story by Kim Souza
ksouza@thecitywire.com
Former Arvest exec Dennis Smiley won’t see any of the $552,000 he earned in stock options during his lengthy banking career. There are 20 banks waiting in line for payment of more than $4.5 million owed by Smiley.
Arvest Bank filed a petition Wednesday (April 3) in Benton County Circuit Court saying it hoped to deposit the $551,754.58 from Smiley’s stock interest into the court’s registry in exchange of for a complete discharge of liability.
Those funds are composed of $427,991.25 from the stock repurchase and $123,763.33 from stock option proceeds accrued up to the time of Smiley’s termination.
In the filing, Arvest said there have been multiple claims for the money from Smiley and 19 banks he owes. The bank’s filing said Arvest “cannot determine without hazard to itself which, if any of them, is legally entitled to the proceeds.”
The bank also noted in the filing that it should not be required to determine who gets paid. In doing so, the bank could subject itself to multiple liability.
Arvest also notes that Smiley was not permitted to pledge or otherwise encumber his shares of Arvest Bank Group stock that he acquired through the company’s stock plan. UCC Financing Statements filed with the Secretary of State’s office indicate Smiley pledged his Arvest Bank stock shares with 11 different banks.
Those 11 banks and nine more were listed in the Arvest court filing, each making claims to Smiley’s stock interest.
BOFK, National Association
Bank of Fayetteville
Bank of the Ozarks, Little Rock
Benefit Bank, Fort Smith
Chambers Bank, Danville
Centennial Bank, Conway
Delta Bank & Trust, Bella Vista
First Bank, Hampton
First Federal Bank, Harrison
First National Bank, Fort Smith
Integrity First Bank
First Security Bank
First State Bank, Lonoke
First State Bank of DeQueen
First State Bank of NWA, Huntsville
First State Bank, Russellville
First Western Bank, Booneville
Legacy National Bank, Springdale
Signature Bank, Fayetteville
Summit Bank, Arkadelphia
Delta Bank & Trust is the first lender to sue Smiley for nonpayment. That suit was filed March 25, in Benton County Circuit Court. Smiley is also subject to a federal fraud investigation for pledging the same collateral multiple times with numerous banks. It is unclear at this time if any other fraudulent actions occurred in connection with the loan scheme.
Several sources interviewed by The City Wire believe criminal charges will soon be filed given the scope of the allegations and prominence of the accused. There are at least two possible ways a criminal investigation involving white collar crimes of this nature can be handled.
A grand jury hearing and sealed indictment until arraignment with evidence supplied by the U.S. Attorney’s office is the traditional method. This can take several months to complete and may not be necessary if a defendant comes forward and is willing to fully cooperate by turning over all evidence of the crime, sources said.
But a more likely scenario would involve a Filing by Information. This would involve a defendant’s attorney working out a deal with U.S. Attorney’s office. In this scenario, a defendant would waive indictment and enter a negotiated plea.
Tim Tarvin, law professor at the University of Arkansas, said in federal cases there is an incentive to come forward and cooperate because in doing so the defendant could shave points off of their sentencing formula. Tarvin has no connection to the Smiley investigation and was speaking merely about the process.
He also said anytime there are civil procedures they can be referred to the criminal investigation.