Roland Arnall became known as one of the wealthiest Angelenos thanks to the subprime mortgage industry he helped create with his company, the former Ameriquest Mortgage.

He was also known for giving money to his favorite causes, particularly the one he had championed more than three decades – Chabad of California Inc.

But when he died at 68 in March 2008, his fortune had been decimated by the collapse of the subprime industry. And now Chabad, headquartered in Westwood, has sued Arnall’s estate for a hefty $17.5 million – the alleged balance due on an $18 million pledge Chabad claims Arnall made in 2004.

Although there’s no formal document of any agreement, Chabad officials said that Arnall pledged the $18 million when he asked the organization to build an Arnall Family Center on property it owns on Pico Boulevard in the South Robertson neighborhood, where organization leaders envision a blocklong Chabad village.

An attorney for Arnall’s widow, Dawn Arnall, said that the suit is frivolous and “a misguided attempt to publicly embarrass the wife of the late Roland Arnall.” His client will fight it.

“There is no merit to the claim that Mr. Arnall made an oral promise at an unspecified date to make a multimillion-dollar gift of an indeterminate amount to Chabad over an unspecified period of time,” downtown L.A. trust and estate attorney Robert Sacks said in a statement to the Business Journal. “This claim is sad and unfortunate given the family’s well-documented history of supporting Chabad and other philanthropies.”

Chabad’s attorney, high-profile litigator Marshall Grossman, said the organization has taken the legal action now because Arnall’s estate is going through the probate process.

“The estate is quite complex,” said Grossman, a partner at Bingham McCutchen LLP in Santa Monica, who filed the suit in Los Angles Superior Court earlier this month. “There are time limits that cover various proceedings in probate cases, and we want to make sure that the court will honor this pledge if the estate doesn’t elect to do so voluntarily.”

As evidence of the pledge, the suit states that Arnall made three payments of $180,000 each toward the $18 million pledge between 2004 and 2008. The organization is demanding to be paid the $17.5 million balance. Under Jewish tradition, donations are often made in multiples of 18, the number that corresponds to the Hebrew word for life.

“It was an oral pledge, which has been paid in part, and well-documented in the plans for the building, the deferral to sell the property and expending substantial amounts of money in carrying out Mr. Arnall’s wishes,” Grossman said.

“And clearly, when one makes payments of over a half-million dollars on a multimillion-dollar gift, that is compelling evidence that the pledge was made.”

Billion-dollar fortune