The Washington Post last week served up a treat for us geeks who care how the plea bargain sausage is made: “How David Petraeus avoided felony charges and possible prison time.”
Without identifying sources — presumably federal prosecutors and FBI agents described as “angry” with the outcome — the story describes the factors that allowed the four-star general and former CIA director to plead guilty to a mere misdemeanor (mishandling classified material) despite providing his mistress/biographer with hundreds of pages of highly sensitive material.
Long story short: One’s negotiating position is enhanced if the government really, really doesn’t want to present the evidence at a public trial. It also helps if your mistress is a kinda-sorta member of the media, since the Department of Justice doesn’t like to prosecute members of the media for doing their jobs.
The sausage we report on in Arkansas Business is rarely that sexy, and we generally only see the finished product, not the process. They are mostly plea deals for perpetrators of wire fraud or mail fraud, or conspiracy to commit one or the other. Occasionally we see a straight-up case of bank fraud, which is what Dennis Smiley Jr., former president of Arvest Bank’s Benton County market, pleaded guilty to.
Smiley was sentenced Thursday to eight years in federal prison by U.S. District Judge P.K. Holmes III in the Western District of Arkansas.
While the sentence was up to Judge Holmes, defense lawyer W.H. Taylor of Fayetteville negotiated a deal in which Smiley pleaded guilty to only a single count of bank fraud — but he had to accept responsibility and restitution for more than 20 bank victims and their combined losses of nearly $5 million.
Meanwhile, here in the Eastern District, I’ve been studying the plea agreements reached in the related cases of Gary Rickenbach, former senior EVP of One Bank & Trust in Little Rock, and Albert Solaroli, the Florida businessman who promptly defaulted on a $1.5 million loan that Rickenbach lined up for him.
Solaroli, who falsely claimed net worth of $169 million when he applied for the loan, was originally charged with bank fraud. But he and his Little Rock lawyer, Omar Greene, negotiated that down to money laundering. What’s more, he only pleaded guilty to laundering $120,000, which greatly reduced the guideline sentence for a guy who got 12.5 times that much.
Rickenbach, who had invested in Solaroli’s company before making the loan, was charged with seven counts, including bank fraud, conspiracy and money laundering. When he was first indicted in April 2014, the case was touted as TARP fraud because Rickenbach allegedly helped hide Solaroli’s default so that One Bank could get an infusion of capital from the federal government.
By November 2015, defense lawyer Bill James of Little Rock had made a deal that would transform Rickenbach from active conspirator to passive bystander. Rickenbach has offered to plead guilty to a single count of misprision of a felony — essentially failing to report that his boss, the late Scooter Stuart, falsified the bank’s call reports. Plus he will only plead guilty if U.S. District Judge Kristine Baker agrees to sentence him to no more than two years of probation.
Baker hasn’t decided whether to go along with the deal, but the expectation that she will turned up in Solaroli’s argument to his federal judge, Brian Miller.
“It took two to tango,” Greene wrote in a memorandum to Miller. “… Rickenbach is virtually certain to receive a sentence of two years of probation. Mr. Solaroli cooperated with the government and was ready to testify if the government needed his testimony. A non-prison sentence would permit Mr. Solaroli to rebuild his financial life and pay restitution and would be appropriate in light of the sentence that Rickenbach has received.”
These two guys tangoed their way to a $1.5 million loss for One Bank, which was then covered up in order to get a taxpayer bailout — and it’s possible that neither one will go to prison? That doesn’t seem right to me, especially when Little Rock developer Steve Clary drew 30 months and the full $1.6 million in restitution for misusing the proceeds from a bank loan.
Maybe Judge Miller shares my sense of fair play. As reported by the Arkansas Democrat-Gazette, Miller granted Solaroli’s request for more time to repay the $120,000 before being sentenced, now scheduled for Feb. 26. But he told Solaroli and Greene at the Jan. 21 hearing that he was offended by the idea of avoiding prison by returning stolen money after being caught.
And maybe Miller was sending a message to his colleague on the bench when he said that, as a former bank director, he knew One Bank’s board would be “mad as hell” if Judge Baker accepts Rickenbach’s no-prison deal.
As with Petraeus, maybe there are secret ingredients in the sausage.
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Gwen Moritz is editor of Arkansas Business. Email her at GMoritz@ABPG.com. |