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Tuesday, August 6, 2013

One Bank's Scooter Stuart Thought He Knew Who Blew the Whistle in Arkansas


Before he died on March 26, Layton “Scooter” Stuart told Arkansas Business that he thought he knew who had stirred up trouble for him with the chief federal regulators of his One Bank & Trust: Michael Heald and Tom Ricciardone.

In August 2011, Stuart had fired Heald as One Bank’s executive vice president and chief operating officer and terminated the bank’s business relationship with Thinc Marketing Group, where Ricciardone was president.

According to Stuart, Heald told him: “I know where every skeleton is, and we’ll ruin your lives.”

After the Office of the Comptroller of the Currency forced the board of directors to oust Stuart from the bank last Sept. 28, Stuart said he received a text message from Ricciardone that started with “I told you we would get you” and ended with a particularly nasty expletive.

Federal agents have since revealed that three anonymous notes were sent to the OCC’s Little Rock field office, the first received on March 14, 2012. The three communications concerned questionable bank loans and fund transfers linked with two Little Rock houses owned by Stuart’s son and daughter.

Those notes prompted OCC scrutiny that exploded into a sweeping forensic audit of One Bank and a multi-agency criminal investigation led by the Internal Revenue Service.

No criminal charges have been made against anyone in connection with the One Bank investigation.

Heald didn’t return messages seeking comment, and Ricciardone declined comment. There is no evidence besides Stuart’s suspicions to link the two to the anonymous notes.

If they did alert the OCC, their actions might be filed in a drawer labeled: Law of unintended consequences.

Heald and Ricciardone were drawn deeply into a chain reaction of terminations and investigations when the scope of federal curiosity extended far beyond Stuart’s alleged self-dealing with One Bank funds to finance his children’s homes. Though unnamed, the two appear to be part of the narrative in the U.S. Attorney’s forfeiture complaint filed July 12 against Stuart’s estate.

Sources familiar with the investigation identify Heald as “former Employee C” in the complaint. Those same sources identify Ricciardone as “the owner of the marketing company” that allegedly overbilled One Bank by $1 million between January 2009 and August 2011.

According to the forfeiture complaint, “the owner of the marketing company eventually agreed to pay $550,000 restitution to the bank, and this agreement also ended the marketing company’s business relationship with the bank.”

The restitution was made through a $550,000 One Bank loan to “the owner of the marketing company” that was guaranteed by the owner’s father-in-law, according to the complaint. Ricciardone’s father-in-law is Little Rock attorney Richard A. Williams.

The $550,000, however, was allegedly redirected by Stuart into an account for his personal use. “Former Employee C” — Heald — “was generally the person authorizing the bank to pay the marketing company’s invoices,” according to the complaint.

Heald is currently listed as the chief financial officer and a partner in Bespoke Video Production of Little Rock, where Ricciardone is a partner and creative director.

What the forfeiture complaint called the “Overbilling by Marketing Company and Layton Stuart” was one of more than a dozen instances of alleged self-dealing by Stuart.

Accompanying that court action was the seizure of assets valued at $18 million to offset more than $16.8 million in bank funds that Stuart allegedly diverted to his personal use. (See table below.)

Northwestern Mutual and Pacific Life insurance loans* $7,784,502
TARP Funds $2,185,343
Interest from participation loans $2,000,000
Loan for John Hancock Life Insurance policy on Stuart** $1,761,000
Bank-paid personal air travel $1,750,000
Buying and renovating 32 Valley Club Circle $1,096,897
Sale of bank-owned condo in Dallas $765,130
Overbilled marketing restitution $550,000
Bank funds used to pay personal credit cards $377,132
5 personal vehicles purchased by bank $235,555
Embezzlement restitution by fired employee $101,003
Downpayment on 13 Lombardy Lane $53,307
Total $16,898,869
Assets Seized by Federal Agents
Net death benefit on John Hancock
Life Insurance policy on Stuart $17,693,837
Two Bank of America accounts $107,800
2013 Land Rover $67,093 #
2013 Lexus RX350 $46,268 #
2008 Escalade $62,314 #
2011 Cadillac SRX $45,247 #
Net proceeds from sale of house at 13 Lombardy Lane $25,992
Five One Bank accounts $25,263
2008 Global Electric Motorcar $14,633 #
Total $18,088,447
*Bank-owned life insurance policies on senior management.
**Loan was repaid from the $20 million payout after Stuart’s death and isn’t reflected in the diversion dollar total.
#Reflects price paid.

“I’m in a situation where I can’t offer any comments now,” said Richard Torti Sr., executor of Stuart’s estate and trustee of various Stuart family trusts. “But I can tell you the family has been devastated over the loss of their father, a husband and their provider.”

According to court filings, Stuart designated Heald as the original executor of his estate and trustee of the various family trusts created under his will dated Feb. 3, 2006.

Stuart named Torti as executor and trustee in a codicil to his will dated March 11, a mere 15 days before his death.

The largest asset seized was the net payout of a $20 million life insurance policy on Stuart. The government claims the $17.7 million is a fruit of Stuart’s allegedly illegal dealings and that he used tainted money to keep the John Hancock Life Insurance Co. policy in force after he was fired from the bank he owned. The 44-page forfeiture complaint portrays Stuart as living out of the bank, someone who didn’t draw the line between bank owner and fiduciary of a federally regulated financial institution.

In interviews with Arkansas Business after his removal from One Bank, Stuart never admitted to any wrongdoing. He didn’t deny any either.

Stuart did make intimations that the investigation would implicate others, and that there was more than one person of interest.

“I’m not the only one,” Stuart said.

ABCs of One Bank

Other casualties followed after the late Scooter Stuart was forced out of One Bank & Trust at the end of September. The federal investigation that was launched with an anonymous tip in March 2012 is expected to yield more names and charges in the coming weeks.

Tom Whitehead was dismissed as chief financial officer, executive vice president and director of One Bank in December. Two months later, Gary Rickenbach was dismissed as executive vice president, chief loan officer and director.
Sources familiar with the investigation identify Whitehead as “former Employee A” in the forfeiture complaint filed last month by federal prosecutors in Little Rock. Sources identify Matt Sweet, former controller and vice president at One Bank, as “former Employee B.” Sweet left the bank in January 2012. According to the complaint, “former Employee B” allegedly was dismissed by Stuart for embezzling money from the bank. Sweet has not been charged with any crime and Arkansas Business has been unable to locate him for comment.
The complaint alleges that “former Employee B” paid $110,000 in restitution to the bank, and $101,000 of that was diverted to Stuart.
Sources identify Michael Heald, One Bank’s executive vice president, chief operating officer and director until Stuart fired him two years ago, as “former Employee C.”
The alphabet soup of former employees allegedly were all involved in aiding Stuart’s diversion of bank funds, according to the forfeiture complaint.

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