Kenneth Charity, a key witness in the bank fraud trial of former First NBC Bank CEO Ashton Ryan, said he racked up $18 million in bad loans from the bank before its collapse, spending money on luxury cars, watches and renovations on his $3 million Covington home, while working with Ryan to hide that he wouldn’t be able to pay.

Through the minutiae of Charity’s testimony, coupled with loan forms and other documents, federal prosecutors on Friday sought to demonstrate that Ryan knew as early as 2011 that Charity was a bad businessman who spent the bank’s money rather than using it on property redevelopment and other business deals.

Charity, who has already pled guilty to conspiracy to commit bank fraud in a deal with prosecutors, was the latest in a string of witnesses for the prosecution over the first two weeks of Ryan’s federal trial related to the bank’s $1 billion collapse.

Most witnesses thus far have testified to variations of the same theme: that Ryan, despite knowing that borrowers wouldn’t be able to repay their loans, allegedly hid that from his board.

Attorneys for Ryan have tried to poke holes in the claims, saying he was personally dealing with some of the bank’s most troublesome clients and trying to keep them afloat.

Friday’s testimony and cross-examinations followed the same pattern.

A benefactor relationship

Charity described how he had started a business relationship with Ryan when First NBC was founded in 2006. He said that in the early years of their relationship, as First NBC loaned him hundreds of thousands of dollars to buy houses for post-Hurricane Katrina renovations, he and Ryan developed a personal bond.

“I got to know Ryan very well and we were friends,” said Charity, who noted that Ryan was godfather to two of his children and had vouched for him at expensive local private schools. “I trusted him implicitly. He had a strong reputation; he was very respected.”

Charity said that Ryan eventually helped him get involved in larger projects, including a $1 million condominium and beignet operation in the Jax Brewery building on Decatur Street in the French Quarter.

He also bought three gas stations on the north shore and a defunct shopping center on Robert E. Lee Boulevard (now Allen Toussaint Boulevard), which had been badly damaged by Hurricane Katrina.

‘Lies like a rug’

But the government argued that Ryan became aware as early as 2011 that Charity was a bad businessman who consistently failed to make meetings, to file documents, to pay business taxes due to the city, to file applications for permits and to handle other routine business duties.

Brian DeJean, Charity’s former accountant, testified that he had dumped him as a client in 2012 because he constantly failed to provide basic documents and lied about it.

“He was not trustworthy,” DeJean said. “He lied and lied again. He lied like a rug.”

DeJean said Ryan had been told in a meeting of Charity’s chronic shortcomings, but he agreed that Ryan seemed to be bending over backwards to help Charity.

In testimony earlier in the week, two directors of programs overseeing grants for refurbishing New Orleans buildings after Katrina — Adrienne Celestine and Aimee Quirk — had testified that Charity had been turned down for grants because he had failed to supply documents that had been repeatedly requested.

Prosecutors said Ryan had represented to bank oversight boards that the grant money was on its way when he knew it had been declined. His defense attorney countered that Ryan had helped Charity re-apply for the grants and hoped they might still get the funds.

Despite his ballooning debts, the government argued that Ryan continued to lend more and more to Charity and claimed on bank documents that Charity was using the money to develop properties, when in fact he was using loan proceeds to pay older loans and to cover personal expenditures.

In one instance, they pointed to a series of three $500,000 loans made to Charity in spring 2015, ostensibly to renovate the beignet shop’s patio on Decatur Street, but which were used largely to pay interest on outstanding loans and for personal spending.

Charity agreed with prosecutors that Ryan knew he was essentially broke from at least early 2015 and was using the money to give the appearance that loans were current.

Under cross examination, Ryan’s defense attorney, Edward Castaing Jr., sought to show that Charity was lying about the extent of Ryan’s knowledge in order to get a lighter sentence. He also painted Ryan as someone who Charity lied to regularly.

Not a sister

He quizzed Charity on his relationship with Stephanie Carter-Stinson, a medical doctor based in Washington D.C., who had been guarantor on all of Charity’s borrowings.

Charity, 58, who is married with five children, agreed that he had represented Carter-Stinson to Ryan and other bank officials as his sister, when in fact she was someone with whom he was involved romantically.

Castaing pointed out, and Charity agreed, that Carter-Stinson had an income of more than $500,000 a year, net assets of more than $5 million and was the main reason the loans kept flowing. The borrowings also were all backed by liens on properties.

Castaing also noted that Charity blamed his wife for the out-of-control personal spending when he agreed to cooperate, saying she had a bipolar condition and couldn’t help spending money.

Castaing then listed purchases that Charity had made for himself, including gold and diamond necklaces and cuff links, a dozen Rolex watches, as well as other high-end timepieces like a Breitling Bentley and a TAG Heuer, which together would retail for well over $100,000.

Evidence showed that the relationship between Ryan and Charity soured over time. An email exchange in November 2016 showed Ryan rebuffing Charity’s efforts to get another loan to buy a new SUV.

“You’re an imbecile,” Ryan wrote to Charity, pointing out that he already had two five-year-old Mercedes-Benz automobiles and needed to prioritize paying down loans.

Charity agreed to plead guilty in July 2019 in hopes of a reduced sentence in exchange for his testimony. Ryan’s trial, which began on Jan. 9th, is expected to last for four-to-six weeks.