The Benton Banking Company saga is over. The last chapter was finished Dec. 20 when David Humberd, attorney for Benton Bancshares, sent a final $5.40 per share payment to shareholders, thus bringing the total to more than $50/share received in several allocations since the bank was sold in December 2007. In April, shareholders had received a $15/share payment, added to earlier distributions made as money was collected.

The book is now closed on the century-old bank that was brought to its knees by fraudulent loans. Humberd told shareholders that Benton Bancshares, which owned Benton Banking Company and its affiliates, will be administratively dissolved and will no longer exist.

The largest asset was a recovery from Tim Parkes, owner of Remington Industries, which owed the bank some $4.25 million. Parkes had paid $2 million before his 2009 trial on ten counts of bank fraud. After his conviction, he was ordered to pay $2.25 million to the U.S. Marshall Service and those funds were eventually returned to Benton Bancshares. Parkes is currently incarcerated at a federal facility in Mississippi, serving a sentence due to end in August, 2015.

Humberd said Bancshares also received a substantial tax adjustment after it was determined that taxes had been paid on earnings that were overstated. Collections were also made from some other debtors, although Humberd said the majority of fraudulent loans were made to fictitious or non-existent people. Bancshares also received a settlement from the surety bond company that insured bank officers.

Then-bank President Jimmy Goddard pled guilty to misappropriation of bank funds in 2009 and is serving a 78-month sentence at a federal facility in Atlanta until September, 2015. The payment for his Bancshares stock will go to the U.S. government for restitution to the surety bond company, Humberd said, noting there was litigation over the shares owned by Goddard and his wife, Mary Ellen. He said she will receive payment for the shares she owned.

Humberd said most shareholders have been extremely pleased with the recovery efforts and the amounts received. Of the 139 shareholders, he said, only two may not have received their total investments back and most shareholders have received a substantial return on their initial investments. Most shares were purchased at $13 when they were first sold in the 1970s. Humberd said there have not been many shares traded since then, although Goddard sold a few of his personal shares. According to an earlier report, the last shares were sold in 2007 for $70/share. Humberd said there was one shareholder who insisted on a buyout earlier in the recovery process and they negotiated to buy those shares back at around $19-22/share. At the time, he said, they were concerned whether they would even be able to cover that.

Ironically, stock of the now-defunct bank has done better than most banks still active. Humberd said when compared to other bank stocks in the Southeastern portion of the U.S., the return to Benton Bancshare shareholders has exceeded the performance of other bank stocks in the region. On the other hand, he said, “we came really close to not making it at all.” He said there were three big days of negotiations where things fell into place to benefit the shareholders. He said the end result was more than he and Barry Massengill and other directors would have anticipated for a long period of time.

Massengill agreed, saying, “We’re very fortunate the way all the circumstances fell together.” He said there was nothing in the financial records reviewed by the Board of Directors that would alert them to the fraud. “I wish we had known,” he commented. He credited Humberd with doing a great job in recovering funds, noting it brought a lot of money into the county that would have been gone, never to return.

All told, the 112,000 shares generated nearly $6.2 million.

Benton Banking Company was sold to First Volunteer at the end of 2007, apparently within hours of being shut down by the FDIC, Humberd said, noting the sale did not include some $17.5 million in bad loans discovered by auditors. Humberd told shareholders in 2009 that the major loss was on fictitious and fraudulent loans used largely to disguise bad loans and items that should have been charged off over the years. In other words, bad loans were covered up by new, fictitious, loans that gave the impression that the bank was profitable and growing. That went on for years, Humberd said, and kept adding up.

Goddard was charged with two counts of embezzlement – a $2.25 million loan to Livingston Company to cover a bad loan to Remington and a nearly $12,000 payment to American Express for personal expenses. Parkes was accused of creating “shell” companies in order to break down the $2.25 million into smaller loans to circumvent federal lending limits. During the trial, Parkes blamed Goddard for the fraud and said he always intended to pay back the loans, which was done before sentencing. At sentencing, Judge Collier described the scheme as “loan kiting” and said deterrence was the most significant factor in determining the sentence.