Riley Loan Trouble

Pat Riley Sr., the Little Rock businessman who defaulted on an $11.5 million loan with Arkansas Teacher Retirement System, is back in the news.

This time he has been dragged into a lawsuit over his son, Jesse, allegedly defaulting on $190,000 worth of loans, according to a lawsuit filed by Regions Bank in Pulaski County Circuit Court.

The elder Riley was named in the lawsuit because he personally guaranteed the loans. But Riley said the default is all just a misunderstanding.

Here’s Regions’ version of events: On April 21, 2000, Jesse Riley borrowed $120,000 and then borrowed another $70,000 on Feb. 15, 2001.

Jesse, who is an ultra marathon runner, used the money to put on an ultra marathon in Austria.

Pat Riley personally guaranteed both loans, but put up no collateral.

The bank’s lawsuit didn’t say when Jesse stopped making payments, but as of April 29, he owed $214,738, including late fees and interest payments. The interest on the loan is adding $50 a day.

Pat Riley’s version is this: When the loan was made, the loan officer at Regions verbally agreed to a 20-year amortization that might have a 10-year balloon note.

Jesse made payments for nearly a year under that plan, Riley said.

But that loan officer left Regions. Then the new loan officer wanted the payment schedule to match what was in the contract agreement, which called for a loan to be paid off in five years and the other in less than a year.

Jesse has been waiting to start making payments on a 20-year basis, “and they won’t accept it,” Riley said. “He is ready and willing pay this one as long they will just honor the terms under which they made the loans,” Riley said.

As for signing the promissory note that spells out the terms of the loan which called for payment much sooner, Riley said “you have to be an attorney to read the little bitty print” in the contract.