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Investment banker subpoenaed in Smithtown Bancorp suit

Developer Robert Toussie hasn't sued Manhattan investment bank Sandler O'Neill, but this week he blitzed them with subpoenas in connection with his suit againt Smithtown Bancorp, the company that owns Bank of Smithtown.

Toussie sued the bank in State Supreme Court last week for $110 million, claiming the company engaged in fraud to disguise its poor financial health and mislead investors into thinking the bank was in better shape than it really was. The suit notes that Sandler O'Neill continued to recommend Smithtown stock, even as its price plummeted and as Sandler O'Neill eventually dumped its own stake in the company. Sandler O'Neill has declined to comment, as has the bank.

The subpoenas, which target several Sandler O'Neill officials, seek information on what they knew about the bank's true financial health and what communication they had with Smithtown officials about any effort to influence investors.

Another subpoena was issued to Standard Valuation Services of Mineola, the company that appraised property for the bank. That one seeks information on whether Bank of Smithtown officials sought to influence appraisals.

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