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| Shaun Hayes Spins Web
By Jerry Berger
Berger's Beat
December 20, 2013
http://bergersbeat.com/
Notorious ex-banker Shaun Hayes may have met his end. He is involved in three federal lawsuits involving securities fraud and five other counts. He will not be able to wiggle his way out of this fiasco. Here are the lawsuits
CASE 1
The first case was filed by Bonhomme Investment Partners, LLC and its owners Richard C. Lehman and Donald Davis on March 14, 2013 against Shaun Hayes, Richard Miller estate, Simmons First National Bank. The Federal Deposit Insurance Co. as receiver for Truman Bank and Truman and Truman Bancorp, Inc. on the following counts:
Count 1 Federal Securities Fraud
Count 2 Missouri Securities Fraud
Count 3 Breach of Implied Covenant of Good Faith and Fair Dealing
Count 4 Common Law Fraud
Count 5 Negligent Misrepresentation
Count 6 Unjust Enrichment
On June 19, 2009, Bonhomme loaned $6M to Bancorp, executed by a promissory note in Bonhomme’s favor. Bancorp pledged its Truman and FFC stock as collateral.At the time of the loan, Hayes told Davis and Lehman that Sun Security Bank where he was Chairman and principal shareholder would loan Bonhomme the $6M for the Truman loan. He further stated he would arrange for Bonhomme to use the collateral provided by Bancorp on the Truman loan to secure Bonhomme’s loan from Sun.Based on Hayes’ statements, Bonhomme borrowed $6.025M from Sun to finance the Truman loan, and pledged the Bancorp Note and the collateral provided by Bancorp on the Truman loan as collateral for the Sun loan.Davis and Lehman also personally guaranteed the Sun loan. Lehman pledged securities he owned with his wife.
At the time of the Truman loan and the Sun loan, Bancorp was not entitled to pledge the Truman stock or the FCC stock as collateral for the Trumanloan because that stock had already been pledged to secure other Bancorp debts.
Hayes and Miller knew at the time they could not pledge stock that had already been pledged. They failed to disclose this to Davis and Lehman who were unaware the stock had already been pledged to secure other loans.In early 2010, Hayes and Miller allegedly lied to Davis and Lehman by telling them the FDIC told them they could not pledge the Truman stock to secure the Bancorp note because Bonhomme could not legally own stock in the event Bancorp defaulted. Hayes and Miller stated Bonhomme would need to exchange the Bancorp note for convertible debentures.
Based on their statements, Bonhomme agreed to exchange the Bancorp note for the debentures. In order to exchange the note for debentures it was necessary for Bonhomme to obtain Sun’s consent to switch the debentures for the Bancorp note for two convertible debentures from Bancorp in the amounts of $4.8M and $1.2M. Hayes gave Sun’s approval.
Bonhomme agreed to the proposed change and Bonhomme pledged the $1.2M debenture to secure the extension of the Sun loan. Hayes, Davis and Lehman agreed to all of this.On September 14, 2012 Truman was closed by the Missouri Division of Finance which appointed the FDIC as the bank’s receiver. The FDIC then sold Truman Bank to Simmons.
On December 19, 2012, Bonhomme filed a claim against Truman Bank. On January 15, 2013 the FDIC notified Davis and Lehman they disallowed Bonhomme’s claim. The case is pending.
CASE 2:
On April 12, 2013 Plaintiffs Cella Funds, LLC, Donald M. Davis, Joan M. Davis and Richard C. Lehman filed suit against defendants Shaun Hayes, John Doe, officer or director of Excel Bank, the FDIC as receiver for Excel Bank and Investors Financial Corporation of Pettis County, Inc. on the following charges:
Count 1: Federal Securities Fraud
Count 2: Missouri Securities Fraud
Count 3: Breach of Implied Covenant o Good Faith and Fair Dealing
Count 4: Common Law Fraud
Count 5: Negligent Misrepresentation
Count 6: Unjust Enrichment
Hayes was a director and principal shareholder of IFC, Excel Bank’s parent holding company, and acted on behalf of Excel Bank and IFC.
