Posted 4/14/2014 12:00 am
Updated 7 months ago
You probably heard that One Bank & Trust’s foolhardy loan of $1.5 million to a Florida penny-stock operator resulted in a federal criminal indictment of former EVP Gary Rickenbach.
What you don’t know is that this second indictment associated with the loan brings new revelations about the management mess at the Little Rock bank under the ownership of the late Layton “Scooter” Stuart.
• The April 2 indictment, which charges Rickenbach with conspiracy to defraud the government and conspiracy to commit money laundering, suggests that he may have personally invested in a company controlled by Alberto Solaroli just weeks before he arranged the $1.5 million line of credit to Solaroli in April 2007.
• For the first time, federal prosecutors alleged that executives misled the U.S. Treasury about One Bank's financial condition when applying for the $17.3 million in TARP funds that were received in June 2009.
• The Rickenbach indictment also describes an alleged co-conspirator never before identified in government documents or news accounts of the meltdown at One Bank: "Co-conspirator Z,” whose description matches G. Robert Hardin, a North Little Rock attorney who was outside counsel to One Bank, which does business as Onebanc.
“Z,” who has not been charged, created two business entities (Ox Investments LLC and Financial One Leasing) and reanimated a third (Crestwood Investment LLC) to which Rickenbach and other One Bank executives allegedly made loans in order to hide the loss associated with the Solaroli line of credit.
The indictment says Z/Hardin created the entities after meeting with Rickenbach and another co-conspirator (identified only as “B”) “to discuss the plan to disguise [Solaroli]’s bad loan from regulators.”
“In response to your inquiry,” Hardin said in an email to Whispers, “yes, I was involved in the organization of the entities in question and prepared certain commercial documents regarding them described in the indictment you inquired about, but I was not involved in any conspiracy alleged to have taken place inside One Bank.
“I have been practicing law and handling business transaction in this community for over 38 years, and my reputation as an honest, ethical attorney speaks for itself.”
The indictment says that a company for which Rickenbach was registered agent invested $25,000 in Solaroli’s CET Racing in February 2007. Prosecutors identified the company as Exodus LLC, but the Arkansas Secretary of State recognizes it as Exodus Holdings LLC.
A registered agent may or may not be an owner of an LLC, so it’s not yet clear whether Exodus’ investment was Rickenbach’s money. His defense attorney, Rick Holiman of Little Rock, last week declined to answer any questions.
“It would be inappropriate for me to comment at this time, but I may have something to say later,” Holiman said.
Within a few weeks after that investment, on April 9, 2007, Solaroli submitted the application that federal prosecutors claim “overstated” his net worth as being nearly $170 million. Solaroli is identified in the Rickenbach indictment as “A.S.”
The next day, his line of credit was up and running because, the feds say, Rickenbach “arranged for other Onebanc executives ... to approve this line of credit without going through the formal approval process of Onebanc’s Loan Committee.”
Solaroli spent all but $5,724 of the credit within six days but never made a single payment on the loan. He was indicted in November by a federal grand jury in Little Rock on one count of bank fraud for giving One Bank a financial statement claiming net worth of almost $170 million when he applied for the line of credit.
His trial is scheduled to begin Aug. 11.
Co-conspirator Z may be new to the public record, but a character who first appeared in Solaroli’s indictment in the fall has reprised his role in Rickenbach’s indictment.
Prosecutors call him “D.C.” and identify him as a One Bank customer who also invested in Solaroli’s business.
As Arkansas Business previously reported, this supporting actor is David Crews, then an executive vice president at Crews & Associates of Little Rock, founded by his father.
One of the first things Solaroli did with his line of credit was have $380,000 transferred to Crews, although the money was allegedly for Solaroli’s benefit.
And while Solaroli was pointedly not making any payments, he did ask Crews to make a single interest payment on the line of credit in 2007.
Eventually, One Bank sued Solaroli in Florida and got a judgment for $1.5 million plus interest in the summer of 2008.
That judgment was somehow used to secure a loan to the newly created Ox Investments, even though Rickenbach, in an email quoted by federal prosecutors in the indictment, would later describe the chances of collecting the judgment as “remote.”
The Rickenbach indictment is the first case of TARP fraud brought in Arkansas.
In announcing the indictment, Christy Romero of SIGTARP — the special inspector general for TARP — said Rickenbach “looked to TARP money to fund his fraud” and that the bank increased its TARP application to $17.3 million specifically because the original request for $10 million wasn’t enough to cover up the bank’s capitalization mess.
But it also makes us wonder if Rickenbach alone will be held accountable. After all, according to the indictment, it was “Co-conspirator B” who requested the increase in TARP funds.
And there’s a veritable alphabet soup of other unidentified players: Co-conspirators A, C, D and Z and someone called Person X.