From foreclosures to fraud to suicide, a lawsuit filed against Opelousas-based St. Landry Homestead Bank alleges a wild ‘Ponzi scheme’ in rural Cajun Country.

By Heather Miller

It’s been six months since U.S. District Judge Rebecca Doherty ordered the federal government to pay $1.67 million in civil damages to Hubert Vidrine, an Opelousas resident who in 1999 was wrongfully indicted by the feds on charges of illegally storing hazardous waste at the Canal Refinery in Church Point he managed at the time. (As it turns out, the federal EPA agent who headed the meritless investigation of Vidrine did so to facilitate an extramarital affair he was having with a fellow investigator.)

But as the former Church Point refinery manager and local businessman puts to rest a 15-year fight with the federal government over false criminal environmental charges and malicious prosecution, Vidrine now finds himself facing another bizarre battle in court.

Vidrine, owner of Vidrine’s Café in Lewisburg, is named as the defendant in a separate civil lawsuit filed in state District Court in St. Landry Parish: St. Landry Homestead Bank took legal action in November of last year to collect on a $2.2 million loan (plus late fees and attorney’s expenses) on which the bank claims Vidrine and his wife Tammy defaulted.  

Though Vidrine’s fight with the feds is completely unrelated to the bank battle, the two court sagas share a common thread: Just as he did when he was falsely charged by the government, Vidrine is crying foul — and countersuing the bank for “a Ponzi scheme perpetrated through a succession of unsound, unsafe and otherwise unlawful loans.”

Vidrine accuses the three-branch Opelousas-based bank of preying upon at least 43 of its customers (also implying that there could be many more) and breaking a slew of federal banking laws in the process, among them “intentionally breaching contracts, terminating long-standing banking practices historically relied upon by customers, fraudulently manipulating appraised values of property, and declaring alleged ‘loan defaults’ against customers the bank perceived would thereby become financially disadvantaged and unable to defend themselves.”


The Dollar Deal

Vidrine’s relationship with St. Landry Homestead Bank dates back to 2002, when then bank President Harold Fontenot (now deceased) befriended Vidrine through his frequent visits to Vidrine’s Café and later urged Vidrine to invest in land, the lawsuit claims. Vidrine, still under federal indictment at the time, told Fontenot he had incurred too many legal fees in his criminal case to invest. According to the countersuit, Fontenot came back with one question: “Do you have a dollar?”

“Yes,” Vidrine responded.

“Well, you’ve just bought yourself 36.8 acres of land,” Fontenot said.

The dollar deal, according to the lawsuit, was attached to the Vidrines signing an irrevocable purchase agreement in which the Vidrines would pay $150,000 for the land and close on the property in one year.

“Fontenot added that if Vidrine wanted to build a subdivision, the bank would finance 100 percent of the development,” the lawsuit states.


A year later, the Vidrines followed through on their purchase agreement and began planning for a subdivision as Fontenot had recommended, but it would be years before the Vidrines discovered that the land they bought in on was actually for Fontenot’s personal gain.

The lawsuit claims that Fontenot purchased the property in question four days before he approached Vidrine about the investment — for less than half of what the Vidrines paid for the same land. And when the Vidrines finalized the deal a year later, Fontenot allegedly took home $78,000 in personal profit, also getting capital gains treatment on the deal by delaying the closing for a year, the lawsuit alleges.

“The principal objective [of St. Landry Homestead Bank] ... at least during the initial years, was for certain bank insiders and affiliated parties to derive personal gains, benefits and profits by using the funds of the bank and the privileges granted to the bank as a federally chartered and insured banking institution (including the privilege to make loans and extend the lines of credit), as if those funds were their own personal assets, and without regard to federal laws and regulations making such activities illegal,” the lawsuit states.

Fontenot eventually convinced Vidrine to move his banking business from Church Point Bank and Trust to St. Landry Homestead, according to the lawsuit, at which point Homestead loaned the Vidrines $129,212 to pay off business and personal loans the couple had through Church Point Bank. That loan came three days after Fontenot had the bank loan the Vidrines $600,000.

The large-scale loans to the Vidrines continued for several years, as Fontenot had established a pattern of pleading with more affluent locals to invest in more property, some of which Fontenot admitted were the results of “bad loans on the bank’s books that needed to be taken off.” With each deal, Fontenot sweetened the offers with no-money down and promises of helping Vidrine to “flip” the properties, according to court documents.

The New Deal

By 2009, Vidrine was over his head in bank loans and subdivisions. Fontenot refused to buy back any of the properties, instead loaning Vidrine another $175,000 against Vidrine’s mortgage to avoid Chapter 11 bankruptcy. It was the same year that Fontenot was diagnosed with cancer; Vidrine’s account was subsequently transferred to the hands of St. Landry Homestead bank administrator Kathy LeJeune.

“Ms. LeJeune had her own, new objectives, ones that were consistent with her self-proclaimed description of herself as the bank’s ‘hatchet lady,’ and she actually seemed to be proud of the bank’s developing reputation as the bank with the highest rate of foreclosures in the area,” the lawsuit states. “After Harold Fontenot died on September 20, 2009, Ms. LeJeune stated to Hubert, ‘I have a list with 43 names on it, loans that Harold made to his friends. You’re on it, and I’m going to get rid of all of them.’”

