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Wilson Bank ordered to pay $7.5M

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Stan Hayes

A Rutherford County jury has awarded a total of $7.5 million to a local real estate developer who sued Wilson Bank & Trust over allegations that a former bank president committed fraud and forgery to the detriment of two companies.

Developer Ken Howell was awarded $3.6 million in punitive damages Thursday after the jury found that Wilson Bank is accountable for the demise of his two companies that were affected by the alleged fraud and forgery by Stan Hayes, who served as the Murfreesboro branch president from 2004 through June 2008.

On Wednesday, the jury awarded Howell $3.9 million in compensatory damages relating to the loss of income and property as a result of various foreclosures on loans that were unlawfully modified.

Wilson Bank has also been ordered to pay all of the attorney fees and court costs associated with the trial, which was held before Chancellor Robert Corlew III in Rutherford County Chancery Court.

For more than three weeks, jurors have listened to a slew of testimony that raised questions as to how Wilson Bank managed lending when it first entered the Rutherford County market and whether some business owners turned a blind eye to questionable practices until it personally affected their finances.

Hayes, who has not been charged criminally in connection with the case, invoked his Fifth Amendment rights during the trial to avoid testifying against himself.

In the lawsuit, Howell successfully claimed Stones River Homes and Richmond’s Retreat LLC, which was jointly owned by Bryan Burns and Brian Krabousanos, were forced to dissolve after Wilson Bank foreclosed on loans that Hayes altered without his permission.

According to court documents, Hayes approved a $1.8 million development loan in January 2007 shortly after Howell and his partners borrowed $880,000 to purchase a 60-acre tract of land in Christiana to build Richmond’s Retreat.

Unbeknownst to the business partners, Hayes allegedly began drawing funds from the Stones River Homes credit line to pay for the Richmond’s Retreat development loan, which in reality, was never authorized by the bank.

A few months later, the group, which also operated as BDH LLC, was in the process of completing a project in Davidson County. In order to satisfy various regulations, Hayes agreed to let them take a lien against Richmond’s Retreat through Pinnacle Bank as collateral for the project.

It was not until May 2008 did they learn that Hayes had pulled more than $760,000 from the Stones River Homes account to back the fake Richmond’s Retreat development loan – meaning Pinnacle Bank financed the Davidson County project without a legitimate source of collateral.

Consequently, the banks halted activity on the accounts, and ultimately, did not rework the loans. Without the needed liquidity, the businesses collapsed.

Though he has not provided an explanation in response to the allegations, Murfreesboro attorney Rodney Scott, who represented Howell, argued Hayes took advantage of unsuspecting clients in order to pump up profit margins and inflate bank deposits – all as part of a larger effort to make the bank appear stronger than its competitors.

Throughout much of the trial, Nashville defense attorney Rob Dodson, of Adams and Reese LLP, insisted Hayes is solely to blame for the fraudulent activity because he acted as a rogue employee and concealed his actions from fellow executives.

To read in-depth coverage of this trial, pick up a copy of the Sunday, March 24, print edition of The Murfreesboro Post.

Read more from:
Banking, BDH, Bryan Burns, Chancery Court, Christiana, Finance, Ken Dill, Ken Howell, Murfreesboro, Richmonds Retreat, Robert Corlew, Rutherford County, Stan Hayes, Stones River Homes, Tommy Taylor, Wilson Bank and Trust
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