Three More Banks Sue Dennis Smiley Over Loans

by George Waldon  on Monday, Apr. 14, 2014 12:29 pm  

Three more lenders have joined the growing line of banks suing former Arvest Bank executive H. Dennis Smiley Jr. of Rogers.

First National Bank of Fort Smith, Simmons First National Bank of Northwest Arkansas in Rogers and First State Bank of Lonoke each filed lawsuits Friday in Benton County Circuit Court seeking to collect on loans to Smiley, who resigned March 13 as CEO of Arvest Bank's operations in Benton County.

The lawsuit by First State Bank of Lonoke alleges that Smiley Jr. and his wife, Cynthia, submitted false financial statements overstating their net worth.

The lawsuits by First National and Simmons First also name Smiley’s father, H. Dennis Smiley Sr., chairman of the board of First State Bank of De Queen.

Smiley Sr. seemed genuinely baffled about the financial chaos that erupted into litigation when contacted by Arkansas Business on April 2.

"His mother and I are brokenhearted about it," he said. "I don’t know everything that’s happened, and I’m not sure if I could talk about it if I did. That’s about all I can say."

In separate filings on Friday, Smiley Sr. denied signing documents associated with loans from Delta Trust & Bank, chartered in Parkdale (Ashley County) but based in Little Rockand Bank of Fayetteville. Delta Trust was the first to file a lawsuit against Smiley interests on March 25; Bank of Fayetteville filed its claim on April 7.

Both banks claim security interests in retirement accounts that Arvest held for Smiley Jr. First National Bank of Fort Smith named Arvest Bank as a defendant, alleging that Chad Evans, an Arvest executive vice president, signed paperwork giving the First National priority position on collateral.

Arvest filed a document called an interpleader asking the Benton County Circuit Court to take responsibility for the money in Smiley's retirement accounts, and the court agreed to do so. But in a counterclaim, Bank of Fayetteville also names Arvest Bank as a defendant. The bank alleges that Euva Phillips, Arvest senior vice president and operations manager, signed paperwork giving Bank of Fayetteville priority position on the collateral.

According to its interpleader, Arvest specifically forbade using retirement funds as collateral. Arvest has not answered the allegations that Evans and Phillips approved such use. Exhibits filed by First National of Fort Smith and Bank of Fayetteville include documents purportedly signed by Evans and Phillips.

Sources have told Arkansas Business that a roster of lenders active in the northwest Arkansas market made multiple loans secured by the same retirement accounts, plus other unsecured loans to Smiley over a period of about three years. All together, the secured and unsecured loans are believed to exceed $4.5 million, but it is unknown why Smiley needed the money or how he spent it.

The most recent list of indicates that 20 lenders were stung by Smiley. Smiley resigned from Arvest on March 13, and sources have told Arkansas Business that he is the subject of a criminal investigation into allegations of loan fraud.

Friday’s Lawsuits

On Friday, First National Bank of Fort Smith sued HDS Holdings LLC, Smiley, and his father, Henry Dennis Smiley of De Queen, to collect on two loans with a combined outstanding balance of $196,093.

Simmons First National Bank of Northwest Arkansas in Rogers sued HDS Holdings and Henry Dennis Smiley of De Queen to collect on two loans with combined outstanding balance of $85,974.

And First State Bank of Lonoke sued Smiley Jr., his wife Cynthia and their Design for the Home LLC to collect on three loans with a combined outstanding balance of totaling $159,085.

First State's lawsuit also claims the Smileys submitted false financial statements for the 2011, 2012 and 2103.

The 2011 financial statement indicated the couple had net worth of more than $1.6 million. According to the bank, the Smileys listed nearly $2.5 million in assets versus $805,046 in contingent liabilities.

The 2012 financial statement reflected a net worth of $728,326, with assets of nearly $2.5 million and liabilities of more than $1.7 million.

The 2103 financial statement listed a net worth of nearly $2.2 million, with assets of more than $3.2 million and liabilities of about $1.1 million.

The Bank of Fayetteville sued April 7 to recover $42,000 owed on a delinquent loan allegedly signed by the elder Smiley. In answer to the suit, he denied signing an individual loan guarantees or signing any loan documents on behalf of the Henry Dennis Smiley Revocable Trust or HDS Holdings LLC.

Bank of Fayetteville claims $479,177 is owed by Smiley Jr., the trust and HDS.

Delta Trust & Bank filed suit on March 25 against HDS, Smiley Jr. and his father for defaulting on a $245,126 loan.

The elder Smiley also denied signing any of the loan documents associated with the Delta Trust debt in response to that suit.

 

 

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