Simmons First National Corp. has denied any wrongdoing in its handling of the bank account of Darren McFadden, the former Arkansas Razorback and NFL player. McFadden has blamed the Pine Bluff bank for failing to warn him about more than $10 million in cash withdrawals and transfers by his financial adviser.
The former Dallas Cowboys running back and his company, McFadden Enterprises Inc. of Denton County, Texas, sued his former adviser, Michael Vick, who lives in Pulaski County, in 2016, for allegedly taking the money.
McFadden later named Simmons Bank as a defendant in the U.S. District Court case for not warning him about the unusual activity in his account.
Between Sept. 22, 2010, and April 24, 2015, Vick, not to be confused with the former pro quarterback of the same name, withdrew money from the account of McFadden, a former family friend who received a six-year, $60.1 million contract from the Oakland Raiders in 2008.
The bank account was opened under the name of McFadden Enterprises at Metropolitan National Bank of Little Rock in 2010. Simmons acquired Metropolitan in 2013 and merged Metropolitan’s operations into Simmons.
McFadden sued Simmons for negligence and breach of contract and is seeking to recover the money Vick withdrew. McFadden’s complaints against Vick include fraud and breach of contract. Vick has denied allegations of wrongdoing in his court filings.
Simmons Bank initially asked U.S. District Court Judge James M. Moody Jr. to throw out the case because Vick was a signatory on McFadden’s bank account and McFadden had given him power of attorney.
But McFadden’s attorneys said in their court filings that Simmons shouldn’t be dismissed and they should be allowed to quiz bank executives under oath about the handling of the account and what they knew about Vick’s alleged theft.
The “wholesale theft … was allowed because of Simmons Bank’s gross indifference and negligence,” McFadden’s attorneys said in an October court filing. “Simmons Bank clearly should have flagged $10.9 million in highly suspicious withdrawals and transfers or, at minimum, someone at Simmons Bank should have contacted … McFadden directly to inquire as to whether this activity was authorized. Indeed, one simple phone call could have prevented this massive looting and misappropriation.”
McFadden accused Vick of using the money “as a personal slush fund” to support his lifestyle. McFadden said in court filings that Vick took about $15 million of his property and assets.
‘An Uphill Battle’
On Feb. 1, Moody denied Simmons’ request to dismiss the case. The bank filed an answer denying the allegations on Feb. 15 and asked again that the case be dismissed.
One law professor thinks McFadden could have a difficult time winning his case because he gave Vick power of attorney.
“My initial sense is it’s going to be an uphill battle to hold the bank liable for anything,” said Lissa Broome, the director of the University of North Carolina School of Law’s Center for Banking & Finance. She was not familiar with the specifics of McFadden’s case.
Simran Singh, an attorney for McFadden in Beverly Hills, California, didn’t return a call to Arkansas Business.
In court filings, however, he said, “Courts across the country have made it abundantly clear that the mere fact that a power of attorney exists does not mean a defendant bank is summarily absolved of its duties of care to their customers, particularly in instances of flagrantly conspicuous and prolonged rampant theft, such as exists in this case.”
Singh noted that during the four-and-a-half-year period that Vick was withdrawing money from McFadden’s account, most of the 982 cash transactions were for around $8,000. Singh alleged that Vick kept those transactions in amounts less than $10,000 in order to sidestep the bank’s requirement to report cash transactions of $10,000 or more. (Federal prosecutors can seek a criminal indictment or file a civil forfeiture lawsuit to recover money that agents believe is tied to “structuring” withdrawals.)
On Nov. 20, 2013, Vick withdrew $100,000, but the next day, he withdrew $8,000, according to a spreadsheet showing the cash withdrawals and attached as an exhibit in McFadden’s filings. And on Nov. 22, 2013, Vick allegedly made two withdrawals, one for $8,000 and another for $1,000.
Another large cash withdrawal came on May 30, 2014, when Vick allegedly withdrew $280,360, according to Singh’s spreadsheet.
One of Simmons’ attorneys, Joseph W. Price II of Quattlebaum Grooms & Tull of Little Rock, said in court filings that Simmons shouldn’t be held liable because Vick had power of attorney for McFadden, which meant that Vick had the “ability to withdraw, debit, and draft checks on the” account.
Nevertheless, Singh said, “Simmons Bank allowed Vick to fraudulently engage in myriad highly unusual, irregular and suspicious withdrawals from [McFadden’s] Simmons Bank Account.”
Singh also alleged that some Simmons employees had “actual knowledge that certain withdrawals by Vick … were unauthorized and/or fraudulent.” The court filing didn’t list the details about the employees’ alleged involvement.
The trial is scheduled to begin next February in U.S. District Court in Little Rock.
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