It was a minor entry on the crime blotter earlier this month: Mandeville police booked a 27-year-old man they said was breaking into a foreclosed home and trying to remove property.
But the arrest of Bradley St. Angelo on a charge of simple burglary is a tiny subplot in a bigger story in which his father is a leading character.
Gregory St. Angelo, the former attorney for First NBC Bank, is at the center of a raft of civil lawsuits and a federal criminal probe stemming from the New Orleans-based bank’s $1 billion collapse last year.
The house that his son stands accused of breaking into on March 9, in Mandeville’s leafy Sanctuary subdivision, was sold days earlier at a sheriff’s auction after the elder St. Angelo defaulted on his loan. Gregory St. Angelo owed nearly $400,000 on the house and had not made any payments since May — a month after the bank failed.
That loan didn’t originate with First NBC, but more than $40 million in other loans to St. Angelo did. And the sheriff's sale came as creditors have turned to the courts to collect some of that unpaid debt.
"They probably view me as someone who has substantial assets and substantial means to give them a higher return than probably what they paid for the loans," St. Angelo said in an interview Friday when asked about the recent flurry of litigation against him.
"I think what'll happen is, like anyone else that's buying distressed assets, you're going to collect the most from the people who can pay the most, and those who can't pay will get off paying less," he added.
After First NBC went under, St. Angelo’s loans were among scores that were sold to the highest bidder.
Ironically, St. Angelo's main role at First NBC was to chase after borrowers who fell behind on payments. "He's an expert in that whole area. And we used him for loan collection activities substantially," First NBC's founder and CEO, Ashton Ryan Jr., said in a 2014 civil deposition.
Appetite for risk
To be sure, St. Angelo's legal issues surrounding his debt do not amount to criminal wrongdoing. But the lawsuits against him, taken together, describe a textbook example of First NBC's unusual appetite for risk and penchant for issuing or renewing large loans to clients who were already knee-deep in debt — and, in some cases, to people with close ties to the bank or its leadership.
In addition to the civil litigation, St. Angelo's role at First NBC is being explored by a federal grand jury that's investigating potential criminal charges related to the bank's collapse.
Though a significant step, the opening of a grand jury probe was hardly a surprise to legal observers, given that the bank’s failure was the costliest one in the United States since the height of the 2008-10 financial crisis.
Recent signals suggest that the investigation is looking into the possibility the bank's failure can't be chalked up only to some bad loans, although Ryan's alleged recklessness in approving loans has always seemed to be at the forefront.
As First NBC's general counsel, St. Angelo isn't surprised that he's been caught up in the grand jury rumors. "I heard they were giving out subpoenas like Halloween candy," he quipped. "I don't know that they would necessarily be restricted to me."
In his view, his purported total debt of roughly $40 million is too high and likely includes overlapping claims.
But, he said, First NBC operated under an understanding that the bank would typically renew loans as they came due, a practice that industry regulators have criticized. However, some borrowers — including St. Angelo — got used to the courtesy, which was no longer extended after the bank failed.
In addition to drying up his credit line, the bank's collapse has taken away a significant chunk of St. Angelo's income. He has a $13 million claim pending with the Federal Deposit Insurance Corp. for legal fees that are owed to him, he said.
After First NBC was ordered closed April 28, nearly $1 billion of the bank's loans were sold off by the FDIC. The largely tattered portfolio netted, on average, only about 40 cents on the dollar.
Given the size of First NBC's nearly $5 billion asset base, St. Angelo doesn't believe his debt would truly "stand out in the loan department."
"I wasn't anywhere near the top echelon of First NBC's lending," he said, "and a lot of my stuff was real estate-secured and collateralized."
25 cents on the dollar
Summit Investment Management, a Denver-based private equity firm that specializes in distressed debt, was the biggest player in the First NBC auction. It paid about $122.5 million — roughly 25 cents on the dollar — for two pools of 254 loans that First NBC had valued at $488.5 million. That haul included St. Angelo's debt.
For affected borrowers, what happens next depends on their financial circumstances. If their loan is current, the borrowers can continue paying off the debt according to the loan's terms, simply sending the payments to the new owners instead of First NBC.
However, if the borrowers are behind in their payments, investors like Summit have options. If the loan was backed by real estate, they can foreclose on the property to recoup the debt. And since they purchased the loans at a deep discount, they may be able to turn a profit even when selling them at a below-market price.
In court filings, Summit has targeted St. Angelo's property that was used as collateral for his loans, including Annadele's Plantation, a Covington bed-and-breakfast and restaurant, and several land lots in the Sanctuary subdivision.
At the center of a separate lawsuit filed in Orleans Parish is St. Angelo's property at 4 Everett Place in Uptown New Orleans, which could be sold to satisfy a nearly $3.4 million debt. Angelo bought the mansion, situated on an exclusive cul-de-sac off Loyola Avenue between State Street and Nashville Avenue, for about $2.4 million in 2015, records show.
As for his son's recent arrest, the elder St. Angelo described it as a misunderstanding, or "a rush to judgment" that "was made relative to whether his (son's) presence in the house was justified or not."
When the Mandeville property went to auction, Gregory St. Angelo entered the bidding, but the price went "beyond the value of the property, I can tell you that." Days later, when his son was arrested, the locks had been changed, but the sale wasn't finalized, he said, and the younger St. Angelo was retrieving what the family believed to be their property.
Reached by phone Friday, Bradley St. Angelo declined comment on his arrest.
'A scary thought'
With the benefit of hindsight, some observers familiar with the bank's inner workings have questioned why Ryan continued lending money to Gregory St. Angelo, whose mounting debt was well known inside the bank.
But their relationship went back years. Ryan, a prominent New Orleans banker, founded First NBC in 2006, choosing a name that recalled First National Bank of Commerce, a prominent New Orleans bank that was acquired by Bank One in 1998.
After the acquisition, Ryan left to work at First Bank and Trust, owned by New Orleans developer Joseph Canizaro. Ryan remained there until just before Hurricane Katrina upended the city in 2005.
That's where Ryan got to know St. Angelo, who played the same role at First Bank and Trust that he later held at First NBC.
Even then, St. Angelo had a propensity for taking out big loans. Ryan said in his 2014 deposition that the lawyer’s extensive borrowing made him "a non-insignificant customer” of the bank he worked for.
When asked in the deposition whether St. Angelo's role at the bank gave him the authority to issue loans, Ryan answered, "Never. That's a scary thought."
On Friday, Angelo said he's tried to find other bank work in the past year, but so far nothing has panned out.
"Anyone associated with First NBC is sort of tainted with the scarlet letter now," he said. "It's not like I haven't tried, but it's not like my phone's ringing off the hook from other banks saying, 'Come help us fail' — which is understandable."
But ultimately, St. Angelo expects to reach an "amicable resolution down the road" over his debt obligations.
"If (Summit) realizes that they only paid 25 cents on the dollar and they can get 50, they ought to take it, be happy and go home, and not try to be greedy pigs," he said. "Fat hogs get slaughtered. Avarice and greed is not going to give them the results they want."