LITTLE ROCK, Ark. (AP) - Family members of a Little Rock bank executive who died suddenly after he was removed from his job wants the federal government to release its claim on nearly $18 million in life insurance benefits.
The government claims the money was the result of illegal activity, but the family of former One Bank & Trust owner Layton Stuart argues it should be paid to a family trust, as Stuart intended.
Stuart, 61, died suddenly on March 26, about six months after federal regulators forced him out of his position at the bank.
The Arkansas Democrat-Gazette reported (http://bit.ly/12Tmy4B ) that life insurance company paid almost $18 million to the federal government on June 17 to satisfy a federal seizure warrant. The Internal Revenue Service also filed claims to money Stuart had in separate accounts plus five vehicles, some of which were driven by his family members.
The U.S. attorney's office filed court papers on July 12 to seize all the assets that had been forfeited. U.S. District Judge Brian Miller has yet to rule on the request. The federal government says the assets came from criminal activity.
Prosecutors allege in an affidavit that as federal agents closed in on multiple financial schemes involving bank funds that Stuart had been juggling for years, he struggled to keep his life insurance policy - which required monthly premiums of $22,000 - from being terminated.
Federal agents searched Layton's home as the IRS, FBI and other agencies investigated dealings related to the bank.
A filing by the IRS says the bank put Stuart on notice that a loan he had obtained using the cash surrender value of the original $20 million policy was in violation of an agreement between the bank and the Stuart Family Trust. Under the agreement, the bank paid the policy's premiums.
That filing was made in February; Stuart died before he could respond to the affidavit.
Officials say the bank worked out an agreement with a trustee on April 17 to be reimbursed for the premiums paid on the life insurance policy, which would have effectively terminated the policy.
The family's trustee argues in court papers that there is no indication that the policy was generated by criminal activity and that the sum of any fraudulent activity is less than the value of the property claimed by the government.
Information from: Arkansas Democrat-Gazette, http://www.arkansasonline.com