Layton “Scooter” Stuart, the former chairman, president and CEO of One Bank & Trust, isn’t alone in receiving attention as part of a criminal investigation into the financial dealings at the Little Rock bank.
At least five other former One Bank executives are included in the probe that sent IRS and FBI agents to Stuart’s west Little Rock home on Feb. 6, according to a source familiar with a forensic audit ordered last year by the Office of the Comptroller of the Currency.
How the bank’s former leadership used $17.3 million in TARP funds is drawing special scrutiny, the source said.
Jerry Pavlas, One Bank’s new president and CEO, confirmed that the audit was the basis of the investigation but was less specific about details under investigation.
“The investigation is against individuals who have left the bank,” said Pavlas, who was hired as Stuart’s replacement in October. “It’s not about the bank or anyone still at the bank. The forensic report is done, and it’s all about the individuals in the forensic report.”
No former One Bank executives are currently under indictment. However, Andrew Melton, who was hired by Stuart as a bank consultant in August, was indicted on 12 counts of mail fraud in an unrelated case on Feb. 6, the same day Stuart’s Hickory Creek mansion was raided.
Melton was re-tained by Stuart to help One Bank comply with the prompt corrective action ordered by the OCC.
Melton, who served as executive vice president and CFO at Little Rock’s Worthen Banking Corp. earlier in his career, worked as a One Bank consultant for about only three months.
“When I got here in October, his consulting arrangement was terminated,” said Pavlas. “When I came in, his services were no longer needed, and the board agreed.”
Melton is among a group of five Worthen alumni who once worked together and later drew a paycheck from One Bank. He and three others are no longer employed by the bank as regulatory scrutiny of its loan operations intensified.
The first to go was Kelly Harbert, who was fired as senior vice president and commercial loan officer on June 3, 2010. She was ultimately sentenced to 30 months in federal prison and ordered to pay $441,912 in restitution after pleading guilty to bank fraud, money laundering and using someone else’s Social Security number to make fraudulent loans for her own benefit.
A year later, Mike Heald was fired as executive vice president, chief operating officer and director. Tom Whitehead, CFO, executive vice president and director, was placed on paid administrative leave in October before he was fired in December.
The fifth, Gary Rickenbach, executive vice president, chief loan officer and director, was placed on paid administrative leave late last month.
One Bank has operated under a supervisory agreement with the OCC since January 2011. The bank reported a $4.2 million loss during 2012.
Although Stuart is no longer involved in operations and has no voting say at the $439.7 million-asset bank, he remains in control of 99.9 percent of One Bank through its holding company, OneFinancial Corp.
“My intention and goal is to restabilize and recapitalize the bank,” Stuart said. “I have not had any discussions with anyone about selling the bank.”
Pavlas said the bank is already stabilized. He added that it’s improbable that any efforts to raise capital will involve Stuart.
“It’s just talk,” Pavlas said of Stuart’s future involvement in the financial affairs of the bank. “It’s craziness.”