Dennis Smiley pleads guilty to bank fraud, faces prison and restitution

by The City Wire staff ([email protected]) 509 views 

Former Arvest Bank President H. Dennis Smiley on Tuesday (Aug. 25) waived indictment and entered a guilty plea of bank fraud in federal court on before U.S. District Judge P.K. Holmes III.

The criminal investigation into Smiley’s loan scheme has been underway for nearly 18 months, but rather than await grand jury indictment, Smiley with representation from W.H. Taylor worked out a plea agreement with federal prosecutors represented by U.S. Attorney Clay Fowlkes.

In most low risk white collar crimes, the defendant can be released on a small bond until a sentencing date which will be set by the court. That was the case with Smiley who was released after posting a $10,000 bond.

Smiley was supposed to be in civil court in Benton County on Monday (Aug. 24) for one of the remaining cases against him brought by Arvest Bank, who settled with 18 other banks who loaned Smiley more than $3.5 million which was backed by the same $500,000 collateral held in Smiley’s Arvest retirement account. Arvest requested by letter to the court that the remaining civil trails be continued until after Smiley’s criminal plea to avoid his taking the Fifth Amendment on cross examination. Benton County Circuit Judge John Scott approved the request.

A spokeswoman for the U.S. Attorney’s Office confirmed the Smiley plea and said sentencing is not likely for three to four months pending the standard pre-sentencing report which the prosecution will generate during that time to support the sentence being sought.

Smiley’s sentence is anybody’s guess. Judge Holmes may defer from the sentencing guidelines that indicate Smiley could face a maximum sentence of 71 months. But it’s more likely the sentence will be less. In any event, Smiley will be required by law to serve 80% of the sentence he receives. Judge Holmes may also require Smiley to pay restitution which is set by the court and paid to the those institutions experiencing losses resulting from Smiley’s crime. He will likely serve three year’s probation immediately following his release from incarceration. 

Insiders familiar with this situation recently told The City Wire that Smiley and his attorney have been settling as much of the debt as possible before sentencing with financial help from a family friend. This could help lower the amount of restitution Smiley is required to pay, but will not likely less the sentence.

CIVIL CONCERNS
Aside from the criminal charge, Smiley still faces creditor Signature Bank which did not settle with Arvest Bank in civil court. Signature has two civil cases in Washington County Circuit Court with three loans totaling $528,000 made to Smiley and his wife Cynthia. Signature Bank CEO Gary Head told The City Wire that his bank was not approached by Arvest Bank for settlement and through Signature Bank’s counsel had hoped to work out a settlement with Smiley on repayment. That has not yet happened given the pending court date.

Signature’s first case against Smiley is set for Oct. 5 in Washington County Circuit Court. The other case is slated for after the first of the year. Two of the loans Signature Bank made to Smiley were for his wife’s business, Design for the Home. That business folded and was dissolved in Cynthia Smiley’s Chapter 7 bankruptcy filed in October 2014. None of Smiley’s creditors objected to Cynthia’s bankruptcy which effectively means all of the debt (more than $1.7 million that was borrowed by him for her business) can be heaped upon him. She evaded her responsibility for the debt through the bankruptcy charge-off.

LIVING BEYOND MEANS
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 filings said Smiley opened the $50,000 credit line in 1989. The Platinum card fell in arrears last year after Smiley lost his job at Arvest Bank. The default interest rate charged to Smiley was 27.24%, according to the filing. The final statement sent to Smiley on Sept. 9, 2014 indicated a minimum payment due of $32,638.18 on the balance of $65,025.41. After repeated demands for payment, American Express asked the court for judgment against Smiley for the full $65,025.41 owed, as well as court costs.

Their home was sold was in August after being on the market 130 days. The home in the Pinnacle County Club area was listed at $568,500. There were three mortgages on the home which were settled in part following the sale. 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.