By Bill Britt
Alabama Political Reporter
MONTGOMERY — Speaker Mike Hubbard tapped a hometown bank for a $1.06 million loan with extraordinarily favorable terms. The seven-figure loan comes as a special grand jury in Lee County continues to take testimony in corruption investigation reportedly targeting Hubbard.
It appears that Hubbard is notably flush with borrowed cash just as his high-priced legal defense team begins racking up billable hours.
According to financial documents filed with the Alabama Secretary of State, AuburnBank wrote the $1 million loan to Michael G. Hubbard who turn around and loaned it to Auburn Network Inc., the broadcast media company wholly owned by Hubbard, on August 13. The Uniform Commercial Code filing that documents the loan also includes a promissory note that states Hubbard, personally, will receive the repayment of the money from Auburn Network, Inc. The Promissory Note–which is signed by Hubbard on behalf of Auburn Network Inc.–states that the proceeds of the loan will be paid to Hubbard, personally, at his home address, at a rate of 5.67 percent annually.
The odd amount of the loan may indicate that Hubbard plans to use the $63,663.70 to pay the interest back to the bank.
It is particularly noteworthy that the UCC filing identifies the promissory note between Hubbard and Auburn Network, Inc., as collateral to secure the loan. The bank’s failure to attach something that could be seized–equipment, real property, contract, etc.–is highly unusual for a loan of such a large amount. And, it is extraordinarily favorable to Hubbard.
The collateral section of the UCC filing states: “Assignment of Promissory Note Dated 8-13-2013 in the amount of $1,063,663.70 between Michael G. Hubbard, Lender, and Auburn Network Inc., Borrower.” See Attached Exhibit A.
A reading of the promissory note indicates that Hubbard faces no substantial personal risk if the loan goes into default, or Hubbard/Auburn Network otherwise fail to repay the loan.
Failure to repay millions of dollars in loan money from AuburnBank would be nothing new for Speaker Hubbard.
In late 2004, AuburnBank took a $1.7 million loss on a loan to Craftmaster Printers Inc., Hubbard’s once-bankrupt printing outfit. AuburnBank had loaned Craftmaster Printers Inc., $4.8 million for the purchase of property and equipment. But by late 2004, Craftmaster was delinquent on the loan and the bank was threatening foreclosure and civil action.
AuburnBank ultimately took a huge loss of depositors’ money and settled with Craftmaster for $3.1 million.
The bank’s gamble with depositors’ money does not appear to have soured it on Hubbard, however.
Striking deals with the local bank aside, August and September were very busy months for Speaker Hubbard.
In quick order, Hubbard emptied his long-time political action committee, Network PAC, ended a lucrative consulting contract with Southeast Alabama Gas District (worth over a $140,000 a year), and hired white-collar criminal defense attorney J. Mark White and a team of additional lawyers and investigators. Furthermore, Hubbard finally reimburse state taxpayers for $2,576.32 silk plants he ordered for his office two years earlier.
Publicly, Hubbard contends his high-priced legal team was assembled to ferret out people who have “publicly and privately” spread false information about the speaker, then to threaten them with libel and slander lawsuits.
It is also noteworthy that two AuburnBank board members have outside ties to Hubbard and his businesses: David Housel, Athletic Director Emeritus at Auburn (where Auburn Network held broadcast rights) and Sherrie Murphy Stanyard, a senior accountant for Craftmaster Printers, Inc.
Given all of the actions taken by Hubbard during August and September it is reasonable to believe that this is all a part of a plan to mount an extensive legal defense using a high-dollar team of lawyers and that Hubbard needs the $1,000,000 loan to pay them.
