Posted 8/8/2014 07:58 am
Updated 1 month ago
The cattle call of lawyers representing lenders burned by former bank executive Dennis Smiley Jr. has dissipated.
The litigious herd was thinned considerably after Arvest Bank of Fayetteville, Smiley’s former employer, recently reached settlements with 18 of the 20 lenders.
Only First State Bank of De Queen, where Smiley’s namesake father is chairman, and Signature Bank of Arkansas in Fayetteville remain as possible claimants seeking money from Smiley’s Arvest Bank Group stock purchase and stock option plans.
Smiley repeatedly pledged his interest in the plans as collateral on a string of loans far exceeding the cash value of the executive incentive account. A series of loans, estimated to involve $4.5 million and sometimes involving questionable signatures and documents, is under criminal investigation. No charges have been filed against Smiley.
Half of the 20 known banks with potential fraud claims against Smiley filed legal paperwork detailing nearly $2 million in outstanding loans tied to him. Brief notations in the loan documents offer a glimpse at how the money was to be spent.
The list of Smiley lenders included half the banks operating in Benton or Washington County.
First State Bank of De Queen has staked an unspecified claim to the $552,000 that Arvest placed in the court registry after the battle over Smiley’s assets began in March. The money represented the cash value of Smiley’s Arvest stock plans.
Signature Bank has yet to lay claim to any of Smiley’s Arvest money. The bank did file a collateral claim on Smiley’s 20 percent stake in HDS Holdings LLC tied to an unspecified September 2009 loan.
His fractional HDS holding represents a 2.8 percent share of NWA Holdings LLC, which owns The Shoppes at Har-Ber Lakes in Springdale. The partially developed 19.8-acre property is home to 70,700 SF of mostly retail space.
Neither Signature nor First State Bank has filed legal paperwork detailing financial claims against Smiley.
According to top executives at both banks, Arvest didn’t extend settlement offers.
"They haven’t reached out to us," said Gary Golden, president of First State Bank of De Queen. "Whatever our attorney says will be our next move."
Dennis Smiley Sr. was drawn deeper into his son’s financial controversies because his name was signed to some of the delinquent loans.
The elder Smiley has denied signing any of the loan documents in contention, and his son has indicated in court documents that his father’s signature might be forged without identifying who was responsible.
"He worked at Arvest, and he was my friend," Gary Head, chairman, president and CEO of Signature Bank, said of Dennis Smiley Jr. "Maybe that’s why they didn’t try to settle with me."
Head worked at Arvest for 16 years and was president and CEO of Arvest Bank-Fayetteville before leaving to start Signature Bank in 2004.
More: Gary Head says he learned of the multimillion-dollar loan scandal in a phone call from Smiley himself.
David Matthews, a Rogers attorney representing Arvest in the Smiley litigation, declined comment on the absence of settlements with First State Bank and Signature.
Matthews also declined comment on any of the settlements with the 18 lenders who were dismissed from the lawsuit over possible claims against Smiley’s Arvest stock plans.
Smiley joined the banks in assigning any interest in the $552,000 to Arvest and exiting the lawsuit.
The 18 lenders who settled are:
- BOKF of Tulsa
- Bank of Fayetteville
- Bank of the Ozarks in Little Rock
- Benefit Bank of Fort Smith
- Chambers Bank of Danville
- Centennial Bank of Conway (successor in interest to Jonesboro’s Liberty Bank of Arkansas)
- Delta Trust & Bank of Little Rock
- First Bank of Hampton
- First Federal Bank of Harrison
- First National Bank of Fort Smith
- Integrity First Bank of Mountain Home
- First Security Bank of Searcy
- First State Bank of Lonoke
- First State Bank of Russellville
- First Western Bank of Booneville
- Legacy National Bank of Springdale
- Summit Bank of Arkadelphia
- Today’s Bank of Huntsville (formerly First State Bank of Northwest Arkansas)
Arvest was pulled into the middle of the financial fray because it controlled Smiley’s stock plans.
The bank also was exposed to potential liability because Smiley used his position inside the bank to have documents prepared that aided his alleged loan schemes.
Several Arvest staffers erroneously signed off on documents authenticating Smiley’s pledge of the stock plans, assuming the paperwork he provided to the lenders was genuine.
Smiley resigned from Arvest on March 13. The first lawsuit generated by the scandal, filed by Delta Trust & Bank, hit Benton County Circuit Court 12 days later.
The allegations of fraud extend to Smiley’s purported net worth that helped induce banks to make him loans.
In court filings, First State Bank of Lonoke questioned the legitimacy of financial statements submitted by Smiley and his wife, Cynthia.
Their 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.
A 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.
A financial statement for 2013 claimed net worth of nearly $2.2 million, with assets of more than $3.2 million and liabilities of about $1.1 million.