TOWN OF VESTAL, N.Y. (WBNG) — A current Town of Vestal board member is facing a lawsuit following the filing of Chapter 7 bankruptcy.
Councilman Stephen Donnelly is in a bit of financial and legal muddle after the Chemung Canal Trust Company filed a lawsuit in January alleging that he lied in the application process for a credit line.
In 2019, Stephen Donnelly was given a business line of credit for $100,000.00 from Chemung Canal Trust.
In 2022, the original line of credit was up for renewal consideration. Court documents state that Donnelly met with the bank and asked for a new line of credit for $100k instead of renewing the old line of credit.
During this process, Stephen Donnelly was required to, in writing, inform the financial institution of his current financial situation. He wrote:
- Stocks and Bonds valued at $500k
- Insurance policy valued at $350k in cash.
- A checking account with $31,500 in it.
- Personal belongings valued at $100k
- Claiming his net worth to be $1.455 million.
The Chemung Canal Trust denied him that new line of credit but instead extended the payment term of the original line.
In the summer of 2024, Donnelly shut down his business “Dynamic Innovation Group LLC” and filed for Chapter 7 Bankruptcy. The amount due on that original line of credit was $85,954.06 when he filed for bankruptcy.
Come December, court paperwork states that Chemung Canal Trust Company allegedly asked Stephen Donnelly for documentation to support the financial claims he made that gained him more time to pay back the money he borrowed.
Donnelly was unable to provide records to back up the claims he made and instead, according to the complaint, provided the information as follows:
- A deposit statement of $31,500 that was deposited into his account a couple of weeks before he had to prove he had that money.
- Investment statements showing his stocks/bonds.
- His homeowner’s policy.
- And that he was working on the list of personal belongings which he would give to them as soon as he could.
The “Bank” fired back at Donnelly’s attorney, stating:
- His proof of money in his checking account was from 2019… not from 2022 as asked. And that money was in his company’s account and not his personal account, as they had asked.
- The NY Life statement showed only $429.76 in net cash value and not the $500k he said existed.
- The homeowner policy he submitted was from 2024 and not 2022 as asked. It also showed he had $689,214 in personal property. The bank asks why he would only list his personal property worth, a vehicle, and a loan receivable of $10k?
- Donnelly also valued his home at $622,400, yet he had it insured for $997,449.00 with an additional structure insured for $99,745.00.
The Chemung Canal Trust alleges that Stephen Donnelly overstated his personal assets by at least $850k. Also, he lied to the financial lender about his worth to get an extension and renewal of the original loan.
Court paperwork states, “The Debtor knew, or should have known, that the Financial Statement contained false or misleading information at the time it was made, and that the Plaintiff would rely on the Financial Statement in extending or renewing, as he requested, the Prior Line of Credit.”
The lawsuit charges Stephen Donnelly with False Pretenses, False Representation, and Actual Fraud.
In February of 2025, Donnelly filed his response to the complaint, denying the majority of it, including that he had overstated his personal assets. He said he had no reason to believe he was not worth $1,455,000.00. Donnelly’s defense stated that the “Bank” failed to prove that he intended to deceive them and asked for the case to be dismissed and to be offered relief.
12 News reached out to Councilman Stephen Donnelly regarding this legal matter and his position on the Town of Vestal’s board, to which he replied, “I did nothing wrong. I will continue my term.”
WBNG also reached out to Town Supervisor Mara Sexton, regarding Donnelly’s position, but has yet to receive a response.
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