First Bank sues Dennis Smiley, Arvest and other lenders

by The City Wire staff ([email protected]) 221 views 

Another bank has joined the growing web of lawsuits, counter complaints and pleas for judgment in the Dennis Smiley fraud saga. 

To date there have been seven banks file counter suits against Smiley, Arvest Bank and the other 20 lenders involved in loaning about $4.5 million to Smiley over the past four years.

First Bank (Hampton) filed its counter/cross complaint in Benton County Circuit Court on Wednesday (April 30). The bank is staking its claim for money loaned to Smiley beginning Oct. 9, 2013. 

The bank said it made a loan of $130,000 to Henry D. Smiley Jr., and nterest was to be paid monthly beginning Nov. 9. with the full balance due October 2014. As a condition of this loan Smiley pledged 4,264.33 shares of common stock in Arvest Bank Group, held in an investment account at Arvest.

First Bank received a signed Security Control Agreement with a power of sale for the collateral should the loan become delinquent. That Control Agreement was signed by Smiley and an Arvest executive vice president Jeb Mills, along with First Bank President Jon Harrell. 

On Oct. 31, 2013, First Bank made a second loan for $50,000 payable in 35 monthly installments with a balloon payment of the balance due October 2016. Smiley again used the Arvest stock as collateral for the loan, tied to the signed Control Agreement.

First Bank declared default under the terms of the two loans due to false or misleading information provided by Smiley during the loan process. Demand for payment was made, but the bank said it is still owed $130,000 on one loan and $49,000 owed on the other loan and interest is accruing on both loans at roughly $25 per day, according to the filing.

The bank asked the court for a judgment against Smiley the unpaid funds. First Bank also answered the Arvest interpleading and filed a claim against Arvest Bank Group noting that the Control Agreements signed by the intermediary for the bank are binding contracts that state Arvest had no knowledge of any other claim to the collateral — Smiley’s stock account. The agreement also states that if any other liens are found against the collateral they will be subordinate to First Bank’s position.

The bank said when Arvest liquidated Smiley’s account without notifying First Bank, it breached the contract signed by its intermediary Jeb Mills. First Bank asked the court to render judgment against Arvest Bank Group for the $180,000 secured by the collateral. They also ask for attorney’s fees and court costs related to this case.

Several of the 19 banks listed in Arvest’s interpleading have filed answers with the court. The exceptions include: Chambers Bank, First Western, Legacy National, Bank of Arkansas, Benefit Bank, Centennial Bank and Bank of the Ozarks.

Benton County Circuit Judge John Scott is expected to call a hearing in the next couple of weeks to begin sorting out the pile of claims against Smiley and his former employer.