Developer Gibbs Admits $123M First NBC Bank Fraud

NEW ORLEANS – A Florida developer today admitted his role in a massive scheme to defraud the now-defunct First NBC Bank out of over $123 million. GARY R. GIBBS, 66, of Niceville, Florida, pled guilty to conspiracy to defraud the New Orleans-based bank, which collapsed in April 2017.

According to federal prosecutors, from around 2010 until the bank’s failure, Gibbs – through himself and various corporate entities – was a regular problem borrower. Unable to meet existing loan obligations or cover overdrafts, Gibbs became the beneficiary of a desperate cover-up orchestrated by the bank’s top brass. Bank President Ashton Ryan Jr., Chief Credit Officer William Burnell, and Executive Vice President Robert Calloway allegedly concealed Gibbs’s true financial instability by issuing new loans to pay off old ones, essentially robbing Peter to pay Paul.

The trio falsified loan documents, claiming Gibbs’s businesses generated sufficient cash flow to service the debt – a blatant lie. They deliberately shielded the First NBC Bank Board of Directors, auditors, and federal examiners from the truth: that Gibbs was only able to make payments through continuous re-borrowing. These problem borrowers were purposefully kept off month-end reports to conceal the precarious situation. Ryan, Burnell, and Calloway knew that if Gibbs defaulted, it would expose the rot at the heart of the bank.

The desperation reached a peak when Gibbs threatened to declare bankruptcy. Ryan reportedly warned Gibbs that the bank couldn’t afford a default. Despite this, the scheme continued, with more false statements and omissions designed to keep the truth hidden. The bank executives never revealed Gibbs’s impending default to anyone, knowing it would unravel the entire facade. Further compounding the deceit, Ryan directed Gibbs to inflate his financial statements, falsely boosting income to mask the mounting losses.

Calloway also allegedly lied to the bank’s external auditors about Gibbs and his loans. By the time First NBC Bank finally failed, Gibbs and his entities owed the bank a staggering $123 million. The scheme, built on lies and desperation, ultimately crumbled, leaving a trail of financial ruin. Ryan, Burnell, and Calloway were previously charged on July 10 in a 46-count indictment.

“Today’s guilty plea demonstrates the FDIC OIG and our law enforcement partners will not tolerate criminals who defraud our insured financial institutions and cause harm to the nation’s banking industry,” said Laurie Younger, Special Agent in Charge, Dallas Region, Office of Inspector General for the Federal Deposit Insurance Corporation. The FBI echoed this sentiment, stating the investigation into the FNBC failure represents a nearly billion-dollar loss to the FDIC. Bryan Vorndran, FBI New Orleans Special Agent in Charge, stated the plea should serve as a warning to those who would manipulate the banking system. Stephen Donn of the Federal Reserve Board also emphasized the commitment to holding accountable those who perpetrate fraudulent actions impacting financial institutions.