Legal Controversy Overshadows Jimmy Winemiller's Wheeling & Dealing Career

by George Waldon  on Monday, Dec. 12, 2011 12:00 am  

Jimmy Don Winemiller Sr. is no stranger to controversy. The Arkansas businessman, who now calls Memphis home, has stood smack dab in the middle of his own whirlwinds and was caught in the periphery of even more notorious storms.

Winemiller was called as a witness in the Whitewater investigation of former Pulaski County municipal judge David Hale in 1999. Two years later, Winemiller was a reluctant witness once again.

He was subpoenaed to testify in the government's immigration lawsuit against a business partner, David Jewell Jones, accused of helping Chinese women enter the country under false pretenses for nefarious purposes.

Now Winemiller, 73, is battling his own criminal allegations, first made in a lawsuit that arose from a financial dispute made public in the days leading up to the Jones et al trial in Little Rock.

This legal tiff, complete with an allegation of official bribery, celebrated its 10th anniversary in April and still hasn't gone to trial. Few could have guessed the civil fraud case filed in Little Rock U.S. District Court in 2001 would morph into a criminal fraud case in federal court in Greenville, Miss.

Winemiller didn't return calls seeking comment for this article, nor did lawyers and prosecutors on both sides of the civil and criminal cases.

The original case filed by David Rabhan of Swainsboro, Ga., and his Ehrlich Fish Farm Inc. against Winemiller and his wife, Rebecca, and their Straight Creek Farms Inc. opened a can of worms for all involved.

The civil case, in which Rabhan sought damages of more than $8.5 million, was put in legal limbo by a criminal investigation into the events surrounding the sale of Straight Creek Farms, a 1,560-acre catfish operation near Inverness, Miss.

The dispute erupted into a criminal indictment on Aug. 24, 2006, that included fraud charges against Jimmy Winemiller and his son, Michael.

The husband of Jimmy Winemiller's daughter, Becky, was mentioned in the civil suit
as an alleged accomplice in the fraud but wasn't named as a defendant in either case.

The criminal component of the long-running litigation is scheduled to go to trial on Feb. 27, marking the 16th time a courtroom date has been set in the five years since the indictment.

The criminal charges represent the most serious challenge to Winemiller's remarkable record of survival.

Days Gone By

Jimmy Winemiller emerged during the 1980s as a wheeler-dealer from Newport, known as a real estate investor who specialized in agri properties, a farmer and a banker.

His business interests were narrowed to farm-related endeavors only in 1986 after he was forced to step down as chairman at First State Bank in Newport. Financial problems amid the S&L meltdown cost Winemiller his stake in First Newport Bancshares Inc., First State's holding company.

His bank stock was lost, pledged as collateral on debt he could no longer service.

In the aftermath, Little Rock's Worthen Bank & Trust ended up taking control of First State and selling the bank to help recoup its loan loss.

Winemiller's net worth on paper at the time was purported to have plummeted from $44 million to a negative $7 million.Not surprisingly, he made a trip to bankruptcy court along the way. His voluntary Chapter 7 petition in Little Rock, filed on May 27, 1988, wasn't closed until Sept. 24, 1993.

Winemiller exited the contentious case on June 16, 1992, with his debts discharged with one exception: a $1.5 million consent judgment entered into with the Federal Deposit Insurance Corp., receiver for New Orleans Federal Savings & Loan Association.

The liability was linked with Winemiller's participation in Security Land Co., a failed real estate venture financed by the Louisiana thrift.

After his bankruptcy, Becky Winemiller's name started appearing on many of her husband's deals through entities such as U.S. Investment Realty Co., Delta Plantation Inc., Tulip Farms Inc. and Tensas River Farms III LLC.

Over the years, she also has been associated with farms in Concordia and Catahoula parishes in Louisiana, Woodruff and Chicot counties in Arkansas and Bolivar County, Miss.

Although the Winemillers have moved to a $3.1 million, mansion in Memphis (see "Scandal Shadows" sidebar), Jimmy continues to oversee investments in Arkansas.

