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Fourth borrower pleads guilty in First NBC bank fraud case

Gary Gibbs, a real estate developer in Niceville, Fla., admitted to charges filed against him July 1

NEW ORLEANS — A fourth borrower has agreed to plead guilty to federal bank fraud conspiracy in the case against First NBC Bank founder Ashton Ryan Jr.

Gary Gibbs, a real estate developer in Niceville, Fla., admitted to charges filed against him July 1 – allegations that formed part of the indictment of Ryan and two other bank officers in July. The alleged scheme helped precipitate the $1 billion collapse of First NBC Bank in 2017, the largest American bank failure in the last decade.

Gibbs’ companies, at least six of which are named in court records, allegedly owed First NBC a combined $123 million when it collapsed. That made Gibbs the largest debtor among seven alleged co-conspirators who owed the bank more than a quarter billion dollars combined.

Three of those borrowers have already pleaded guilty, while Gibbs and two others were charged in bills of information rather than indictments, suggesting they will also plead guilty. A seventh borrower, Frank Adolph Jr., was indicted along with Ryan and former bank officers Bill Burnell and Brad Calloway last month.

In the factual basis for his guilty plea, Gibbs acknowledges that Calloway, a former First NBC vice president, was his loan officer. Calloway, Ryan and Burnell, the bank’s chief credit officer, allegedly approved falsified records for Gibbs and hid his and his companies’ overdrafts to justify lending more money to those entities, even after they had failed to pay loans on time.

Federal prosecutors allege Ryan, Burnell and Calloway loaned money to another borrower, identified in court records as Borrower E, so that other borrower could cover payments on Gibbs’ existing loans, falsely stating that Borrower E was paying a debt to Gibbs. The bank leaders also used Gibbs’ loan payments to pay off loans for a separate customer, identified as Borrower F, according to the factual basis for Gibbs’ guilty plea.

Gibbs admits he was allowed to borrow additional money – hundreds of thousands of dollars at a time – in 2011 and 2012 so he could cover overdrafts on his existing loans. In 2013, he borrowed another $1 million, even though the bank officers knew Gibbs’ companies did not have enough revenue to pay the loans they already had, the government alleges and Gibbs admits in court records.

When Gibbs threatened to file for bankruptcy, Ryan told Gibbs the bank couldn’t afford for him to default on the loans, so he and Calloway approved additional loans for Gibbs, according to the court documents.

Prosecutors allege the bank officials repeatedly falsified Gibbs’ financial records and the purpose of the loans so they would continue to be approved by the bank’s board.

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