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Friday, January 27, 2023

NBC’s first borrower says Ryan knew he couldn’t pay | business news

Kenneth Charity, a key witness in the bank fraud trial of former First NBC Bank CEO Ashton Ryan, said he racked up $18 million in bad loans from the bank before it collapsed, spending money on luxury cars, watches and renovations. on his $3 million Covington. he marries, while working with Ryan to hide that he couldn’t pay.

Through the minutiae of Charity’s testimony, along with loan forms and other documents, federal prosecutors tried to prove Friday that Ryan had known since 2011 that Charity was a bad businessman who spent the bank’s money instead of using it on property remodeling and other businesses. offers

Former First NBC executive Ashton Ryan, Jr. walks to the US District Court in New Orleans for his trial on Tuesday, January 10, 2023. (Photo by Chris Granger | The Times-Picayune | The New Orleans Advocate)

Charity, who already pleaded guilty to conspiracy to commit bank fraud in a plea deal with prosecutors, was the latest in a series of prosecution witnesses during the first two weeks of Ryan’s federal trial related to the $1,000 bank collapse. millions.

Most of the witnesses so far have testified on variations on the same theme: that Ryan, despite knowing that the borrowers would not be able to repay their loans, allegedly kept that from his board.

Ryan’s lawyers have tried to deny the claims, saying he was personally dealing with some of the bank’s most troublesome customers and trying to keep them afloat.

Testimony and cross-examination on Friday followed the same pattern.

A benefactor relationship

Charity described how he had entered into a business relationship with Ryan when First NBC was founded in 2006. He said that in the early years of their relationship, First NBC loaned him hundreds of thousands of dollars to buy houses for post-Hurricane Katrina renovations, he and Ryan developed a personal bond.

“I got to know Ryan very well and we were friends,” said Charity, noting that Ryan was the godfather of two of her children and had vouched for him at expensive local private schools. “I trusted him unconditionally. He had a solid reputation, he was highly respected.”

Charity said Ryan eventually helped him get involved in bigger projects, including a $1 million condo and beignet deal in the Jax Brewery building on Decatur Street in the French Quarter.

He also bought three gas stations on the North Shore and a defunct shopping center on Robert E. Lee Boulevard (now Allen Toussaint Boulevard), which had been badly damaged by Hurricane Katrina.

‘Lies like a rug’

But the government argued that Ryan realized as early as 2011 that Charity was a poor businessman who consistently failed to hold meetings, file documents, pay business taxes owed to the city, file permit applications and handle other routine business tasks. . .

Brian DeJean, a former Charity accountant, testified that he had dropped him as a client in 2012 because he consistently failed to provide basic documents and was lying about it.

“He wasn’t trustworthy,” DeJean said. “He lied and lied again. He lied like a rug.”

DeJean said that Ryan had been told in a meeting of Charity’s chronic shortcomings, but agreed that Ryan seemed to be doing everything he could to help Charity.

In testimony earlier this week, two program directors who oversee grants to renovate New Orleans buildings after Katrina, Adrienne Celestine and Aimee Quirk, testified that the Charity had been turned down for grants because it had failed to provide the documents that were requested. they had repeatedly requested.

Prosecutors said Ryan had told banking supervisory boards that the grant money was on the way when he knew it had been turned down. His defense attorney responded that Ryan had helped Charity reapply for the grants and hoped they would still be able to get the funds.


Former First NBC executive Ashton Ryan, Jr., right, walks with his wife Jolene to the US District Court in New Orleans for his trial on Tuesday, January 10, 2023. (Photo by Chris Granger | The Times-Picayune | The New Orleans Advocate )

Despite his mounting debts, the government argued that Ryan continued to lend more and more to Charity and claimed in bank documents that Charity was using the money to develop property, when in fact it was using the loan proceeds to pay off older loans and to cover personal expenses. .

In one case, they pointed to a series of three $500,000 loans made to Charity in the spring of 2015, ostensibly to renovate the forecourt of Beignet’s Decatur Street store, but used largely to pay interest on outstanding loans and to personal expenses.

Charity agreed with prosecutors that Ryan had known he was essentially broke since at least early 2015 and was using the money to give the appearance that the loans were current.

During cross-examination, Ryan’s defense attorney, Edward Castaing Jr., tried to show that Charity was lying about Ryan’s extent of knowledge in order to get a lighter sentence. He also painted Ryan as someone Charity regularly lied to.

not a sister

He questioned Charity about her relationship with Stephanie Carter-Stinson, a Washington, DC-based physician who had been a guarantor for all of Charity’s loans.

Charity, 58, married with five children, agreed that she had represented Carter-Stinson to Ryan and other bank officials as her sister, when in fact she was someone with whom he was romantically involved.

Castaing pointed out, and Charity agreed, that Carter-Stinson had an income of more than $500,000 a year, net assets of more than $5 million, and was the main reason the loans kept flowing. The loans were also backed by property liens.

Castaing also pointed out that Charity blamed his wife for out-of-control personal spending when she agreed to cooperate, saying she had a bipolar condition and couldn’t help but spend money.

Castaing then listed the purchases Charity had made for himself, including gold and diamond necklaces and cufflinks, a dozen Rolex watches, as well as other high-end watches like a Breitling Bentley and a TAG Heuer, which together would cost more than $ 100,000. .

The evidence showed that the relationship between Ryan and Charity soured over time. An email exchange in November 2016 showed Ryan rejecting Charity’s efforts to get another loan to buy a new SUV.

“You’re an asshole,” Ryan wrote to Charity, noting that he already owned two five-year-old Mercedes-Benz cars and needed to prioritize paying off the loans.

Charity agreed to plead guilty in July 2019 in the hope of a reduced sentence in exchange for her testimony. Ryan’s trial, which began on January 9, is expected to last four to six weeks.

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