Prosecutors seek ‘two-level’ sentence increase against former banker Dennis Smiley

by Kim Souza ([email protected]) 112 views 

Former Arvest Bank President Dennis Smiley may face a two-level increase in the minimum federal sentencing guidelines, according to a 14-page sentencing memorandum filed Thursday (Jan. 7).

In its pre-sentence investigation, the United States Probation Office “properly found, pursuant to USSG §3B1.3, that Smiley abused a position of trust, requiring a two level increase in defendant’s offense level.” Smiley’s sentencing is set for Jan. 28.

Smiley plead guilty to one count of wire fraud on Aug. 25 after a lengthly investigation into his fraudulent bank loans totaling more than $6.3 million borrowed from 23 different Arkansas banks. The loss resulting from the loans is expected to be $5.282 million, according to the plea agreement.

“Even if some individual steps in Smiley’s scheme were not especially complex or intricate, the overall scheme clearly warrants the sophisticated scheme enhancement. Smiley’s fraudulent scheme involved 55 personal and business loans totaling more than $6 million from 24 different banks and occurred over a long period of time … The scheme involved Smiley submitting forged loan documents, false financial statements, and false certifications regarding his Arvest stock. The scheme involved the use of two companies owned and controlled by Smiley, HDS Holdings LLC and Design for the Home LLC … these facts alone support an enhancement for sophisticated means,” noted Kenneth Elser, assistant U.S. Attorney and author of the prosecution’s amendment.

A two-point upward adjustment would bump the minimum 57-month sentence to a 70-month sentence minimum based on the federal sentencing guideline for fraud involving the $4 million owed to bank victims. Federal judges are able to make “downward departures” in the minimum sentencing guidelines.

Smiley, through his attorney W.H. Taylor, filed a 28-page sentencing addendum on Thursday in which he made a case for leniency. Smiley objected to the two-level increase supported by statute, denying the crime was “sophisticated” in nature. Smiley devoted three-quarters of the filing to share his civic accomplishments over the course of more than a decade, which included board positions on the Jones Trust, Care Foundation, NorthWest Arkansas Community College and many other charitable organizations in the region.

Smiley said he feels great remorse for the crimes committed and the people he disappointed. For years Smiley said he “woke up each morning shaking” at the thought of the web of debt that he had spun as he lived well beyond his means. All the while Smiley said he always planned to repay each loan in full, admitting that he eventually lapsed into denial when the debt because too large to control.

Smiley asked the court to consider his work in the community and that if allowed to serve a shorter sentence he would have more years to earn money to repay the looming debt.

Lastly, Smiley urged to court to not see the 24 banks owed money as victims, noting that they made him loans without doing their own due diligence.

Elser’s filing argued that Smiley used his position as president of Arvest in Springdale and Benton County to facilitate the perpetration and concealment of the bank fraud. He said the former banker also admitted to falsifying financial statements, forging the name of his own father as co-borrower without his knowledge.

Smiley also made fraudulent material misrepresentations to each bank regarding the collateral, which was his Arvest stock held in a restricted account. At the time Smiley’s fraudulent scheme was discovered by the various banks, Smiley had loans totaling more than $4 million dollars which were owed to 20 different banks all of which he had collateralized with his Arvest stock which was worth less than $500,000, Elser’s filing noted.

Lastly, the filing said Smiley admitted that he signed and directed and caused three subordinates and other executives at Arvest to sign various documents which falsely assured the banks that the collateral was unencumbered and would be available to satisfy the loans if the loans were not paid back, an admission that was also confirmed by a review of the bank records.

“While Arvest did not make the loans that were covered by the fraudulent scheme, Arvest was no less a victim of the scheme and sustained the largest loss of all victims,” Elser said.

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