First NBC Bank's former top lawyer was charged in federal court Friday with conspiracy to defraud the New Orleans bank, which failed two years ago in the biggest U.S. bank collapse since the 2008 financial crisis.
Gregory St. Angelo served as First NBC's general counsel for a decade until 2016, and during that time, he took out loans totaling tens of millions of dollars from the bank, many of which went into default.
He is accused of conspiring with two former top First NBC officials to defraud the bank: President and CEO Ashton Ryan, referred to in court documents as "Bank President A," and former Chief Credit Officer Bill Burnell, referred to in the documents as "Bank Officer B."
St. Angelo is the first former bank employee to be charged in the wake of the collapse, although Jeffrey Dunlap, a Slidell-based contractor, pleaded guilty in October to federal bank fraud charges for his part in the $1 billion bank failure.
Neither Ryan nor Burnell has been charged, though the charging documents make clear that the two are targets of the federal probe.
The documents allege that both Ryan and Burnell committed numerous crimes, though the two are described rather than named, in keeping with Justice Department guidelines.
St. Angelo was charged in a bill of information rather than a grand jury indictment, generally a sign that a defendant has agreed to plead guilty and cooperate with prosecutors. He is due for a first appearance in federal court March 29.
Phil Wittmann, St. Angelo’s lawyer, said his client "is cooperating with the U.S. attorney in an ongoing investigation of the failure of First NBC Bank and for that reason — because the investigation is ongoing — we’re not going to have any other comment at this time.”
Dunlap has also agreed to cooperate. He has said that he filed bogus loan paperwork, with Ryan's help, to secure a line of credit from First NBC of more than $22 million.
Ryan owed Dunlap money in a separate real-estate venture, and Dunlap has said that Ryan kept extending his credit with the bank on the basis of the money Ryan owed him, even though Ryan knew the loan was risky.
In the court documents filed Friday, prosecutors alleged that St. Angelo, Ryan and Burnell conspired to defraud the bank through various "false and fraudulent pretenses," and that by the time of the bank's collapse St. Angelo had obtained nearly $56 million in loans and other advances through such means.
First NBC Bank’s stunning $1 billion collapse likely ended dozens of banking careers, some by choice and some by circumstance.
Ryan continues to maintain his innocence, according to his lawyer, Eddie Castaing.
“Anyone who committed fraud on the bank also committed fraud on Ashton Ryan and the board, and they should plead guilty," Castaing said Friday. "Ashton had nothing to do with it.”
“You can tell whoever you want that Ashton Ryan totally denies all of the allegations in the bill of information as it applies to him,” Castaing added.
Burnell, through his lawyers Ralph and Brian Capitelli, also denied wrongdoing.
"My client did not receive a penny from any of these transactions," Brian Capitelli said. "Prosecutors usually say, 'Follow the money.' If you follow the money here, it starts and ends with Greg St. Angelo."
The owner of a Slidell construction firm caught up in a federal investigation into First NBC Bank founder Ashton Ryan Jr. is set to plead guil…
Ryan, a veteran New Orleans banker, founded First NBC in New Orleans in 2006 with backing from such high-profile figures as NFL stars Eli and Peyton Manning. It saw rapid growth and was taken public in 2013 at an initial share price of $24, with the shares nearly doubling in value over its first year as a listed company.
But the bank was seized by state and federal regulators in early 2017 after the Louisiana Office of Financial Institutions became concerned that it had become overextended and was not adequately funded.
After the seizure, First NBC was acquired by Mississippi-based Hancock Holding Co., the parent company of Whitney Bank, in a deal that included $1.6 billion in deposits and $1 billion in assets, including $600 million in cash. The cost to the Federal Deposit Insurance Corp. — an arm of the government that insures customers' deposits — was estimated at $1 billion.
Six federal agencies, including the FBI, have been investigating the bank's failure, which has led to the conviction of Dunlap last fall and to Friday’s charges against St. Angelo. A federal grand jury has been investigating for at least 18 months.
Last December, St. Angelo was effectively banned from the banking industry by the FDIC, which found that he had demonstrated a “willful disregard for the safety or soundness of the bank.” He has been the target of several lawsuits and last summer agreed to repay $30 million to a firm that bought his outstanding loans to FNBC.
The filing by federal prosecutors Friday alleges that St. Angelo and several businesses he owned — including St. Angelo Investment Co., Lismore Properties and Annadele Inc. — were part of a conspiracy by St. Angelo, Ryan and Burnell “to enrich themselves unjustly by disguising the true financial status of St. Angelo, the entities and other borrowers, concealing the accurate performance of loans, and misrepresenting the nature of payments to St. Angelo and certain entities.”
It says that St. Angelo — with the knowledge of Ryan and Burnell — overstated the value of his and his companies’ assets, understated their liabilities and omitted key information. It says they also issued new loans to help bring old loans current in order to conceal the borrowers’ true financial condition, issued fraudulent tax credit loans and lent money to nominees that were fronts for St. Angelo.
The filing offers some detail as to how the alleged schemes worked.
For example, it alleges that Ryan and Burnell fraudulently funneled a total of $7.3 million to St. Angelo by agreeing to cover a series of large overdrafts on the First NBC accounts of one of his companies, Premier Information Systems. The payments were characterized as investments in a property — 622 Conti St., located in the French Quarter across the street from the Louisiana Supreme Court building — leased by another of his companies.
However, the feds contend, neither St. Angelo nor any of the companies he controlled had any rights over historic tax credits that were the basis for the purported investment.
They further contend that St. Angelo, Ryan and Burnell were informed by First NBC’s outside counsel that St. Angelo had no claim to the tax credits. The money was allegedly lent on the grounds that it would be used to renovate 622 Conti but was instead used to pay off old debt owed to the bank by one of St. Angelo’s entities.
The filing also claims that similar schemes involving the St. Angelo-owned Annadele restaurant in Covington and a building at 616 Girod St., near Lafayette Square, funneled $2.3 million in First NBC funds to St. Angelo to avoid having to declare old loans in default.
The charging document cites emails exchanged between an unnamed bank employee and Burnell in 2014, suggesting that both knew the tax-credit lending was a scam.
Asked by the employee if the Conti Street property was out of tax credits, Burnell allegedly responded: “As long as we have a sharp pencil we are never out of tax credits."
"LOL ... I think that just made my day," the unnamed employee responded.
Staff writer Gordon Russell contributed to this report.