Feds Scrutinizing Gene Cauley's Real Estate Dealings, Holdings

by George Waldon  on Monday, Jun. 8, 2009 12:00 am  

A Chenal Downs manor, on the market for the better part of three years, is the latest property to be associated with Gene Cauley. Ownership of the house shifted in a recent deal valued at $2.1 million, although the house failed to sell at $1.6 million.

Federal subpoenas from a criminal investigation in New York have followed former Little Rock lawyer Gene Cauley back to Arkansas. Prosecutors are scrutinizing his real estate investments in connection with Cauley's theft of $9.3 million in client funds.

Cauley recently waived indictment in U.S. District Court in Manhattan, pleading guilty to wire fraud for spending the money for his personal expenses and business ventures and criminal contempt of court for lying about it.

Cauley surrendered his passport and has until June 8 to post $5 million bail, secured by $3 million in real estate and $2 million secured by three financially responsible people. Sentencing is scheduled for Sept. 10.

Investigators from the U.S. Attorney's Office in New York are interested in Cauley's real estate holdings beyond his ability to post bond. They are gathering subpoenaed real estate records to untangle Cauley's web of limited liability companies and examine his assets with an eye toward restitution and more.

What they discover will help answer questions about liquidating assets to repay clients and whether client funds were used in connection with his properties. In securing the bond, Cauley is to use only property "not tainted by the defendant's use of misappropriated client funds."

If the examination goes deep enough, it could also fix a net value on Cauley's leveraged multimillion-dollar portfolio.

Kevin Huchingson, principal at the Little Rock office of Colliers International, is listing several Cauley-owned properties for sale. Primarily undeveloped commercial sites in west Little Rock, the properties were on the market months before Cauley's legal problems became public knowledge on May 8.

Among the properties are a 1.8-acre site at the southeast corner of Col. Glenn and Shackleford roads, about 4 acres at the northeast corner of Stagecoach and Baseline roads and a 1.6-acre site near the northeast corner of Stagecoach and Otter Creek roads.

Huchingson is aware of the rumored "Cauley list," a detailed roster of real estate holdings marked for sale. He has had more than a few inquiries about it from commercial realtors and prospective buyers.

"I have no list, but I have had people calling me up and ask about it," Huchingson said. "We don't have any new property on the market."

Real estate watchers anticipate a sell-off of Cauley's stakes in various properties/ His defense lawyer, John Wesley Hall Jr., told the Arkansas Supreme Court in a May 9 e-mail that "Cauley is liquidating assets to make restitution" and that he "plans on doing so even if he has to sell assets at a loss."

But for now, not much has shown up in the way of public filings.

Cauley remains an investor in Vertical Lofts, a green residential development in downtown Little Rock.

 

 

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