Former Bank of Choice CEO charged with fraud

GREELEY – Darrell McAllister, former president and CEO of Bank of Choice, has been charged with securities fraud.

Colorado Banking and Securities Commissioner Fred Joseph has filed civil charges against McAllister, alleging that McAllister violated the registration and anti-fraud provisions of the Colorado Securities Act.

McAllister has 21 days to respond to a request for injunction, which would ban him from participation in the financial services industry and return the $500,000 lost by a group of investors.

The charges allege that in the summer of 2008, while acting as president, CEO and chairman of the bank, formerly based in Greeley, McAllister conducted an unregistered preferred stock offering in Bank of Choice Holding Co. to the public.

The complaint states that this stock offering was made in the hopes of improving capitalization at the bank. The bank was put under a consent order in early 2011, with regulators directing the bank to increase capital.

About 40 investors purchased preferred shares of Bank of Choice Holding Co., resulting in combined investment of about $7.8 million, according to the complaint. None of the investors received a return of their principal, the document states.

The charges also allege that McAllister directed bank employees to solicit bank customers to trade their fully-insured bank certificates of deposit for preferred stock without providing employees with supervision, oversight or training to inform customers of potential risk.

One Bank of Choice employee, Anita Adolf, is named in the complaint. McAllister allegedly instructed Adolf to contact some of her “large depositors” about the offering, even though Adolf had no background or experience in securities offerings and received no training from Bank of Choice or anyone else.

The complaint alleges that investors were encouraged to cash out the CDs and then invest the funds in the stock offering, according to a release from the Division of Securities. It is alleged that at least four investors traded in their CDs for stock.

The CDs paid a fixed interest rate, were fully insured by the Federal Deposit Insurance Corp. and had no risk of loss. The complaint goes on to allege that these investors were told that the stock investment paid 7.28 percent, a higher rate than the CD, according to the release.

The investors received quarterly interest payments until Sept. 2, 2009, at which point they received a letter from McAllister stating that the preferred stock dividends were being discontinued, according to the complaint.

The investors later learned that Bank of Choice had been closed and the stock they had purchased was worthless, according to the allegations.

It is alleged that these investors combined lost more than $500,000 from these investments. The complaint also states that the investors were all farmers, and were related.

McAllister served as CEO and chairman of the bank from 2003 until 2010. He now works as a financial adviser for Morgan Stanley Smith Barney.

“There are a lot of different issues involved in this and it’s not quite that simple,” McAllister told the Denver Post. “There’s been a lot of effort trying to settle this dispute.”

Attorney Martin Berliner told the Post that McAllister’s defense will be “vigorous” and could get ugly.
“We intend to name parties at fault who are not named as defendants,” Berliner told the Post Thursday. “We told the state about others in the bank who were closer to the bone than Darrell, who were not named, and in their investigative process got them to roll over on Darrell.”

Bank of Choice was once Greeley’s largest community bank, holding $1.07 billion in assets and encompassing 17 branches. The bank took on some larger loans from New Frontier Bank, which was liquidated in 2009.

Bank of Choice was closed by regulators in July 2011 because of insolvency. The bank was bought by a holding company now called NBH Holdings Co.

Bank of Choice now operates under the name Community Banks of Colorado, another institution purchased by NBH Holdings.

Joe Bonner, who took over at the helm of Bank of Choice in October 2010, left the bank in late February, for “personal reasons,” according to a bank spokesperson.

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Molly Armbrister covers real estate, banking and health care for the Northern Colorado Business Report. She can be reached at 970-232-3139, or

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