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Fraud Friday — Former Bank President Pleads Guilty to $3.5 Million Fraud

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September 18, 2015

By Bob Coleman
Editor, Fraud Friday

Fraud Friday — Former Bank President Pleads Guilty to $3.5 Million Fraud

I gave my five common themes of lender employee fraud in a speech to America’s Small Business Development Company annual conference in San Francisco last week.

Long Time Employee
Outside Investments make them appear to be independent
Known as a Rainmaker
Humble
Spouse is an Interior Decorator

Check-off Dennis Smiley’s name to most of the items on the list.

The former president of Benton County at Arvest Bank is the son of the Chairman of Arkansas- based First State Bank — owning $500,000 of Dad’s bank stock.

Well that’s what the paperwork said for the 20 banks who lent $4 million using the same First State Bank stock as collateral over and over and over.

Oh, the stock is in Dad’s name, not the son’s. There is only one letter difference between Henry Dennis Smiley, Sr. and Henry Dennis Smiley, Jr, so not too much due diligence would be needed by a lender who had a stock secured loan by a president of a bank.

Right?

Did I also mention the spouse is an interior decorator?

Writes Kim Souza of the City Wire:

Details emerged in Cynthia Smiley’s bankruptcy case shedding light on what happened to the around $4 million the couple borrowed from 20 banks across the state.

Dennis Smiley earned $400,000 as a bank president which was not enough to support the couple’s lifestyle, nor the $550,000 mortgage and minimum interest payments to the 20 banks the couple borrowed from over and over again.

The couple also owed $104,000 to American Express and $34,000 to Citibank. Dillard’s and Neiman Marcus were also owed $10,000 and $5,400 respectively. All the consumer debt was discharged in Cynthia Smiley’s bankruptcy.

Dennis Smiley was sued by American Express in January for unpaid credit card accounts totaling $65,025.

The Platinum card fell in arrears last year after Smiley lost his job at Arvest Bank.

Their home was sold was in August after being on the market 130 days. The home in the Pinnacle Country Club area was listed at $568,500. During the time the Smiley’s owned the 2,967-square-foot home, they made modern updates such as marble and Brazilian wood floors throughout.

Dennis, Jr, faces 71 months in prison and millions of dollars in restitution.

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