Only in Arkansas: The Top 10 Business Stories of 2011

by Arkansas Business Staff  on Monday, Dec. 26, 2011 12:00 am  

His scheme, a classic Ponzi in that new loans backed by phony bonds were used to pay interest on earlier phony bonds and loans, worked flawlessly until September 2010. Then, in a routine examination, the Federal Deposit Insurance Corp. questioned why First Southern Bank had invested $22.7 million in rural improvement district bonds. Further investigation revealed that the bonds, purchased from the bank's controlling shareholder, were worthless.

The bank never recovered. The FDIC took receivership in December 2010, rendering its stock worthless as collateral.

At the beginning of 2011, Home BancShares Inc. of Conway and a string of other Arkansas banks announced that they suffered losses from Lewis. At least 11 banks were victimized by Lewis, who spent months dodging process servers attempting to serve him with lawsuits from the various banks.

On Aug. 2, Lewis pleaded guilty to one count of bank fraud in U.S. District Court in Little Rock and agreed to pay restitution of nearly $40 million. He is scheduled to report to federal prison on Feb. 7.

While Lewis' fraud was the largest prosecuted in Arkansas, it's not nearly the largest with Arkansas connections. Former North Little Rock businessman W.A. "Tony" Rand and his five sons cost oil and gas investors more than $110 million. Most of them committed their crimes in Texas and were sent to prison in 2011.

Rand and three of his sons were convicted in federal court in Texas for operating an oil and gas scam and started serving their sentences in 2011. Tony, Greg, Mark and Bill Rand also agreed to pay restitution of $99.7 million. Tony's oldest son, Wayne Rand, was sentenced to 20 years in Texas state prison in 2011 for conning investors out of $8 million.

Tony's other son, Jeff, started scheming when he was living in Hot Springs and continued after he moved to Houston. In July, Jeff pleaded guilty to fraud of between $2.5 million and $7 million in U.S. District Court in Fort Smith. No sentencing date had been set as of last week.

No. 3
Manufacturing Suffers

Arkansas manufacturing took some body blows in 2011.

The Arkansas Department of Workforce Services reported in October that manufacturing had the largest over-the-year decline of all the business sectors in the state, with a loss of 6,400 jobs "related to multiple layoffs and business closures."

State manufacturing took two especially newsworthy hits in 2011: The Yarnell's Premium Ice Cream Co. of Searcy closed abruptly in June, and Whirlpool Corp. of Benton Harbor, Mich., announced plans to close its Fort Smith plant in 2012.

About 200 Yarnell's employees lost their jobs suddenly when the 79-year-old family company closed and subsequently filed for Chapter 7 bankruptcy. Yarnell's listed $15.7 million in debts and $8 million in assets.

Although the number of workers was relatively small, Yarnell's was very much an Arkansas tradition. The Yarnell family had operated the company from its 1932 beginning until its end. With a nod to its Arkansas origin, the manufacturer made an ice cream flavors in honor of the University of Arkansas Razorbacks.

 

 

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