Lawyers save on opening first NBC fraud case | business news

Opposing attorneys in the Ashton Ryan bank fraud trial made opening statements to the jury Tuesday, painting two very different pictures of the defendants’ role in the $1 billion collapse of New Orleans-based First NBC Bank.

Assistant US Attorney Matthew Payne argued that Ryan and his co-defendant Fred Beebe were part of a wide-ranging conspiracy that spanned several years to lend to unworthy borrowers and forge documents to cover up those borrowers’ inactivity could be payments.

“The evidence will show that the defendants, Ashton Ryan and Fred Beebe, were dishonest and misrepresented in order to lend money to borrowers who were unable to pay their debts and had a special relationship with Ashton Ryan,” Payne argued.

Ryan faces 43 charges including bank fraud, conspiracy and making false entries in bank records. Beebe faces seven counts under the same indictment, all relating to the six borrowers who have pleaded guilty to the case.

Ryan and Beebe’s attorneys issued separate opening statements. While they didn’t deny that a small number of borrowers had amassed hundreds of millions of dollars in bad loans over the decade that the bank existed, they argued quite different motivations for their customers’ behavior.

Ryan’s lead attorney, Edward J. Castaing, Jr., said his client founded First NBC Bank after Hurricane Katrina with altruistic intentions and may have been too lenient with some of the bank’s borrowers.

Former First NBC executive Ashton Ryan, Jr., left-center, walks with his attorneys, Peter Castaing, far left, Edward J. Castaing, Jr., right-center, and Deborah Pearce at his trial Tuesday U.S. District Court in New Orleans, January 10, 2023. (Photo by Chris Granger | The Times-Picayune | The New Orleans Advocate)

“Any loan Ashton made to Ryan, he expected and thought it would be a good loan that would be repaid with interest, fees and profits, all in favor of the bank,” Castaing said.

Castaing added that he had granted the loans “also for the benefit of the borrowers, yes, perhaps wrongly.” But it was “to help borrowers rebuild after Katrina and help them get credit that they couldn’t get from the Whitneys of this world, the Cap Ones,” he said, citing Hancock and Whitney Bank Capital One.

Castaing discussed Ryan’s background as a graduate of Jesuit High School and Tulane University, where he earned an MBA, before joining ‘Big Five’ Arthur Andersen accounting firm. After moving into banking in the 1990s, he eventually founded First NBC in 2006 to provide credit to those trying to recover from the devastating hurricane, Castaing said.

Ryan’s attorney said it’s important to distinguish between bad loans, which his client approved, and criminal fraud and conspiracy.

“The government needs to prove beyond a reasonable doubt that Ashton Ryan had a specific criminal intent to deceive the bank and deprive it of something of value,” Castaing said. “He must have intended to hurt the bank.”

A junior leader


Fred Beebe, center, former Vice President of First NBC, enters the U.S. District Courthouse in the New Orleans Times-Picayune Tuesday, January 10, 2023 with his attorneys Ethan Bolagh (left) and Sara Johnson (right). The New Orleans Advocate

Beebe’s attorney Sara Johnson tried to distance her client from the alleged conspiracy. Beebe was a relatively young vice president who worked at a Kenner branch of the bank, she said, noting that he had only joined First NBC Bank in 2009.

The charges against Beebe relate solely to loans made to Warren Treme, one of the developers who was approved to borrow millions of dollars from the bank despite falling deeper into the waters and being perpetually insolvent.

Johnson said that Beebe was essentially duped and that Treme’s credit was passed on to him when he came to the bank. She said Treme’s credits transitioned from First Bank of Commerce, where both Beebe and Ryan worked, to First NBC and was initially assigned to Brad Calloway.

Calloway is one of three bank employees who have pleaded guilty to the case.

“Everybody threw their stuff on the new guy,” Johnson said, leaving Beebe with Treme’s bad loans already running into millions of dollars that were beyond Beebe’s authority to approve or deny.

Johnson said Beebe not only made accurate reports of Treme’s bad credit situation, but eventually took pains to record meetings with Treme discussing his bad loans and then worked with federal authorities when the bank collapsed.

witnesses come

Payne for the prosecution also predicted witnesses would come, including Gregory St. Angelo, First NBC’s former top attorney who was also one of its biggest borrowers.

St. Angelo owed the bank $46 million at the time of its collapse.

Gary Gibbs, a Mississippi developer, will testify about how he constantly got loans to cover the fact that his projects in Arkansas, Tennessee and Louisiana had failed and he couldn’t make payments, Payne said.

Other witnesses include Kenneth Charity, another real estate developer; owner of financial services company Frank J. Adolph Jr.; hotel owner Arvind “Mike” Vira; and contractor Jeffrey Dunlap. Payne said he would detail how Ryan benefited from cozy credit ties through a land development deal with Treme, in which Dunlaps’ construction company had an interest.

The first witnesses in the case will be called on Tuesday afternoon.

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