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Turner Grain’s Dale Bartlett Claims Ignorance in Company’s Collapse

8 min read

As his creditors’ claims have grown exponentially, Dale C. Bartlett has sworn in bankruptcy court that he had no idea what caused the collapse last summer of Turner Grain Merchandising of Brinkley, the business he co-owned until a year ago.

Attorneys for those creditors, whose total claims have reached $46.3 million, have questioned why Bartlett sold his interest in the company to his longtime business partner, Jason Coleman, for a mere $5,000 about six months before a queue of farmers began suing for millions of dollars owed on crops.

They also question the timing of his decision to transfer nearly all of his assets to his wife just before Turner Grain’s financial mess was exposed and why he continued to work at the company when he no longer had an ownership interest in it.

In his answers, spread across four proceedings since October, Bartlett has proclaimed his innocence and ignorance. For him, Turner Grain was a side business that supplemented his primary income as a farmer, and eventually he just turned it over to Coleman.

“He was the business,” Bartlett said. “He grew the business to what it was.”

Turner was forced into receivership in September and then it filed for Chapter 11 bankruptcy protection on Oct. 23, listing $24.8 million in debts and $13.8 million in assets. Turner Grain’s bankruptcy filing lists Bartlett as a 50 percent owner but acknowledges that the ownership is in dispute.

Bartlett, 45, filed for his own bankruptcy protection on Sept. 5 and listed $5.5 million in debts and $2 million in assets. Since his filing, other creditors have filed claims pumping up the potential liabilities by more than eight times his original estimate.

Arkansas Business obtained transcripts from Bartlett’s bankruptcy proceedings, on Oct. 16, Dec. 1 and Dec. 15, and listened to his testimony during a bankruptcy hearing last week. Taken together, Bartlett’s statements offer a peek inside the collapse of a company that reported $277.9 million in revenue in 2013.

Jason Coleman has not testified in the bankruptcy proceedings, and his attorney, Lisa Ballard of North Little Rock, has indicated to the court that Coleman will assert his privilege against self-incrimination. Ballard didn’t return a call for comment. Coleman hasn’t filed for bankruptcy protection.

“Dale Bartlett has his story. I’m sure Jason Coleman has his story,” said Lyndsey Dilks of Little Rock, one of the attorneys representing Southern Rice & Cotton LLC of Harrisburg (Poinsett County), which is owed $3.23 million, according to Turner Grain’s bankruptcy schedules. “And I don’t think we are to the bottom of it yet. I think there’s much to be unraveled here.”

Dilks said that Southern Rice is continuing to operate.

‘A Problem’

During the bankruptcy proceedings, lawyers for creditors grilled Bartlett on the timing of his financial decisions. But Bartlett said he didn’t know the company was really on the verge of collapse until an Aug. 12 conversation with Jason Coleman’s uncle.

On that day, Bartlett said, “Neauman Coleman had called me and said that there was a problem.”

There were, however, signs the company was having trouble as early as July, he acknowledged, including irregularities in the bank statement and a call from a farmer holding a check that bounced.

Bartlett said he had heard several rumors about what caused the collapse, including accusations that he took money from the company, which he specifically denied.

Turner Grain Formed

Born March 4, 1969, in Helena, Bartlett was raised in Marvell (Phillips County) and began farming when he was 9 years old. A few years after earning a bachelor’s degree in agricultural business from Arkansas State University at Jonesboro in 1991, Bartlett met Jason Coleman.

“We grew up in towns side by side each other,” he said.

Bartlett was a self-employed farmer when in 2002, Bartlett and Coleman incorporated Turner Grain, named for an unincorporated community in Phillips County, Bartlett said.

Turner Grain was referred to in the industry as a “principal” or “jobber” rather than a broker. A jobber actually contracts to buy and take possession of a farmer’s grain and delivers it to the ultimate buyer.

For example, if a grain buyer offered rice for $5 a bushel that day, Bartlett would call farmers to see how many of them would want to sell at $4.90. Once the farmers were committed, Bartlett then would call the grain buyer back and report how many bushels he had to sell.

“Those trades should be back-to-back,” Bartlett said.

Neither Coleman nor Bartlett was required to be licensed to handle the transactions, and Bartlett said he didn’t have insurance if he made a bad trade.

Bartlett, Jason Coleman and Neauman Coleman would launch other businesses over the years, including Agri-Business Properties LLC, which had a grain facility on its property.

But Turner Grain appeared to be doing the best financially.

Bartlett said he received $45,000 salary from Turner Grain for 2013. He also received a $45,000 dividend check from another related entity, Turner Commodities Inc., which was incorporated in 2005. But that check was “no good” and Bartlett said he never received that money.

Selling Out

2014 started out as a good year for Bartlett.

On Jan. 2, 2014, Turner Grain took out a $1 million line of credit from Rabo Agrifinance Inc. of St. Louis. Bartlett and Turner both personally guaranteed repayment.