In 2008, Donald M. Davis spoke to Hayes about obtaining a loan from Truman Bank for financing for business purposes. At this time Hayes was a shareholder of Truman Bancorp and consultant to Truman Bank. Hayes told Davis Truman Bank would not provide financing unless Davis purchased shares of the worthless Bancorp stock.Hayes told Davis Truman Bank could not finance its own stock purchase but that he would arrange for a loan to Cella Funds from Excel Bank to fund the purchase of the Truman stock and in turn, Cella would pledge the Truman stock to Excel Bank to secure the loan.In August, 2008 Cella purchased 32,607 shares of Bancorp stock, borrowed $750K from Excel Bank and pledged its Bancorp stock to Excel to secure the loan. Donald and Joan Davis and Richard Lehman signed as personal guarantors.Prior to the receivership Excel Bank sold the loan to Big A, LLC, Pettis Co. Missouri.On October 19, 2012 Excel Bank was closed by the Missouri Division of Finance. The FDIC was appointed as Excel’s receiver. The plaintiffs filed claims against Excel Bank but on February 13, 2013 the FDIC disallowed them.The plantiffs are asking for actual damages against each defendant for their connection to securities fraud plus punitive damages of $2.7M against each defendant.The case is pending.
CASE 3:
Filed May 16, 2013 by Bonhomme Investment Partners, LLC, Donald M. Davis and Richard C. Lehman against Shaun Hayes; John Doe, officer or director of Excel Bank; The FDIC: and Investors Financial Corporation of Pettis County Missouri, Inc.
Count 1: Federal Securities Fraud
Count 2: Missouri Securities Fraud
Count 3: Breach of Implied Covenant of Good Faith and Fair Dealing
Count 4: Common Law Fraud
Count 5: Negligent Misrepresentation
Count 6: Unjust Enrichment
The case is based primarily on misrepresentations and omissions by Hayes to the plaintiffs.In February of 2009, Bonhomme borrowed $3.6M from Excel Bank. The loan was approved by Hayes who deceptively conditioned the loan and a loan from Truman Bank on Bonhomme’s purchase of Truman Bancorp stock. Hayes failed to disclose that Truman and Bancorp were in serious financial trouble and that the Truman stock was worth less than the cost of purchase.Hayes told Lehman that he would have to secure the loan with property he owned in California
and that if he pledged the property, Excel Bank would substitute Truman stock as collateral for the loan and release of Lehman’s property. Based on these representations, Lehman personally guaranteed the loan.In June 2009, Bonhomme borrowed $1.6M from Excel Bank – Hayes approved the loan. He deceptively conditioned the loan and the loan from Truman Bank on Bonhomme’s purchase and subsequent pledge of Truman Bancorp Preferred Stock. Davis and Lehman signed as personal guarantors.
On October 18, 2012, Excel Bank sued Bonhomme, Davis and Lehman in Pettis Co. seeking to recover the amount due on the loan. Excel went into receivership the next day and some of its assets were assumed by Simmons First National Bank. The case was transferred to St. Louis Co. Circuit Court and Simmons was named a plaintiff. The case is pending.
The plaintiffs are suing for actual damages plus punitive damages from each defendant in the amount of $20M.
The case is pending.
What a wicked web Hayes wove. Bonhomme was duped with worthless Truman stock that was in turn used as collateral on five loans. He pledged the same collateral to Excel Bank and Sun Financial Bank.
Richard Miller conspired with Hayes to dupe Bonhomme. Miller then duped Monte Franklin into believing he had no knowledge of Hayes’ financial shenanigans with the plaintiffs when he retained Franklin to investigate Hayes. Miller further claimed Hayes had no interest in Truman even though Hayes was a major shareholder. Miller did not disclose Hayes was being sued by Eagle Bank for pledging the same Truman stock he had pledged to the other plaintiffs.
Can this be the beginning of the end for Hayes?
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