'I was never involved in any conspiracy;' Ashton Ryan takes stand in First NBC Bank fraud trial

Ashton Ryan, Jr., took the stand in his own defense Monday, telling jurors who will soon weigh his fate that First NBC Bank "was my baby," and that he had only altruistic aims in founding and leading the bank before its 2017 collapse under a mountain of bad loans.

"I was never involved in any conspiracy," Ryan said as his defense counsel, Edward Castaing, asked him to answer the main charges against him as his federal bank fraud trial entered its fifth week.

Had he taken part in the fraud, Castaing asked, that ultimately led to First NBC's $1 billion demise?

"It was my baby, why would I do that?" Ryan answered in brief testimony before the trial recessed.

The testimony from Ryan lasted less than a half hour Monday afternoon. In addition to answering the charges, Castaing led Ryan through his biography as a graduate of Jesuit High School and Tulane University, and touched on his path to founding the bank after Hurricane Katrina. While Ryan has long said through attorneys that he was not guilty of fraud, his testimony represented some of his most expansive public statements in years on the bank's collapse and his role in it.

"Did you hide anything?" Castaing asked Ryan.

"People who have known me understand I'm a straight guy. I'm a Catholic and believe in my religion and don't do anything I'm not supposed to do," Ryan replied.

Earlier in the day, federal prosecutors rested their case after four weeks of testimony from a total of 47 witnesses, which included nine borrowers and bank officials who have themselves admitted to having been part of the alleged fraud scheme.

The core of the government's allegations against Ryan, who was originally charged in 2020 and faces a 49-count indictment on charges of conspiracy, bank fraud, and falsifying documents, is that he colluded with other bank officials to funnel millions of dollars to a handful of favored debtors, even though he knew they were unable to repay or even pay interest on their loans.

Key witnesses have included Gary Gibbs, a Mississippi land developer who said he had racked up $123 million of loans from First NBC with help from First NBC lending officer Brad Calloway. Gibbs and Calloway both have pleaded guilty to one count of conspiracy to commit fraud and said they are hoping for light sentences in exchange for their cooperation.

Gibbs had testified that Ryan encouraged him to keep borrowing and to use the proceeds to cover that his various projects, including a proposed duck hunting lodge and hotel in Arkansas, were underwater. As well as paying off loans with other loans to give the appearance they were current, Gibbs admitted he used proceeds to help fund a lavish lifestyle that included private planes, vacations and luxury automobiles.

A mountain of bad debt

Last week, Gregory St. Angelo, who was First NBC's top lawyer as well as its second-largest borrower when the bank collapsed, gave similar testimony that he had faked the value of assets, including millions of dollars in historic building renovation tax credits, to keep the loans coming. He ended up owing the bank $46 million and also had used loan proceeds for expensive personal purchases, even though he was effectively bankrupt.

The government's final two witnesses on Monday were federal investigators — Joey Hood of the Federal Deposit Insurance Corporation and Josephine Beninati, a financial analyst for the U.S. Attorney's Office — who were called to bolster a key element of the government's case: that Ryan had personally benefitted from the fraud scheme.

Ryan's defense has asserted that he was motivated only by a desire to keep some of the bank's most troubled borrowers afloat until they could get their projects off the ground.

Beninati testified that the proceeds of loans to borrowers Geoffrey Dunlap and Warren Treme ultimately went to pay off loans Ryan himself owed to First NBC Bank.

Dunlap was a contractor for developments that Ryan and Treme were involved in and had built up a large debt with First NBC as he went unpaid for work on the projects. He has testified that Ryan arranged for loans to him that were used to pay for work on Ryan and Treme's projects.

'Assets were disappearing'

Beninati's testimony included a flow chart showing that Ryan's approximately $10 million in total compensation over the decade he was CEO of First NBC Bank was not enough to have covered the $17 million in debt he had repaid to the bank for various projects. That was made up of proceeds from loans to the borrowers he had lent to, she contended.

Ryan's lawyer argued that she had not taken into account his other assets, especially his shares in First NBC when it had become a public company in 2013, which at one time were worth $20 million.

"Yes, but over time those assets were disappearing," Beninati said.

Character witnesses

Before Ryan took the stand for brief testimony at the end of the day Monday, his defense attorney had called Kerney Craft, a partner in Metairie accounting firm Wegmann Dazet & Co., as an expert witness.

Craft briefly testified that the many loans exhibited as part of the prosecution's case that were identified as for "working capital" could have legitimately been used to pay down other loans.

Also taking the stand as a character witness for Ryan was Troy Henry, a prominent New Orleans businessman. He told how Ryan had helped him and his company overcome a crisis in 2013 when other banks had turned him down.

Henry, who is Black, said Ryan had a reputation as a banker who would lend to African Americans when they found it difficult to get loans elsewhere.

"He took a chance on me," Henry said of Ryan. "He had a reputation not only for honesty and integrity, but in New Orleans as color blind."