Arkansas Business' 25 Outlaws, Scoundrels & Posers (25th Anniversary)

by Arkansas Business Staff  on Monday, Mar. 23, 2009 12:00 am  

9. Reed, Weichern and Cox
The wheels of criminal justice were put in motion when federal regulators declared FirstSouth of Pine Bluff insolvent in December 1986. The crash of the $1.68 billion-asset public company was the nation's largest savings and loan failure to date.

The case against Roderick Reed, First-South's president, was the first to reach resolution when he pled guilty to bank fraud in October 1989 and was sentenced to 30 months in prison.

Howard Weichern, FirstSouth's chief executive officer, was convicted of one count of bank fraud and conspiracy in October 1990 and sentenced to four years in prison.

Harley Cox, general counsel for FirstSouth and a board member, was convicted on 15 counts of making false statements and taking other action to conceal the true financial condition of the thrift from its board and from regulators.

Cox was sentenced to four years in prison in August 1991 but received a pardon in January 2001, part of the roster signed the day before President Bill Clinton left office.

Much of the investigation centered on FirstSouth's Texas real estate investments that were listed as loans.

10. Karl Bernhardt
Ford-New Holland Inc. landed a $1.2 million judgment against Karl Bernhardt in January 1990, but tracking down the globe-trotting Bernhardt and collecting the judgment was another matter.

Bernhardt turned Twin City Ford Tractor Inc., with lots in North Little Rock and Alexander, into the largest dealership in North America through creative use of price breaks from Ford. Example: Bid on state contracts with volume discount prices, agree to buy back the equipment at the original cost after one year and resell it at a higher but still below-market price for good used equipment.

Ford decided Bernhardt was breaking the rules. Bernhardt responded by abandoning the dealership in June 1987, taking $605,000 of his "cash equity" when he returned to his native Germany. When Ford finally tracked him down there to serve court papers, Bernhardt relocated to Costa Rica.

11. W.A. "Tony" Rand
Little Rock businessman W.A. "Tony" Rand thought he had a happy-ending script for building a lucrative regional move theater chain. However, federal authorities rewrote Rand's story in March 1991 with a 26-count indictment on interstate transportation of money taken by fraud, money laundering and bank fraud.

Uncovering false statements to lenders and the tax man provided the plot twist, with Rand receiving about $17 million in financing through a pattern of deceit that dated back to 1987. Rand was filing tax returns showing no profit at the same time he was telling creditors that his business was very profitable indeed.

In February 1992, Rand was convicted and sentenced to seven years in prison for his misdeeds. His holdings in Arkansas, Texas and Tennessee were sold to pay taxes and creditors.

 

 

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