Small Town Bankster
Reckless lending, casino gambling and allegedly doctored books led to the demise of a century-old community bank. Now its CEO faces prison time.
This Week In Blunders Nov. 30-Dec. 6
“We do not want and will not have another epidemic of bank failures.” – President Franklin D. Roosevelt, 1933.
This is going to sound like the 1980s: A small-town banker allegedly made dubious loans to friends and neighbors that were never repaid. Then he allegedly cooked the books to hide his recklessness as his century-old institution failed.
Danny Seibel, 54, headed the First National Bank of Lindsay, Okla., which had served its community of nearly 3,000 people since 1902. The bank once boasted $108 million in assets. Regulators shut it down in October 2024.
On Thursday, a federal grand jury indicted Seibel on bank fraud charges. He faces up to 30 years in prison and a $1 million fine if convicted.
It was a bit of a relief that First National Bank of Lindsay was one of only two banks that failed last year, and it was pretty small. Five banks failed in 2023, and some of them were huge:
Silicon Valley Bank (Santa Clara, Calif. — March 10, 2023.
Signature Bank (New York) — March 12, 2023 .
First Republic Bank (San Francisco) May 1, 2023.
Heartland Tri-State Bank (Elkhart, Kan.) — July 28, 2023.
Citizens Bank (Sac City, Iowa) — November 3, 2023.
The nation hadn’t seen an outbreak of financial folly like this in years.
Industry observers were on high alert for another 1980s-style Savings & Loan crisis, which defined an economic era with the demise of more than 1,000 S&Ls. Some of these federally guaranteed institutions were huge, some were medium-sized, but many were tiny – operating in small in towns like Lindsay.
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Seibel began working at First National as an intern in 1992 and climbed to the top. He must have known everyone in town.
According to the indictment, he lent to the owner of a heating and air conditioning business that serviced marijuana grow houses. He also extended credit to the operator of a trucking company and someone who ran several automotive businesses around town. They didn’t repay the loans.
The bank’s inevitable failure came as.a shock to the small community. Its majority shareholder filed a lawsuit against Seibel and his wife for fraud claiming $10 million in losses.
The shareholder’s name – and no, you can’t make this up – was Jack Justice. As in, you don’t know jack about justice until you meet Jack Justice.
Jack Justice extracted quite a mea culpa. Here’s what Seibel said in a response to Jack Justice’s lawsuit:
“I, Danny, solely took actions that went against my fiduciary responsibilities to the Board of Directors of the First National Bank of Lindsay, and its customers. Those actions were wrongly taken out of deep internal fear for my job and position within the community. I truly believed I could eventually correct these actions with minimal loss to the bank. I truly wanted to help the Lindsay community and believed in certain customers, now knowing that belief was a mistake.”
It’s a mistake repeated throughout banking history. It can even happen in a town that dubs itself the “broomcorn capital of the world.”
You don’t need to know what broomcorn is to imagine boredom. Naturally, the thing to do in a field of wind-swept sorghum stalks is to drive away to Sulphur, Okla., or Oklahoma City and hit the casinos.
One of Seibel’s unnamed borrowers was a frequent gambler, according to the indictment, and he was pretty good at getting hotel rooms booked. Their text exchanges went something like this:
Seibel: “Any pull to get us a nice room at Riverwind [Casino] Saturday night? Or somewhere else close by? Tried Artesian [Casino] but booked.”
Borrower: “You’re completely set up for Saturday night under your name[.]”
Seibel: “No shit?! Awesome. Thanks man.”
When you’re heading a bank that’s running low on reserves, you have to be careful what you say in texts. Seibel didn’t learn this until it was too late. He sent another unnamed borrower panicked messages like this:
“Dude[,] I just covered $70k and now you’re $31k over. I’ll give you $5k now and that is all[,] you gotta start putting money in.”
“You bring me deposits tomorrow. I am finally totally tapped. Way too far OD. You need to go factor and cover this overdraft …”
“Hey I’m over $500k. I’m tired of taking care of your business and get no damn deposits. I have legal lending limits and overdrafts are part of it. I’m sorry my job ain’t worth it.”
And when Seibel was allegedly cooking the books to hide this folly, he may have sent suspiciously conflicting reports to regulators. Here’s what he texted another bank employee in June 2024, according to the indictment:
“I think I’m nailed to the wall now I [g]ave them a report that [is not] the same as what they got now and they have both. Nobody’s fault but my own. Also, delete these texts.”
Yeah, better delete them al before they end up in an indictment.
This would be hilarious, like the madcap bankster who couldn’t shoot straight, if it weren’t so reckless and tragic.
Three weeks before regulators shuttered the bank, its Vice President Clint Simonton reportedly committed suicide at the age of 51.
“Clint was a proud American and patriot. He was a conservative and had a great passion for talking politics,” his obituary reads. “He probably broke a few laws but he was always ready to defend the people he loved. That’s just who he was.”
It was just a bunch of neighbors helping neighbors in a tiny conservative town until it all went horribly wrong. That’s about how it went in the 1980s, too.
So many frauds, so little time to keep up with them all. Business Blunders has launched a new feature called Business Blotter. It’s like the police beat briefing you used to get from your local newspapers only for business.
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Now Lieweke can’t thank the president enough.
In July, Trump’s Justice Department indicted the founder of Greenwood Village, Colo.-based Oak View Group for bid rigging. Lieweke pleaded not guilty but faced up to 10 years in prison.
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On Tuesday, though, Trump issued Lieweke a “full, unconditional pardon,” because … well, who knows. He didn’t say why. He doesn’t have to.
Trump has already pardoned or given clemency to more than 1,600 people this year, compared to just 237 in his first term. So what’s one more?
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In all the fuss about Trump bombing Venezuelan drug boats while pardoning a former Honduran president convicted of drug trafficking, Liekeke’s pardon seems lost in the news cycle.
How will he show his gratitude?
“This has been a long and difficult journey for my wife, my daughter, and me,” Lieweke said in a statement. “The President has given us a new lease on life with which we will be grateful and good stewards.”
Thouandaires don’t stand a chance
The world has more billionaires than ever, according to a report in The Wall Street Journal on Thursday, thanks to tech-fueled stock market gains.
As another year of growing wealth inequality comes to a close, 2,900 billionaires control $15.8 trillion around the globe.
A recent report from Oxfam, a group sounding the alarm on inequality, shows just how extreme this trend has become and why our democracy is being ceded to billionaires.
Check out this chart from the report.
The line at the top represents the richest 0.01%. Most of us live somewhere along that flat line on the bottom.
Did you really think it was going to trickle down?
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