Chelsea Groton Bank had no obligation to investigate F. Robert LaSaracina's handling of a trust he defrauded before granting him a $1.3 million loan secured by a mortgage on trust-owned property, a Superior Court judge has ruled.

Judge William Bright's decision, filed a week ago in Hartford, came in a lawsuit filed last spring in New London Superior Court by the late Fredrik Holth, who succeeded LaSaracina as trustee of eight Kauppinen family trusts after it was discovered that LaSaracina had stolen trust assets.

LaSaracina, a former accountant who had a practice in Norwich, has been sentenced to more than five years in federal prison for defrauding investors and failing to pay employment taxes. Heirs of the Kauppinen trusts are among his victims.

Holth, who died in August, had alleged in a four-count complaint that Chelsea Groton acted negligently in April 2009 when it granted LaSaracina a $1.3 million loan to refinance two promissory notes secured by previous mortgages granted by another bank, each in the principal amount of $600,000. The suit alleged that LaSaracina used the proceeds of the loan for his own purposes.

LaSaracina's mishandling of the Kauppinen trusts and other misdeeds led to his October 2010 arrest on federal charges.

Chelsea Groton denied any wrongdoing after the suit was filed, saying it would be "fully vindicated" if the case proceeded.

"We were confident that we acted appropriately," B. Michael Rauh Jr., the bank's president and chief executive officer, said Wednesday. "We're pleased that the court's opinion affirms that."

The bank, which had asked that the case be transferred to Hartford Superior Court's complex litigation docket, filed a motion in July to "strike" the plaintiff's complaint in its entirety. Bright granted the motion in his Jan. 12 ruling.

Thor Holth, the New London attorney representing the plaintiffs, including Kathryn Guinan, who succeeded Fredrik Holth as trustee of eight Kauppinen trusts, declined to discuss the ruling or to say whether he would appeal it. Thor Holth is Fredrik Holth's son.

"I do not comment on pending litigation," he wrote in an email.

The plaintiffs also include Kenneth Korsu of Southbury and Heather Korsu of Griswold, trustees of a ninth Kauppinen trust.

In their complaint, the plaintiffs alleged that if the bank had "carefully reviewed" LaSaracina's loan application, an appraisal and title search of the property to be mortgaged and "exercised reasonable care to investigate what LaSaracina was doing," it would have discovered that he had misused proceeds from the previous loans and was going to do the same with the Groton Chelsea loan.

The mortgaged property is at 247 and 251 Greenmanville Ave. in Stonington, sites currently leased by a Friendly's restaurant and a motel.

"The premise that underlies all of the plaintiffs' claims," Bright wrote in his ruling, "is that the bank 'had knowledge' of LaSaracina's wrongful conduct." He found, however, that the complaint does not allege that the bank had "actual knowledge" of LaSaracina's misappropriation of trust-owned property.

Bright concluded "that the information in the bank's possession when it entered into the loan transaction with the (Kauppinen) trusts did not create a duty to investigate LaSaracina's past wrongful conduct."

b.hallenbeck@theday.com