The Winemillers own a piece of downtown Little Rock's Quapaw Tower - two pieces, actually. Their Crown Investments LLC owns a 625-SF condo on the seventh floor and a 900-SF unit on the second floor.

The couple lived in the highrise before moving to a 4,300-SF home in west Little Rock's Hickory Creek neighborhood.Owned since 1994, the house is for sale, as is their Iron Horse Farm.

The 507-acre training and boarding spread complete with racing track is east of Perryville.

In September 2010, the Winemillers made horse racing news when they paid $475,000 for a filly sired by Ghostzapper, 2004 Horse of the Year, and birthed by Azeri, 2002 Horse of the Year.

At the time, Jimmy Winemiller told the Arkansas Democrat-Gazette the foal was among a dozen or so race horses he and his wife had an ownership stake in.

Meanwhile in Mississippi

The criminal case against Winemiller and other participants in the Straight Creek transaction was given legs by allegations raised in the earlier civil fraud case.

Jimmy Don Winemiller and his son, Michael, are accused of conspiracy to defraud the United States and loan/credit application fraud in connection with the deal, aided by bribery, forgery and bogus appraisals.

The Winemillers were accused of removing assets from the property before the sale was completed, including timber, equipment and more than 6.2 million pounds of catfish.

Those assets were supposed to be part of the purchase and remain as collateral on the $10 million loan that financed the deal.

The loan was made by Gulf Coast Bank & Trust of New Orleans and was largely guaranteed by the federal government's Rural Development Administration.

Wilbur Peer of Upper Marlboro, Md., an associate administrator at the USDA's Rural Business Cooperative Services, was identified by the government as receiving a $50,000 bribe from Jimmy Winemiller to help make the loan happen.

According to the government's case, the alleged bribe was made through a Feb. 4, 2001, check that Becky Winemiller wrote at her husband's behest.

Among other allegations, Michael Winemiller helped inflate the value of the Straight Creek property with phantom assets including equipment and
a fictitious count of catfish inventory.

The numbers game with assets and collateral was played to falsely qualify for the favorable RDA financing and create a lucrative transaction at the expense of the lender, according to the feds.

Straight Creek Farm was resold at foreclosure in a deal that reflected 35 cents on the dollar compared with the original transaction.

For now, the Feb. 27 court date in Greenville, Miss., remains on the docket.

Scandal Looms Behind Luxurious Shelter

The new Memphis address of Jimmy and Rebecca Winemiller is tinged with controversy.

The 15,632-SF mansion is the former home of Charles Bolton, an investment adviser who helped create bogus tax shelters for wealthy clients.

The opulent property was bought in July for more than $3.1 million in the name of the Rebecca B. Winemiller Revocable Trust. The seller was Bolton's wife, Michelle.

The sprawling residence in the gated Normandy Park neighborhood of east Memphis, just off Shady Grove Road, took two years to build. Bolton's detractors might argue the money that built the home came from ill-gotten gains.

The schemes illegally sheltered billions of dollars in taxable income and capital gains during 1998-2002 and in the process made millions of dollars for Bolton and others.

Bolton admitted using the shelters to illegally protect personal income of $15 million in 2000 and $25 million in 2001.

On April 13, 2010, Bolton pleaded guilty to one count of conspiracy to defraud the IRS in the case that lasted nearly three years. He was sentenced to 15 months in federal prison and fined $3 million in Manhattan's U.S. District Court.

Bolton was imprisoned but was released on bond while his sentence is appealed. The bail request was granted Sept. 10, 2010, after a letter from his lawyers noted:

"In addition to meeting the statutory qualifications for obtaining bail pending appeal, there are also equitable reasons that the court should grant this motion. Since Mr. Bolton has been incarcerated and separated from his wife and children, his family unfortunately has fallen into turmoil. His two oldest children are struggling; they have faced problems with drug and alcohol use and have dropped out of college. All three of his children are in counseling for depression. Mr. Bolton's wife has been trying to hold the family together on her own. Allowing Mr. Bolton to return to his family now, when they are in crisis, would help them immeasurably."

 

 

Please read our comments policy before commenting.