Chambers Files Lawsuit Against Standridge

Chambers Bank of Danville has filed a lawsuit against former Mount Ida insurance agent Steve Standridge and the bank’s insurance carrier, St. Paul Mercury Insurance Co.

Chambers said it lost $5 million dealing with Standridge and has sued St. Paul, known as Travelers, for denying its claim to cover the loss under a fraud policy worth up to $2 million. Travelers said the alleged loss is not covered under the policy.

Chambers’ troubles started in April 2009, when Standridge wanted to borrow $10 million to buy back stock in Steve Standridge Insurance Inc. that was owned by Broad Street Capital, the lawsuit said.

At the time, most of the agency’s and Standridge’s personal assets were already subject to liens and security interests from First Service Bank of Greenbrier. Chambers Bank would only make the loan if Standridge could get First Service to agree to let Chambers have a superior interest in his assets.

Standridge returned with a signed agreement from Phillip Ellis, president of the Clinton branch of First Service Bank, so Chambers made the loan. Standridge also persuaded Chambers to make premium finance loans so several clients could buy insurance from him.

Between May 2009 and August 2009, Chambers approved four such loans. When they went into default, Standridge’s world crumbled.

It turned out Standridge never issued insurance policies to any of the premium finance borrowers. And the signed agreement with First Service Bank was a forgery, the lawsuit said.

Chambers said it lost $5 million from the defaults of the premium finance loans. The lawsuit didn’t say how much Chambers lost on the $10 million loan to Standridge; one source said that loan could be the subject of another lawsuit.

The bank is suing Standridge and his agency for fraud.

Standridge agreed in July to have his insurance license permanently revoked instead of facing 72 counts of wrongdoing at the Arkansas Insurance Department.

Standridge’s agency once had 20 offices and 178 employees in Arkansas. His offices since have been sold.