Centennial Bank Holdings Inc. of Denver said Tuesday it has reached a settlement with former clients of imprisoned Cherry Creek financial adviser Will Hoover.
After insurance coverage, the company incurred a pretax charge of $6.5 million to resolve a lawsuit from Hoover’s clients, who argued they had lost $10.5 million.
“The case was scheduled for trial in a couple of weeks. It is something that came together quickly in the last few days,” said chief financial officer Paul Taylor.
Centennial Bank inherited the lawsuit with its 2004 acquisition of Guaranty Bank & Trust, which provided banking services to Hoover.
Hoover was convicted in June 2004 of 44 felony counts of fraud, theft and racketeering. He is serving a 100-year sentence for defrauding dozens of clients out of an estimated $15 million.
“In no way is this an admission of guilt or anything else,” Taylor said. “Legal costs were clearly a factor.”
Taylor said he could not disclose the total value of the settlement. Plaintiffs in the case argued Guaranty had conspired with Hoover to defraud them by floating his checks even though Hoover was technically insolvent.
News of the settlement and projections for a second-quarter net loss of $6.8 million pushed Centennial shares to $5.06 a share, their lowest level ever. They recovered to end trading at $5.76, a gain of 2 cents.
Staff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.
