by Arkansas Business Staff on Monday, Dec. 28, 2009 12:00 am
Best Cautionary Tale
Despite having a doctorate in economics, Jeff Collins got caught up in the northwest Arkansas construction boom and went bust, straight into a bankruptcy filing listing $10.3 million in debts. Collins had an impressive background: former chief of the Center for Business & Economics Research at the University of Arkansas, partner in Streetsmart Data Services LLC of Fayetteville, etc. Props go to Collins, however, for being open about his downfall and sharing the story with our readers.
Worst Legal Arguments
The lawyers at Carney Williams Bates Bozeman & Pulliam became righteously legalistic when they claimed they couldn't possibly pay their disgraced former partner and rainmaker Gene Cauley contingency fees on pending cases because he surrendered his law license in May. Instead of the millions Cauley believes he's due, they offered to pay him an hourly rate for services rendered. It might be possible to feel some sympathy for Cauley if he hadn't attempted an even more audacious argument in a separate legal dispute. A 22-year-old employee of Cauley's billboard company was electrocuted, and Cauley argued that his former law firm's workers' compensation policy should cover the billboard company employees that he had otherwise failed to insure.
After nearly two years of hounding Dillard's Inc. hoping for change, New York activist investors quietly cashed out of the Little Rock retail chain. Since 2007, Barington Capital Group, led by James A. Mitarotonda, and the Clinton Group Inc., both of New York, had been trying to gain access to the hermetically sealed retailer. Mitarotonda did score a victory when he was able to choose four board members in 2008. But even with that win, the Dillard family still had the upper hand because their votes controlled the board. In 2008, the activist investors' frustration with management continued as sales continued to slide along with the company's stock price. As of March 31, the shareholders had sold most of their Dillard's stock.
Best Upward Failure
In June, former University of Central Arkansas President Lu Hardin was named president of Palm Beach Atlantic University, a private interdenominational Christian university in West Palm Beach, Fla. Hardin left UCA last year in what could fairly be termed a state of disgrace, with a state audit finding potential legal problems with $300,000 in bonuses and the nearly $1 million buyout paid to Hardin, among other issues. A number of the audit findings were forwarded to the Faulkner County Prosecuting Attorney for review, and the FBI reportedly is looking into goings-on at UCA.
Best Anonymous Act of Kindness
An article in Arkansas Business that profiled the Newborn Umbilical Cord Blood Initiative at the University of Arkansas for Medical Sciences revealed that the hospital had raised only $150,000 of its $500,000 budget. Shortly after the article appeared, the hospital received an anonymous $250,000 matching grant, and the center was therefore able to open on schedule.
Worst Victim Lineup
Among the Arkansas investors who lost millions after investing in Regions Morgan Keegan "high-yield" bond funds were a Boy Scouts Council, a church and an 87-year-old veteran of the Battle of Okinawa.
Best Mea Culpa
In October, former Bureau of Prisons resident Warren Overton wrote a guest commentary for Arkansas Business in which he said, "When you do the wrong thing, it will haunt you. Karma is real and has a memory like an elephant. You can't ever make wrong right."
ThermoEnergy Corp. is blaming some of its financial troubles on its former CFO, Andrew T. Melton. The wastewater treatment company, which has struggled since its inception in 1988 to make a profit, discovered in an audit that Melton had somehow failed to file payroll taxes since mid-2005. At the end of June, the company owed more than $4.4 million in back taxes, penalties and interest. Melton left the company in August.
Worst Hair Day
J.M. Products of Little Rock, once one of the country's largest manufacturers of ethnic hair care products, woke up with bed head in April. The company filed for Chapter 11 bankruptcy protection and listed $14.6 million in debts and $20.1 million in assets. But the company never improved under Chapter 11. Its assets were sold in October at an auction for $6.8 million to C2 Global Technologies Inc. of Canada. J.M. had struggled after the 2005 death of its founder, Ernest Joshua Sr. Joshua started the company in the 1970s and ended up in the Arkansas Business Hall of Fame.
Best Legal Showdown
Two of Little Rock's best-known businessmen stepped into the Pulaski County Courthouse to fight over money. In 2008, Jennings Osborne sued some investment firms controlled by Little Rock financier Warren Stephens. Osborne charged that after he sold his Arkansas Research Medical Testing LLC to Stephens' companies in 2004, the new management made a mess of things. Osborne said he was banking on the managers listening to his advice so he could receive $9 million in deferred compensation after selling the company for $20 million. Although the medical testing company reached its financial goals the first year, it didn't the second or third year, resulting in Osborne missing out on $6 million. In September, a Pulaski County jury ruled in favor of Osborne, but it awarded him only $3 million instead of the $6 million he sought.
In January, IberiaBank Corp. of Lafayette, La., announced that it had charged off $3.6 million in the fourth quarter of 2008 because of credit fraud by an unnamed Arkansas customer who had used phony collateral to secure a series of loans. Despite a number of tantalizing clues in the bank's statement, it was not until May 11 that Arkansas Business identified the fraudster: Dana Washburn of Rogers. She pleaded guilty the next day to a federal charge of bank fraud and is scheduled to be sentenced in March.
Best Stupid Robbery
In July, a burglar performed a smash-and-grab on perhaps one of the dumbest places to rob in Little Rock. The suspect backed a truck into Wired!, a Little Rock firm that specializes in video surveillance, and proceeded to steal a flat-screen TV from the location on Bowman Road. Unsurprisingly, the robber was apprehended soon after since Wired! is equipped with 17 digital cameras.