Vidrine’s countersuit claims that one of the 43 “victims” of St. Landry Homestead was a home-building company owner who, at the urging of Fontenot, purchased 120 acres of The Shawnee Farms LLC, a development owned by Michael Singletary, the bank’s attorney, and Bob Sullivan, the “paramour” of Fontenot’s sister. At $720,000, the sale price equaled a profit of 100 percent per acre — and was “financed 100 percent by the bank.”

“The transaction not only constituted an unsafe and unsound banking practice under federal law, but led to the financial ruin and suicide of [the business owner], as admitted by Fontenot, who subsequently expressed remorse, stating ‘I pushed him too hard; I never thought he’d commit suicide,’” the countersuit claims.

Following Fontenot’s death from cancer, Vidrine employed a new strategy of selling off lots in his subdivision as a means of paying down his massive debt owed to the bank. In early 2010, his new method was working, according to the lawsuit, and the lot sales were helping to cover much of his monthly debt service to the bank. But bank executives soon told Vidrine that the lot sales would no longer be credited as note payments, though the Vidrines claim they were still forced to hand the bank every penny they made from selling subdivision lots. And when the bank cut off the Vidrines’ long-standing “privilege” of same-day credit on their deposits, the NSF charges alone amounted to thousands of dollars every month.

“In subsequent years, the [bank’s] principal objective ... became to cover up the earlier illegal conduct, by fraudulently misleading, deceiving and coercing those bank customers who were victims of the earlier illegal conduct,” the lawsuit states.

Vidrine also accuses LeJeune of reneging on a payment plan the Vidrines negotiated with current Bank President Kip Bertrand in April 2010.

By mid-2010, the bank had reverted to tacking on additional charges and penalties to the Vidrines’ account. Vidrine, meanwhile, was approaching his breaking point.

Vidrine was called into a meeting in May 2010 with LeJeune and another bank exec, both of whom laid out “a plan to save him,” the lawsuit claims.

The bank offered to consolidate all of his loans into one monthly note, lower the interest rate and apply the revenue from Vidrine’s lot sales to his note payments. The lot sales revenue allowed Vidrine to “not have to worry about where the money came from for the monthly payments.”

But when the consolidation process moved to the appraisal phase and the Vidrines’ properties and assets were valued, Vidrine claims more fraudulent activity ensued.

“The bank told [the appraiser] to ignore the fact that, at that time, the Vidrines’ business was producing $4 million a year in revenue, and instead appraise the business as a vacant, abandoned building — even excluding the value of its fixtures and equipment,” the lawsuit states. “And they told him to ignore the value of the subdivision lots based on the actual current lot sales, and to use instead an arbitrary value of less than 50 percent of that. The result was a fictitious appraisal, millions of dollars less than the actual value of the Vidrines’ property. It apparently was intended to give the bank a ‘justification’ — albeit a false and fraudulent one — for refusing to apply the Vidrines’ future loan payments to their monthly note payment obligations, and in turn an excuse for declaring a default — which is what the bank ultimately did.”

Months later, the bank — again — stopped applying Vidrine’s subdivision lot sales to his monthly note. The Vidrines also claim that when they were forced to find another $15,000 a month from other income sources to go toward the note, the bank didn’t credit their payments to the account for several months, “thereby consummating the facade of a default — a default that the bank itself created.”


Bank Denies Wrongdoing

The Vidrines’ countersuit outlines more allegations of misconduct by LeJeune and other bank executives, all of which the bank denies in the response filed in state district court in St. Landry Parish.

The bank counters that the years of transactions between Fontenot and Vidrine, many of which were verbal agreements and not contractually binding, are irrelevant because the Vidrines signed a new contract in June 2010, months after Fontenot died.

Attorneys for the bank also argue that Vidrine’s perception of Fontenot as a friend does not legally give the bank fiduciary duties (the obligation to act solely in the Vidrines’ best interest). A fiduciary relationship, according to the bank, would have had to be outlined in a formal, written agreement that doesn’t exist.

“While clothed as a claim sounding in fraud/duress ... as part of some elaborate storyline that they were somehow duped into entering into certain transactions ... the Vidrines are really suggesting that St. Landry owed it a duty akin to a fiduciary. This can be the only plausible explanation for the allegation that a ‘relation of confidence’ existed. The Vidrines have alleged no written agency or trust agreement under which St. Landry agreed to act in a ‘relation of confidence.’ In a nutshell, the Vidrines are contending that they were neophytes to borrowing money, notwithstanding their longtime business history. Louisiana law or public policy does not provide that the enforcement of a negotiable instrument is somehow unlawful, illicit or immoral because the borrower did not bother to think for himself.”

No trial date has been scheduled in the case, and it’s unclear whether the parties will attempt to reach a settlement before it reaches trial.

Vidrine’s lawyer, Gary Cornwell of Beaumont, declined to comment for this story, citing the pending litigation.

Attorney James Gibson of the Lafayette law firm Allen & Gooch did not return calls or emails from ABiz for comment.

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