Former Arvest Officer Dennis Smiley Under Investigation for Loan Fraud

by George Waldon and Gwen Moritz  on Wednesday, Apr. 2, 2014 12:01 am  

Dennis Smiley, as a trustee of the Jones Trust of Springdale, participated in the March 2013 groundbreaking ceremony for the Webb Memorial Children Park on the campus of the Center for Nonprofits at St. Mary's in Rogers. Smiley resigned from the trust's board last month.

H. Dennis Smiley Jr., the former CEO of Arvest Bank's operations in Benton County, is the subject of a federal criminal investigation for loan fraud.

Smiley allegedly pledged repeatedly the same collateral worth hundreds of thousands of dollars to borrow $4.5 million or more from an estimated 18 different banks, Arkansas Business has learned from multiple sources.

One of the sources, who all spoke only on condition of anonymity, said the scam dates back to at least 2010 and was discovered only recently. The red flag was raised when a scheduled loan payment didn't clear because a Smiley account had insufficient funds to cover the draw.

This bounced payment apparently happened during the week of March 10, and Smiley resigned from his position at the state's largest bank on March 13.

Smiley did not respond to a message left on what was believed to be his home phone on Tuesday, and a Fayetteville lawyer believed to be representing him did not respond to a call for comment.

More: Delta Trust & Bank has filed a lawsuit against Smiley and his father.

Arvest has not explained the departure of Smiley, a long-time employee.

"Mr. Smiley's reasons for resigning his position are personal in nature and we are not going to comment on his personal situation," Arvest spokesman Jason Kincy said in an email on Tuesday afternoon.

Smiley had worked for the company since 1989, was CEO of Arvest in Springdale for about 11 years and was the top executive for the Benton County operations for almost two years.

Uniform Commercial Code filings with the Arkansas Secretary of State's office indicate that Smiley used the same shares of Arvest Bank stock as collateral for multiple loans.

The banks understood that the collateral was not literal stock but a type of phantom shares contrived by Arvest Bank Group as an incentive to reward top executives based on the appreciation of real Arvest shares held by the Walton family.

Executives holding these phantom shares could, upon leaving the company, cash in the stock for a price tied to the book value of Arvest.

 

 

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