H. Dennis Smiley Jr. backed away from his lawyer's attempt to blame his victims before he was sentenced Thursday to 97 months in federal prison followed by two years of supervised release.
U.S. District Judge P.K. Holmes III also ordered the former president of Arvest Bank’s Benton County market, who pleaded guilty last year to bank fraud, to pay restitution of $4.91 million.
Smiley has until March 14 to report to prison.
Holmes also said he was capping interest on the restitution amount and was not going to levy a fine against Smiley.
"It’s more important that restitution be paid," the judge said.
Smiley took the stand to testify before being sentenced in hopes for leniency. Under questioning by his attorney, W.H. Taylor of Fayetteville, 52-year-old Smiley said he ran into financial problems shortly after he got married while in college and kept hoping his next promotion and salary increase would save him.
"It continued to snowball," Smiley said. "I look back and cannot understand the trouble I got in. I was doing things I never thought I’d do."
When Taylor asked him why he kept with the scheme when it wasn’t working, Smiley said it was bad for a banker to have trouble with his personal finances.
"I couldn’t face it; I should have faced it," Smiley said. "If I had faced it, I probably wouldn’t be sitting here."
Smiley pleaded guilty in August to a single count of bank fraud after defrauding 23 Arkansas banks out of $5.3 million through a combination of forged signatures and fraudulent collateral. Smiley's Arvest retirement account, which he had repeatedly used as collateral, was used to pay down some of the debt.
In a sentencing memorandum, Taylor asked for a shorter prison sentence, two years, rather than the longer sentence contemplated by federal sentencing guidelines. One of the arguments made in the sentencing memo was that the banks should have been more vigilant in preventing Smiley’s scheme from working for as long as it did.
On the stand, Smiley backtracked from that view, saying the responsibility for the fraud was his and that he had taken advantage of colleagues who had trusted him. Smiley also absolved three Arvest employees who unwittingly helped the scheme by crafting fraudulent documents on Smiley’s orders.
"The harm I have caused to people is what is unforgivable," said Smiley, whose voice momentarily broke. "I take full responsibility for what I asked them to do. They did it because they trusted me."
Acting U.S. Attorney Kenneth Elser of Fort Smith asked Smiley point-blank if he placed any blame on the banks, and Smiley quickly responded, "No, sir." Holmes was unmoved by the memo’s argument and when he mentioned it during sentencing — calling it a "somewhat incredulous argument" — took note that Smiley had not continued that line of reasoning in his court testimony, Smiley vigorously shook his head.
Holmes called it a "significant case" unlike many other white-collar crimes he had dealt with over the years. He said it was because it was a long-term fraud that involved so much money and so many different victims.
Holmes said 55 fraudulent loans amounted to $6.3 million with a loss of $5 million to the banks. He said each fraudulent loan basically amounted to three individual felonies.
"I don’t know how he got up and went to work at Arvest Bank," Holmes said.
Taylor, in a last plea for leniency, told the court that Smiley’s actions were uncharacteristic and there would be little value gained by locking him in prison for a long term.
"I’ll say the obvious: Sometimes really good people do really bad things," Taylor said. "He’s ready to shoulder that burden and he rightfully should. I don’t think he’ll ever be in trouble again."
As Arkansas Business was the first to report in April 2014, Smiley amassed millions in debt spread across virtually every bank operating in northwest Arkansas by repeatedly pledging the $500,000 worth of phantom stock contained in his Arvest retirement account, assets that couldn’t legally be pledged at all.
Smiley had suddenly resigned from Arvest a couple of weeks earlier, after a check for payment on one of the many loans bounced, triggering a collapse of his scheme.
Holmes gave the defense and prosecution one last chance to speak about sentencing and he inadvertently skipped over Smiley. When Taylor pointed out Smiley wanted to speak, Holmes apologized, "That’s probably the most important allocution there is."
Standing in front of Holmes with eight family members in the front row of the court, Smiley said he was sorry.
"I let so many people down," Smiley said. "I only hope I have a chance to get through this quickly and have a chance to make things right. I hope for your good judgment and your mercy."