IberiaBank's Fraud Suspect Identified

by Gwen Moritz  on Monday, May. 11, 2009 12:00 am  

Dana Washburn

The Arkansas customer whose phony collateral forced IberiaBank Corp. to take a $3.6 million write-off in 2008 was a prominent northwest Arkansas couple, Colon and Dana Washburn of Rogers, court documents and sources confirm.

A civil suit — originally filed in Benton County Circuit Court in December and amended in April — accuses Dana Washburn of defrauding IberiaBank’s Arkansas charter, Pulaski Bank & Trust of Little Rock, by using a fake brokerage account as collateral. Pulaski also alleges that she had help from her parents, Daymon and Betty Taylor of Rogers.

The lawsuit does not accuse Colon Washburn of any wrongdoing, although he is a defendant because his name is on the loans with his wife’s.

Dana Washburn, in a response filed April 14 by Fayetteville attorney W.H. Taylor, asserted her Fifth Amendment right against self-incrimination seven times. Multiple sources have told Arkansas Business that Dana Washburn is likely to plead guilty to federal charges, although no charges had been filed against her as of last week. She and her lawyer declined to be interviewed.

Colon Washburn is a former Wal-Mart executive and real estate developer. Ironically, the biggest deal of his real estate career, the $56 million sale of Beau Terre office park in Rogers in 2004, also seems to have led to his financial downfall and his wife’s criminal entanglement.

His lawyer, Rickard Hood of Bentonville, did not return a call seeking comment, nor did the lawyers representing Daymon and Betty Taylor, Jack Lassiter of Little Rock and Charles Kester of Fayetteville.

Background
IberiaBank announced on Jan. 21, as part of its year-end earnings release, that it had written off $3.6 million in the fourth quarter of 2008 due to credit fraud by an Arkansas client. The client was not and still has not been publicly identified, but IberiaBank left a string of tantalizing and sometimes confounding clues that led to the Washburns.

CFO Anthony Restel said Iberia-Bank began to question the borrower’s financial status “in early January” after a foreclosure notice was filed on the borrower’s primary residence, on which Pulaski Bank held a second mortgage of $600,000.

That was a reference to the notice that IberiaBank received concerning a nonjudicial foreclosure that Regions Bank filed against the Washburns on Dec. 2. That first mortgage claim, valued at just under $1 million, has since been incorporated into the Pulaski Bank litigation.

While IberiaBank may not have realized the extent of the Washburns’ money problems until then, it certainly knew there were problems: Pulaski Bank’s lawyer, David B. Vandergriff of the Little Rock law firm of Quattlebaum Grooms Tull & Burrow, had sued the couple in Benton County Circuit Court on Dec. 19.

That complaint included a notice of foreclosure on the same 6,400-SF house at 5 Beau Chene Lane in Rogers, and it said Pulaski Bank “became suspicious” when “it was unable to confirm the existence” of a brokerage account that the Washburns had used to secure an additional $3.6 million in loans.

However, it wasn’t until the Jan. 21 earnings release that IberiaBank began to allege actual fraud.

When the complaint was amended on April 9, the picture became clearer, although many questions remain. Here’s the bank’s claim, in abbreviated form:

 

 

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