Walter Quinn Sues Heartland Bank, Richard O' Brien

Walter Quinn Sues Heartland Bank, Richard O' Brien
Walter Quinn, left, has fired the latest volley in his legal squabbles at Heartland's former president, CEO and board member, Richard O’Brien.

The deteriorated fortunes of Walter Quinn have spawned another lawsuit.

In this one, the Little Rock businessman isn’t a defendant facing creditors. He’s a plaintiff suing Heartland Bank and its former president, CEO and board member, Richard O’Brien.

Once the largest stockholder in the Little Rock bank, Quinn claims O’Brien contributed to his financial difficulties and pushed him out of Heartland. His complaint alleges breach of fiduciary duty and fraud.

“I expect you’re not calling to thank me for renewing my subscription,” O’Brien said when contacted about the lawsuit. “Walter’s under a lot pressure, and I wish him and his family the best.”

O’Brien denied Quinn’s al-legations in his response to the lawsuit in Pulaski County Circuit Court.

In his answer, O’Brien said that regulators at the Federal Reserve and the Arkansas State Bank Department are responsible for pushing Quinn out of leadership positions at the bank and its holding company, Rock Bancshares Inc.

How It Went Down
That forced exodus began with O’Brien asking Quinn, at the behest of regulators, to remove his loans from the bank on April 2, 2015.

Quinn and his companies were over-leveraged, which was why their loans with Heartland became the subject of regulatory scrutiny, according to O’Brien’s court filing.

Quinn and various entities associated with him were habitual slow payers and the Heartland loans were regularly in technical default status, O’Brien said in his answer to the lawsuit.

Quinn took a leave of absence from his positions with Rock Bancshares and Heartland on Dec. 17, 2015. That move wasn’t voluntary. It was at the request of bank regulators, O’Brien noted in his court filing.

Some of Quinn’s allegations revolve around the conversion of $3.2 million in Rock Bancshares capital notes into Heartland stock.

Quinn indicated that ex-changing this holding company debt he held into bank stock somehow caused a domino effect on his financial fortunes. Quinn said he wouldn’t have done the deal if he had known he would have to pay off his loans.

He implied this came as a surprise and O’Brien should’ve warned him.

O’Brien indicated Quinn did the capital note-stock deal at the urging of regulators and the deal likely had no bearing on his already strained financial resources.

According to O’Brien, those capital notes were actually owned by Rock Financial Group LLC, not Quinn.

In his legal response, O’Brien said that Quinn “blurs the lines between himself and the numerous entities he owns and controls, treating the assets of those entities as if they were his own and the liabilities as if they were interchangeable. He ignores the legal formalities and realities of the situation.”

Heartland Bank was taken over by Simmons Bank in a foreclosure-driven stock auction earlier this year. Quinn’s Little Rock home is under the cloud of foreclosure as well.

Malvern National Bank, which holds a $1.2 million first mortgage claim, is seeking a default judgment against Quinn. The home loan has been delinquent for a year now.

Prosperity Bank of El Campo, Texas, holds a second mortgage claim on the 7,490-SF Riverview Point residence. That’s tied to a $1.2 million debt remaining from a consent judgment held by the bank.

You might recall that the Prosperity debt began as a pair of delinquent loans associated with Quinn’s soured oil and gas investments.