A Colorado businessman was hit last week with a $1.9 million judgment after defaulting on a loan that he said was tied to a business deal with Walter Quinn of Little Rock.
U.S. District Judge Billy Roy Wilson awarded Heartland Bank of Little Rock the judgment against Randal B. Parsley and his company, Ambassador Energy LLC of Castle Rock, Colorado.
That part of what is now a tangled case is fairly straightforward: In December 2011, Parsley borrowed $3 million at 7 percent annual interest from Heartland, where Quinn was CEO. Parsley defaulted on the loan in 2015, according to federal court filings.
Heartland received the judgment before the case went to trial because the loan default was “undisputed,” according to Wilson’s order.
But the backstory is more complicated: Parsley blamed Quinn for the default and has sued him for breach of contract, among other things. Parsley is seeking at least $1.5 million in damages in a case set for trial starting March 13.
Parsley’s trouble with Quinn can be traced to a March 2011 business trip that he took with Quinn and John Lewis. Quinn and Lewis owned Rock Exploration LLC of Little Rock, an oil and gas company, although Quinn is better known as the former chairman, president and CEO of Rock Bancshares Inc., Heartland Bank’s holding company.
You may remember that in August Simmons Bank of Pine Bluff became the sole shareholder of Heartland, which lost more than $11.7 million in the first half of this year after losing nearly $7.9 million in 2016.
Quinn resigned from Rock Bancshares in late 2015 as his own financial problems became tangled with the bank’s.
On the 2011 business trip, according to Parsley’s complaint, Quinn mentioned that he needed cash and that he and Lewis were each willing to sell 5 percent of Rock Exploration — 10 percent of the company — for a total of $3 million.
Parsley agreed, although the terms were never put in writing. To get the money for the investment in Quinn’s company, Parsley said, Quinn arranged a meeting with a Heartland Bank loan officer. After the meeting, the $3 million loan to Parsley was approved.
But before the loan closed, “Quinn was in need of his share,” Parsley said in his complaint, so Lewis stepped in and advanced Quinn $1.5 million. When the loan closed, all $3 million went to Lewis, according to the court document.
“Quinn never fulfilled his promise to provide Parsley 5 percent interest of Rock Exploration and disclaims making that promise,” according to a filing by Parsley’s attorney, Richard Downing of Little Rock.
Downing wants to use Heartland’s bank examination report by the Federal Reserve System and the Arkansas State Bank Department as evidence in his client’s case. Downing told the court that the report reveals evidence of other “Quinn affiliates self-dealing with Heartland Bank and the involvement of Heartland officers/board members in those activities.”
He also said the bank examiners’ report shows “a practice of handling specific loan activities and behavior by Quinn which amounted to a habit and custom of Quinn’s benefitting from Heartland Bank loans.”
The report is confidential, and the use of it violates the Code of Federal Regulations, according to a filing by Heartland’s attorney, Paul Bennett of Pine Bluff. He filed a motion to keep the report out of the trial.
Quinn’s attorney, Kenneth Shemin of Rogers, did not immediately return a call for comment. But in his response to Parsley’s suit, Shemin asserts that Quinn never received any economic benefit from Parsley’s money: “Quinn denies that there was ever any agreement for him to sell any interest in Rock Exploration to Parsley,” Shemin wrote.
As of Thursday, Judge Wilson hadn’t ruled on whether the bank examiners’ report can be used in the lawsuit.