Ex-Arkansas bank executive spared prison term

An effort to hide a defaulted $1.5 million loan from federal regulators in 2008 earned Gary Rickenbach, a former senior vice president at One Bank, a felony record and two years' probation Wednesday.

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Before an October jury trial in which two other former One Bank executives were acquitted of knowingly assisting in the bank's submission of false reports, federal prosecutors and Rickenbach tried to negotiate the same sentence in return for his guilty plea to a charge of misprision, which is an act to conceal a crime. But U.S. District Judge Kristine Baker refused to accept the plea bargain then, prompting attorneys to renegotiate it to eliminate any specific sentence recommendation from prosecutors.

That left Rickenbach, 59, facing four to seven months in prison Wednesday, after First Assistant U.S. Attorney Pat Harris asked the judge to halve the eight- to 14-month penalty range recommended by federal sentencing guidelines in exchange for Rickenbach's trial testimony.

Harris also declined to object to defense attorney Bill James' request for a sentencing variance to allow Rickenbach to serve a strictly probationary sentence.

This time, Baker agreed, noting that after a three-week trial, it was clear that Rickenbach wasn't involved in a scheme to personally profit from hiding the bad loan, other than to keep his job. She said he had "no criminal history to speak of," and that "by all accounts, he has been a productive member of society and the community" until what he described as making a series of "poor decisions" that overrode his instincts and training.

Baker ordered Rickenbach to perform 100 hours of community service work, as directed by U.S. probation officers, while on probation. She declined to impose a fine.

At the trial, Rickenbach acknowledged devising a plan, with the approval of the bank's owner, Layton Stuart, to stave off the bank's loss by approving additional loans that would essentially "buy out" the bad loan. The complex series of maneuvers kept the bank in good standing while it vied for, and eventually obtained, a $17.3 million loan from the government's Troubled Assets Relief Program.

While the bank eventually recovered from the bad loan, the false quarterly "call reports" and internal bank records created a false picture of the bank's stability during the national financial crisis, when other banks across the country were collapsing under the weight of too many unsecured loans. At the trial, Harris said the bank's holding company was down to just $55,000 when it received the federal bailout funds in early 2009.

On Wednesday, Rickenbach fought back tears as he told the judge from a courtroom lectern, "This has been a very long and tough journey."

He said it was about 10 years ago that he was introduced to Alberto Solaroli, a Canadian who falsely claimed to have a net worth of about $100 million and persuaded the bank, through Rickenbach, to extend him a $1.5 million line of credit. The loan was to be paid off within a year and generate about $600,000 in interest for the bank, but Solaroli never made a single payment.

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Rickenbach, believing the loan to be a good investment for the bank, didn't reveal to his fellow bankers that he had also personally invested money with Solaroli.

"I have been dealing with the repercussions of giving him a loan ever since," Rickenbach said Wednesday, adding that he was angry at himself and embarrassed.

In his nearly 16 years at the bank, he said, "I made about $100 million in loans ... and I was expecting to collect 100 percent." He said the Solaroli loan was "an abject failure by any measure," and that he has since asked himself why he engineered the complicated plan to buy out the loan rather than "take the easy route" and let the bank charge it off as a bad loan.

The bank pursued Solaroli in a civil lawsuit in Florida, and he eventually pleaded guilty to a money laundering charge for which he is serving time in a federal prison.

Rickenbach apologized to his former co-workers and the nonbanking members of the bank's holding company, saying, "my actions further complicated their responsibilities" after banking regulators removed Stuart from the helm of the bank in 2012.

Federal prosecutors later discovered that Stuart had been using funds from the bank for his personal use, but he died in March 2013, before he could be prosecuted.

Stuart's actions were described in detail at the October trial by former Chief Financial Officer Tom Monroe Whitehead, who testified under an immunity agreement that he used his position to rubber-stamp Stuart's activities. The allegations were also described in a forfeiture complaint that the government filed in 2013 against Stuart's estate to seize about $18 million in assets.

Rickenbach thanked friends and supporters "who have helped me and my family get through this for the last four years" and noted that the effort to reverse the bad loan had destroyed his career as a banker, cost him expected retirement benefits and caused pain for his two children and his wife of nearly 24 years, Becky.

Citing the publicity that the One Bank cases have generated, James told the judge, "The banking community in the Eastern District of Arkansas and elsewhere has certainly acknowledged this prosecution and has acknowledged there will be consequences" for violating banking regulations.

Metro on 12/08/2016

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