Dennis Smiley sentenced to 97 months for bank fraud

by Kim Souza ([email protected]) 2,957 views 

Former Arvest Bank banker Dennis Smiley will spend the next eight years in federal prison for the bank fraud he committed with 24 banks while obtaining 55 loans and wrongly using three of his subordinates and forging the names of his father and wife.

A somewhat stoic, yet humble Smiley stood before Federal Judge P. K. Holmes III Thursday morning (Jan. 28) in Fayetteville saying, “I am truly sorry for the conduct I committed that hurt so many people, my wife, my kids, my parents, the community and Arvest Bank. … I only hope that I will have a chance to make this right. That is what I am asking for Your Honor. That and your mercy.”

Smiley also faces mandatory restitution in the amount of $4.915 million, with two years supervised release and a $100 special assessment, which was due immediately. Holmes said the restitution will not have additional interest added and there were no other fines assessed. Smiley is also allowed to self report to federal prison on March 14, 2016, ironically two years to the date he resigned his job at Arvest.

Judge Holmes took a while to explain why he felt compelled to sentence the 52-year-old Smiley within the stated guidelines of 97-121 months. He said many times when he’s presided over white collar crime, the underlying reasons for the fraud or theft were to repay medical bills or even support a gambling addiction, but this time it was quite different as this entire “sophisticated” crime was perpetrated merely to maintain a lifestyle well beyond the defendant’s means.

He said the scope of the crime was enormous given that it impacted two banks across the state and his own employer Arvest Bank, who alone faced about $4 million in potential civil liability because of his crimes.

“If these fraudulent acts were tallied up individually they would encompass around 100 felonies,” Judge Holmes said.

Smiley also took the stand in his own defense to tell the court why and how perpetrated the crimes. His legal counsel W.H. Taylor asked Smiley if he in any way blamed the banks who loaned him money for any part of the crime. This line of questioning came on the heels of the defendant’s sentencing memorandum where Smiley and his counsel argued the banks were not “vulnerable victims” because they did not follow standard lending protocol.

“I take full responsibility,” Smiley replied also saying he did not hold any of the lending banks accountable.

Judge Holmes reminded the court that Smiley used his position of power and trust within the community to get loans from those he had long relationships with over the years. He also said Smiley misrepresented his net worth and concealed other vital information to these lenders that helped him get the loans. For that reason, Holmes sided with the prosecution on the two-level upward adjustment in the sentencing. Another two level adjustment was awarded to the prosecution for the “sophisticated means” of the crime.

Taylor told the court that this is a classic story of a “good man who has done something bad.”

Phil Knight, a banking consultant in Northwest Arkansas, agreed with that statement. He said had Smiley been able to repay all the money he borrowed, no one would have likely pressed charges.

“At the end of the day banks want to get repaid for the loans they make. No one would have likely cared about the fraud aspect if he could have repaid the money.” Knight said.

Smiley said after the crash of the local real estate market around 2008, loans were harder to secure because of the regulatory oversight. He said that was when he first turned to fraudulent means to keep the house of cards from tumbling down. He said he kept the loan coupon books in his briefcase and each week he pulled out the notes that were due and tried to figure out a way to pay something to keep the banks happy. By 2012, Smiley admitted he knew there was likely no way out.

When asked by the court why he didn’t come forward at that time, Smiley said the worst thing a successful banker can do is let the public know that he can’t manage his own money.

Smiley received a three-level downward departure for his acceptance of responsibility after his crime was discovered by his employer Arvest Bank in March 2014. The court also cited the crimes only stopped because one lender did call to check on the Arvest Bank stock collateral in early March 2014, talking with Euva Phillips who had signed on behalf of Arvest Bank as the senior vice president of operations. Phillips, who signed at the coercion of Smiley, took this to an Arvest superior who told Smiley to “fix it” and never do it again, according to commentary from Holmes. He said another bank called to check on the collateral within the next week and Arvest gave Smiley a choice to resign or be fired on March 14, 2014.

The crimes were turned over to the Federal Bureau of Investigation and Smiley said he met with the FBI for the first time in April 2014. He said that he immediately turned over all his records to the authorities and took full responsibility for the acts.

None of the banks involved in the lending scheme were present at sentencing, but Holmes said he did receive 30 letters in support for Smiley ahead of the proceedings, which he took into account when deciding the sentence.

The base offense of bank fraud carried a point level of 7, but the scope of the crime involving more than 10 institutions and $6 million pushed the level up another 18 points. Another 8 more points were added in because of abuse of trust, sophisticated means, more than $1 million loss to one institution, and use of a private trust which totaled 33 points.

With the 3-point reduction for acceptance of responsibility, the final sentence level was 30 which carried a sentence recommendation between 97 and 121 months. Holmes said he chose the low end of those guidelines because there was no use in Smiley spending more time than necessary and still adhere to the federal protocol.

Holmes told Smiley he had 15 days to appeal the sentence. Neither side had any comment for the media following the sentencing hearing.

Given the 97-month sentence, and 80% mandatory time served, Smiley will likely serve around 77 months or 6.5 years before he would be eligible for supervised release. Holmes said the Bureau of Prisons would be notifying Smiley in the next 30 days about where he will serve his sentence. The closest possibilities range from Texarkana, Texas, Forrest City, Ark. and El Reno, Okla.