--A Milwaukee judge Tuesday appointed Milwaukee attorney Michael Polsky as receiver to oversee the liquidation of Central States Mortgage Co., and Central States' parent company dropped its $15 million lawsuit against the company's founder. The Wauwatosa, Wis.-based mortgage company, which was 70% owned by credit unions, closed on March 9 and filed for receivership March 27 in Milwaukee County Circuit Court. Its parent company, CSMC Ind., had asked the court to appoint another Milwaukee attorney, Philip Ostroski, as receiver (Milwaukee Journal Sentinel April 7). CSMC filed a notice Tuesday it was dropping its racketeering lawsuit against founder and former CEO Richard Jungen and four other former executives. The company's attorney, David Meany, said Wednesday the action was dropped for now to enable the receivership to proceed. The lawsuit had alleged that Jungen and others used another business called Interim Funding to funnel bad mortgages to Central States, causing a $15 million loss. The dismissal motion was filed "without prejudice," which means CSMC could revive the matter during the receivership case (The Business Journal of Milwaukee April 8). A receivership is a state court proceeding that allows the liquidation of a company in a manner similar to a federal bankruptcy.


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