Worst Word Placement
A contentious clause in the Utility Facility Environmental & Economic Protection Act of 1973 may be the linchpin for the embattled John W. Turk Jr. coal-fired power plant in Hempstead County. The case opposing the plant has made its way to the Arkansas Supreme Court. Chairman of the Arkansas Public Service Commission Paul Suskie says the issue boils down to one little ol' word: "and."
Best Larger-Than-Life Hog
Darren McFadden could have sought out a customized wall graphic from the folks at Fathead to capture his collegiate glory. Instead, he commissioned a larger-than-life, floor-to-ceiling painting of himself in his Arkansas Razorback jersey for the garage of his Little Rock home.
William Clark resigned as CEO of CDI Contractors in January and, with CDI colleagues Shannon Earls and Danny Bennett, formed Clark Contractors in February. The worst recession since the Great Depression was, Clark said, a much better time to be a small company with six employees than to be a large company scratching to stay busy. "We don't have to have a great success rate in order to make ends meet. By the time the economy turns around, we'll have a few jobs going, so we'll be able to benefit."
U.S. Rep. Mike Ross, D-Ark., attracted a healthy portion of backlash about his stance on health care when some digging uncovered that Ross sold a pharmacy to Stephen LaFrance, owner of USA Drug, for seemingly more than it was worth. Ross and his wife sold Holly's Health Mart in Prescott and its assets for almost $1.5 million. An appraiser said the property was worth less than $200,000. Ross' argument that the client list and the operation were worth far more than that did little to mollify his critics. Though the deal may have been completely legit, the reporting of it was bad timing for Ross.
Best Snake-Oil Salesman
It remains to be seen whether the machine developed by Clean Technology International Corp. really is the answer to hazardous waste and the future of nanocarbon technology, but this much is clear: Investors who gave tens of millions of dollars to Darrell Lainhart of Sherwood for shares in CTIC haven't seen a dime in return after nearly a decade.
Worst Ongoing Blame Game
Former insurance exec Frank Whitbeck just can't let go of the notion that he didn't get a fair shake in court in his civil and criminal battles. Whitbeck still blames mistreatment by Little Rock's Metropolitan National Bank for forcing him to commit fraud in a failed attempt to prop up his unstable business ways. Sentenced to six years in federal prison for pillaging Signature Life Insurance Co., he has tried to get his jail time reduced because of allegations of mistreatment against Metropolitan raised by northwest Arkansas developer Tom Terminella in his (so far unsuccessful) battle with the bank. Whitbeck caught a break with his sentence to begin with, considering the guideline range for his misdeeds was 11 to 14 years.
Worst Victim Mentality
Bob and Katherine Shoulders complained to anyone who would listen - including the Northwest Arkansas Business Journal, the Arkansas Democrat-Gazette and The New York Times - about the "trash-eating rat" who had foreclosed on their Fayetteville Athletic Club. What they tended to gloss over was the fact that they had stopped making payments on two of their three loans from ANB Financial months before the Bentonville bank was shut down by the Federal Deposit Insurance Corp. in May 2008. SM-WLJ Asset Owner LLC of Coral Gables, Fla., led by former Chicago banker Rick Williamson, acquired their $11 million in debt as part of a portfolio of nonperforming ANB loans the FDIC auctioned off, and Williamson had the nerve to foreclose rather than accept the Shoulderses' offer to pay less than half what they owed.
Worst Reason to Join the Family Business
Some families just aren't made to work together. Curt Bean Lumber Co. of Glenwood, for example. After Scott Thomason married Corey Bean in 1996, he went to work for his father-in-law, and she soon followed in the family business. A few years later, though, the recession hit the timber industry and lumber prices tumbled. By 2009, Bean Lumber was pushed to the brink of filing bankruptcy. The company blamed its financial troubles on the Thomasons. In a lawsuit, Bean Lumber said Curt Bean's daughter and son-in-law orchestrated an elaborate scheme that cost the company possibly millions of dollars in profits and sales. Scott Thomason denied the allegations. Thomason, who owns and operates Mid-Ark Lumber Inc. of Glenwood, said his company was owed $351,000 from Bean Lumber and has sued to collect that amount. The lawsuit is pending in Pike County Circuit Court.
Worst Delay for Art Lovers in Arkansas
It was the Best Museum-in-the-Making on last year's list of Best & Worst, but in 2009, officials with Crystal Bridges Museum of American Art acknowledged that the museum would open at least a year later than scheduled - in 2011 instead of 2010, possibly later.
Best 25th Anniversary Issue of an Arkansas Periodical
OK, we'll acknowledge that this category is kind of narrow, but we here at Arkansas Business are proud of our 25th anniversary issue, which contained 25 lists in different categories - from Living Legends to Great Whispers to Outlaws, Scoundrels & Posers - each with 25 entries. The issue was a hit, if we do say so ourselves, and we had fun, but we have to be honest: We were glad to see that big sucker detailing 25 years of Arkansas business and political history go out the door and to the printer. Our favorite headline from yesteryear: "A celluphone in every car?"
That would have to be the welcome given in May to Kris Allen of Conway, winner of "American Idol." Throngs gathered at Little Rock's Riverfest Amphitheatre and in Conway's downtown to hear, see and congratulate the state's newest celebrity, an aw-shucks fellow with a pleasant voice and an even sweeter demeanor.
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