Fraud Friday — Grand Jury Issues New TARP Indictments against 4 Community Bankers
March 13, 2015
By Bob Coleman
Editor, Fraud Friday
The former COO, CCO, CFO and another EVP have seen more charges filed against them for hiding a bad loan from the regulators. The former CEO died in 2013.
The Arkansas bankers convinced themselves Alberto Solarori was a genius who held a breakthrough patent on a “psudo adiabatic engine.”
As I wrote last year, what is a “pseudo adiabatic engine?” Well, it’s pretty cool technology. It will get you twice the fuel efficiency of any car gasoline engine on the market. Really!
Just the type of person you want as an investor if you are an Arkansas community banker.
But since you are reading “Fraud Friday,” you already know where this is going.
Instead of finding a investor, they get a borrower. The bank makes a $1.5 million line of credit to Alberto Solaroli.
I’m sure there was a good reason a Florida inventor with a sure thing and a multi-million net worth needed a line of credit from an Arkansas community bank.
Of course, in the first 30 days the entire line was tapped.
And never a payment was made says the Feds. Seems his net worth was tied up in a penny stock… which ended up being worth, well zero.
The problem is a $1.5 million hit to the bottom line would jeopardize the $17 million in TARP funds the bank was counting on back in 2008.
So, the four developed an elaborate scheme to hide the bad loan from regulators, from TARP, even from the Board of Directors.
After the bank sued Solaroli and got a $1.6 million judgement, the due date was advanced three months to make it appear less delinquent.
On January 19, 2009, Gary Rickenback emailed his fellow conspirators writing the bank would make two loans to pay off the Solaroli loan — to a straw borrower and a loan controlled by the bankers in the name of “Recovery, LLC (name is for discussion purposes only; we will utilize something more discreet)”.
Rickenbach also received an email, probably from the CEO, that read, ‘Gary – I know that your [sic] busting your *** on this mess – But you can’t be involved in the murder and also solve the crime.’
“On February 4, 2009, RICKENBACH sent an email stating, ‘I’ve been focused on cleaning up the documentation on the other 2 deals so we can get them booked. Documents with revisions went to [the attorney] yesterday so I think those are close. I will hot step with [the straw borrower] to get the other part done. It was considered most important to get the Crestwood/Ox loans done to clear the deck and when [the straw borrower] deal gets done it will just reduce the Ox loan . . .I will do better at keeping everyone up to speed.’
The loans eventually funded.
In May 2009, the bank requested an increase of TARP monies to $17,300,000. That request was granted and, as a result, on June 5, 2009, OFC received $17,300,000 from TARP. Prior to this money being deposited into the OFC bank account, OFC (that’s the bank holding company) had a balance of $55,741.63.
Rickenbach kept the loans current. Almost two years later he wrote an email with the subject line Slushy Fund. “One thing we need to keep in mind and perhaps reserve some of the interest recovery and/or the gain that we have parked out there is the interest renewal of the loan. It won’t mature until January 2011, but that is about $30,000 of interest needed for renewal and if I don’0 come up with a solution by then. I don’t have much left in my funds we created for that deal and the leasing company deal.
It all came crashing down in September 2012 when Rickenbach wrote a memo to the Board, “There is no doubt that my actions in all of these situations has been devious and misleading to prevent the bank from having to recognize a loss on this Solaroli loan in January 2009.”