Posted 2/22/2013 02:46 pm
Updated 1 year ago
One Bank & Trust of Little Rock filed suit on Friday to recover more than $1 million in allegedly misappropriated funds from Hunter P. Stuart, a former vice president and the son of bank's majority owner.
The lawsuit filed in Pulaski County Circuit Court alleges unjust enrichment and conversion of bank funds in connection with the purchase of a $450,000 home in March 2009.
According to the complaint, Hunter Stuart wrongly received $94,527 from One Bank to cover the down payment on the 5,300-SF home in west Little Rock's Pleasant Valley neighborhood.
Stuart allegedly received those bank funds at the direction of his father, Layton "Scooter" Stuart, who was chairman, president and chief executive officer of the bank at the time, and of Tom Whitehead, the chief financial officer.
Whitehead and the elder Stuart were both fired by the board of directors last year on the instructions of the Office of the Comptroller of the Currency. Neither is named as a defendant in the lawsuit.
The complaint alleges that Hunter Stuart did not have sufficient assets to make the down payment and the loan application misrepresented his net worth and income.
Hunter Stuart received $94,527 through two cashier checks issued by One Bank, the lawsuit claims. The checks "were improperly accounted for on the bank's books as being bank-related expenditures and did not reflect their true purpose," according to the complaint.
One Bank also provided a $360,000 loan to finance the balance of the purchase, according to the lawsuit, which alleges that additional unspecified bank funds were used to pay for renovation work on the house.
The outlay of these unspecified funds was hidden on the bank's general ledger as "Bank Building Under Construction" and later "Leasehold Improvements," according to the complaint.
The renovation expenditures allegedly were carried by One Bank as costs associated with its Chenal or Foxcroft branches in Little Rock.
A building permit indicating a value of $200,000 was taken out for the project on April 17, 2009. Wagner Construction Services LLC of Cabot was the contractor on the project. Rodney Wagner, the company's namesake owner, had no comment regarding the job.
Public records indicate work on the house either was never completed or never received final inspection.
According to One Bank's complaint, Scooter Stuart approved the invoices related to the remodeling work at his son's house, and Whitehead processed the payments and posted the entries to the bank's fixed asset system.
"The property renovation costs were paid from funds illegally diverted from (One Bank) between mid-2009 to mid-2011," the lawsuit alleges.
"The misappropriation and concealment of bank funds was done at the direction, and with the participation and knowledge of L. Stuart along with the assistance of Whitehead, and (Hunter Stuart) knew or should have reasonably known these payments were not authorized payments by the bank.
One Bank is seeking possession of the residence or a lien on the property to secure its financial claim, followed by a court-ordered sale of the home.