Former banker faces allegations of UCC breach

When engaging in business transactions, you tend to expect the people you are dealing with to honor their side of the agreement. When parties involved in such transactions behave dishonestly, it can be highly detrimental to the business deal and to the companies involved. The Uniform Commercial Code is in place to provide standards for business transactions by which all companies must abide. The UCC is in effect in almost every state, including New Jersey and New York.

Several banks located in Arkansas filed UCC financial statements, which led to a federal probe of a former Arvest Bank top officer. The allegations against him implicate him in a multimillion-dollar loan fraud scheme. The former CEO stands accused of borrowing more than $4 million from a combination of 18 or more banks. The problem with these loans is that he allegedly used the same collateral for each one. Court documents show that the CEO did not have the authority for that action. The long-term employee resigned his position in the wake of the investigation.

In order to combat the charges and extricate itself from any potential liability, Arvest Bank has planned to deposit more than $550,000 to the court. The funds were tapped from the CEO’s monies vested in the bank’s stock and investment options. By signing over the money to the court, Arvest Bank hopes it can avoid any liability.

Although these companies are in another state, this situation could just as easily befall a business in New Jersey or New York. When you are conducting a business transaction, it is important to understand the UCC in order to ensure that you are not in breach of it. Furthermore, this understanding will help identify whether anyone you are doing business with is in breach of the code. The advice of a knowledgeable attorney can guide you through the process, helping you to protect your business and challenge anyone you perceive to be at fault.

Source: Arkansas Business, “Ex-Arvest Banker Dennis Smiley Draws Criminal Scrutiny,” George Waldon and Gwen Moritz, April 7, 2014