MN Bankers’ Suits Allege Death Threats and Extortion

David Grzan claims his longtime employer and business partner created a hostile work environment and threatened his family, among many other accusations. In a countersuit, Steven Liefschultz, CEO of Equity Bank, says Grzan filed his lawsuit in order to defame and extort him.

The former president of Equity Bank and the bank's CEO are in the midst of a particularly contentious legal dispute.

In a lawsuit filed in Hennepin County District Court, David Grzan alleges that he has repeatedly been subjected to an unusual and abusive workplace by his employer, Steven Liefschultz.

Liefschultz is CEO and majority owner of Minnetonka-based Equity Bank, and he owns a number of other local companies named in Grzan's suit. According to court documents, Grzan has worked in various positions in companies led by Liefschultz since 1996-most recently as president of Equity Bank, a position he held until January.

Grzan alleges that he has been put through “the worst abusive, harassing, vile, deviant, and threatening conduct imaginable” while working for Liefschultz. The complaint states that Liefschultz has repeatedly made threats in order to prevent employees from quitting.

In fact, it alleges that Liefschultz went so far as to threaten to murder Grzan, to burn down his home, and to “dismember” his children by cutting off their fingers. The suit also describes Liefschultz as a “pervert,” and it includes a list of alleged quotes that contain racial slurs and derogatory language aimed at women.

The complaint further states that Grzan has “been forced” to work between 85 and 100 hours per week every week, has been prohibited from taking lunch breaks, and has not been permitted to take sick days.

Grzan seeks a restraining order and contends that Liefschultz has promised him considerable sums of money related to commercial real estate transactions, which he never received.

“These are really outrageous allegations, and as far as we can tell, they're completely unfounded,” Eric Magnuson, an attorney representing Equity Bank and other entities led by Liefschultz, said in a Wednesday phone interview. “They're way over the top and really bizarre.”

Liefschultz denied the allegations and filed a counterclaim, which tells a starkly different story than Grzan's. It states that Grzan, while working under Liefschultz in various capacities for about 15 years, managed some properties owned by Liefschultz and “established a pattern of failures” that damaged Liefschultz's businesses.

Liefschultz claims he “tried to accommodate” Grzan despite his track record of failed projects because he saw him as a friend and Grzan appeared loyal. But Grzan allegedly “set upon a course of deliberate and malicious misconduct” to harm Liefschultz's businesses.

Among other things, the counterclaim says that while Grzan oversaw lending activity at Equity Bank, many of the loans he wrote “appeared to be deficient in many respects” and defaulted-which caused the bank to reduce his responsibilities.

And when the apartment rental market collapsed, Liefschultz found that Grzan, who oversaw rental records for properties owned by Liefschultz, engaged in fraudulent conduct that resulted in the loss of hundreds of thousands of dollars. Among other things, Grzan is accused of lying on documents to hide that he was giving free rent to unqualified tenants and “flagrantly committing outrageous acts of cruelty, abuse, and disdain in the treatment of tenants, vendors, and employees” who reported the misconduct on an apartment-rating Web site.

The counterclaim also states that Grzan abruptly quit his position at Equity Bank and immediately began an effort to defame and extort Liefschultz by sending e-mails to Liefschultz's business partners containing copies of the lawsuit.

Liefschultz's counterclaim asks the court to throw out Grzan's suit. It also states that Grzan's “negligent and intentional conduct” has resulted in monetary losses, and Liefschultz seeks punitive damages.