Within days, Turner Grain had received $900,000 from Rabo. Bartlett said the money was supposed to be used “for milling equipment”; that equipment was never purchased.

Bartlett celebrated his 20th wedding anniversary by buying his wife, Elizabeth, a $13,000 diamond ring. He wasn’t sure of the exact date he bought the jewelry, but it was “somewhere close to” Jan. 8.

A month later, Bartlett had decided it was time to leave Turner Grain. “There were decisions being made that I wasn’t aware of,” he said.

He said Coleman’s management decisions involved “a significant amount of money,” such as spending more than $30,000 on a software package used for grain tracking. And a construction company showed up to build a grainery addition that Bartlett said he didn’t know anything about.

But he maintained that he believed Turner Grain was in “very good” financial shape when he sold his interest to Coleman, even though it wasn’t very profitable for a company with revenue of more than $200 million a year. Bartlett said he remembered a tax return — for 2012 or 2013, he couldn’t remember which — showing net income of about $20,000.

Bartlett said he was having “a few health issues, and I just felt like there was something else I wanted to do.”

To complete the sale of his share of Turner Grain to Coleman, Bartlett downloaded a stock purchase agreement from a legal website because he couldn’t locate the stock certificates.

“The last we knew of, the corporate book was at the accountant’s office, and we haven’t seen it since,” he said.

But Bartlett remained involved in other businesses with Coleman and even started new ones after the sale. And he continued to work for Turner Grain.

“I had customers who had contracts to ship grain through. I guess the last customer I had shipped their grain in April 2014,” he said.

Termination

Bartlett said he continued shipping grain, paying customers and paying bills for Turner Grain while taking no salary.

“Farming has been really good in the last few years,” so he didn’t need the money, he said. In his bankruptcy filing, Bartlett showed his farm income at $131,000 in 2012.

The first indication that something might be wrong occurred on July 11, when Bartlett got a bank statement for Turner Grain that showed handwritten checks.

“A handwritten check doesn’t go through the [company’s] computer system,” he said.

That same day, a farmer called Bartlett.

“He said that he had [received] a check and there wasn’t enough money in the bank to cover that check,” Bartlett said. “I called Jason. … That’s the only time, the first time and only time at that point that I knew of anyone who had a check that was no good.”

The next day, Coleman terminated Bartlett.

Coleman “told me to stay on the farm; he would take care of the rest,” Bartlett said.

Bartlett said he asked what was going on, and Coleman “said he had been sick and not able to go to the office.”

Trust

Sometime during the summer of 2014 Bartlett went to see an estate planning attorney in Memphis. After that meeting, all of Bartlett’s interest in real estate, except for his home, was transferred to his wife.

When asked why he did that, Bartlett said, “My understanding is it doesn’t transfer until upon my death.” Then it will go to his wife.

Bartlett’s bankruptcy attorney, Frederick “Tripp” Wetzel III of Little Rock, spoke up and said that Bartlett was “obviously confused between the will and what he did.”

The timing of the visit to the estate planner seemed odd to Dilks, the attorney for Southern Rice.

“So it was this summer that you decided to transfer everything to your wife?” she asked.

“Yes,” Bartlett said.

“Any other reason?” Dilks said.

“No,” he said.

Called Back

On Aug. 12, Jason Coleman’s uncle called Bartlett. Neauman Coleman said “that he had power of attorney for Jason and that he felt there was a problem and asked me to help.”

Bartlett came back to Turner Grain on Aug. 13 and “talked to people that were coming in and trying to help Neauman in whatever he asked me to do.”

Bartlett didn’t offer many details about the days he spent at Turner Grain in mid-August. But he said farmers were coming in with complaints, and Neauman Coleman was the one operating the business at that point.

Turner Grain wasn’t taking new business at that time.

Even after spending about a week in the office, Bartlett said, he still didn’t know what had happened to cause the collapse of the company. He told Dilks that he wasn’t aware of any criminal activity at Turner Grain.

Kevin Keech, the bankruptcy attorney for Turner Grain, said in a December bankruptcy proceeding that he was in the process of hiring a forensic accountant to comb through Turner Grain’s books.

The problem, he said, was that Turner Grain and the other businesses that Coleman and Bartlett operated were intertwined.

“The Receiver has not yet completed such investigation, but based on the information currently available to him, it appears Turner Grain and the Related Entities shared or exchanged funds and other assets and/or operated as alter egos of each other,” Keech said in a Nov. 12 filing.

But Keech said in the Dec. 15 hearing that he intended to examine Turner’s financial records for possibly up to three years.

“Whether it is a Ponzi scheme, I don’t know,” Keech said.

And, as of Dec. 15, he had not done a detailed analysis of Turner Grain’s books for preferential or fraudulent transfers.

“At this point in time, we have not evaluated any claims or actions against the principals of the company,” Keech said. “Without knowing what happened to the money, it’s a bit premature.”

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