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Coast developer alleged to be major player in loans that brought down First NBC Bank

First NBC Bank Holding Company and then-CEO Ashton Ryan Jr., center, rang The NASDAQ Stock Market Opening Bell in celebration of their IPO in May 2013. In 2017, federal and state regulators seized the beleaguered institution, ordering it closed and initiating a $1 billion cleanup, the costliest failure of an American bank since 2010.
First NBC Bank Holding Company and then-CEO Ashton Ryan Jr., center, rang The NASDAQ Stock Market Opening Bell in celebration of their IPO in May 2013. In 2017, federal and state regulators seized the beleaguered institution, ordering it closed and initiating a $1 billion cleanup, the costliest failure of an American bank since 2010. Globe Newswire

The investigations into the collapse of First NBC Bank have unearthed a new series of suspicious, multimillion-dollar loans that regulators allege were fraudulently obtained from former bank executives, this time involving a Mississippi Coast real estate developer who faces a separate lawsuit alleging he duped a former business partner’s widow, leaving her on the hook for millions of dollars of his bad debts.

Regulators from the Federal Deposit Insurance Corp. said in a notice filed last week that Robert Brad Calloway, a former loan officer and chief credit officer at First NBC Bank, submitted false or misleading documentation in order to make a series of loans to Diamondhead, Mississippi-based businessman Gary R. Gibbs that totaled $123 million at the time of the New Orleans bank’s collapse.

The filing says that Calloway, along with First NBC’S former CEO, Ashton Ryan, got the loans to Gibbs approved when they knew he didn’t have the necessary collateral, and that they also knew the money was being used by Gibbs to cover payments on existing loans instead of for Gibbs’ business expenses, as was represented to the bank’s loan committee.

The allegations are the latest in the long-running saga of First NBC’s collapse and subsequent federal investigations, and they add Gibbs to a growing list of borrowers whose loans were allegedly made by Ryan and other executives without heeding bank regulations and the bank’s own policies aimed at preventing losses or fraud.

First NBC’s collapse in 2017 was the largest bank failure in the U.S. in a decade and has resulted in guilty pleas by one former senior bank official, Gregory St. Angelo, and two former clients, Jeffrey Dunlap and Kenneth Charity, both property developers who admitted to borrowing millions of dollars from the bank through fraudulent means.

Gibbs has not been charged with any crimes related to the loans he received, or accused of wrongdoing by regulators in civil litigation. Through an attorney, Gibbs declined to comment for this article.

Gibbs and one of his top lieutenants have been subpoenaed by federal investigators to provide documents in relation to the bank’s collapse, according to people with direct knowledge of the investigation.

The FDIC eventually sold part of First NBC to Hancock Whitney Corp. for $1.6 billion; that bank also assumed liability for nearly $1 billion in deposits. It also sold 1,200 First NBC loans with a nominal value of $1.8 billion for a discounted price of $874 million to investors, sometimes called “vulture funds,” that specialize in collecting on potentially shaky debts.

Read the full story at Nola.com

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