$2.5 Million Home's Ruins Reflect Whitbeck's Fortunes

by George Waldon  on Monday, Feb. 16, 2009 12:00 am  

This pile of rubble at 2322 N. Spruce St. was once the home of Little Rock insurance executive Frank Whitbeck.

Word of a record set-ting residential teardown began circulating through the Country Club of Little Rock in late January. Talk of the pending development really took off when heavy equipment was unloaded at 2322 N. Spruce St.

It indeed looked like the 4,400-SF house was about to be reduced to rubble – much like the fortunes of its former owner, fallen insurance executive Frank Whitbeck.

(To view a map of the neighborhood with property details listed, click here.)

Couples and small groups of curiosity seekers began walking through the vacant residence during the weekend of Feb. 7-9. The doors were removed, allowing open access for impromptu self-guided tours. Gone too were windows, the staircase banister and other fixtures.

Though stripped of furnishings, the house was filled with memories for some who walked through, recalling childhood days and past owners. Other visitors milled about shaking their heads in wonder.

"Two and a half million for a teardown? You have got to be kidding me."

"And for a garden."

"I guess Jimmy Dyke has so much money stacking up that he had to shove some of it out his back door."

The $2.5 million acquisition by businessman James T. Dyke, through Topview II Holdings LLC, certainly expanded his back yard and opened up the landscaping possibilities for a showcase garden.

The addition of the Whitbeck land doubles the size of his grounds to 1.5 acres, and extends his property line to the Country Club of Little Rock golf course. P. Allen Smith, the locally grown but nationally known gardener, is said to be master planning the greenery project for Dyke. Neither could be reached for comment.

The purchase marks the second seven-digit teardown for Dyke, owner of Dyke Industries, who calls both Arkansas and Florida home. It brings his investment in the Country Club Heights neighborhood to more than $5.8 million, all cash.

Through Briland Enterprises LLC, Dyke purchased a neighboring 5,574-SF home at 4800 Hawthorne Road for $1.28 million in November 2004 and bulldozed it to make way for his $2 million-plus mansion.

Well known as a patron of the arts, his name is associated with the James Dyke Collection of Contemporary Drawings at the Naples (Fla.) Museum of Art and Little Rock's Arkansas Arts Center.

Dyke donated his collection of 133 drawings and watercolors by neoimpressionist artist Paul Signac to the Arkansas Arts Center more than eight years ago. At the time, that gift was described simply as a multimillion-dollar treasure.

Dyke played a pivotal role in the purchase of a controversial piece of art that graces downtown Little Rock's intersection of Main Street and Capitol Avenue: "Standing Figure: Knife Edge." The 1,200-pound, bronze sculpture is the work of the late Henry Moore, a world-renowned British sculptor.

Though some consider the 12-foot abstract piece an acquired taste, no one quibbles with it as an investment. Purchased for $185,000 in 1978, the sculpture is appraised at $2.5 million.

Not So Golden Touch

The passage of time hasn't been as kind to the fortunes of Frank Whitbeck. The purchase of his property, which was loaded with debt and creditor claims, resulted in a $500,000 check for the Arkansas State Insurance Department.

The money went toward the restitution of Little Rock's Signature Life Insurance Co. of America, which the agency took over after discovering that Whitbeck had mismanaged the company to the point of insolvency.

The $500,000 brought Whitbeck current on past-due quarterly installment payments on a financial settlement with the Insurance Department and will keep him in good stead until a final balloon payment this fall. Whitbeck now owes about $2.5 million, which will be due in full on Sept. 30.

"The closer we get to that date, the more reliable the number will be," said Steve Uhrynowycz, deputy receiver for the Insurance Department.

The agency will order an actuarial review this summer to determine what the final number will be. The total was estimated to be $3.7 million in 2004 when the Insurance Department sent Whitbeck a notice to cure Signature's Life's capital shortfall.

That $3.7 million figure was entered as a judgment against Whitbeck when he was sentenced to six years for fraud on Oct. 23. The deal to sell the house was said to be in the works back then.

"We felt like letting it go through a private sale was the best way to get a good sales price," Jane Duke, U.S. Attorney for the Eastern District of Arkansas, said of the decision not to foreclose after the judgment was entered.

The restitution is connected with assets he illegally diverted from Signature Life for his personal use and to another of his ventures, Winrock Grass Farm Inc.

Whitbeck, 61, began serving a six-year sentence for fraud in federal prison on Dec. 1.

He avoided a criminal trial by an 11th-hour plea agreement on one count of mail fraud in U.S. District Court. Whitbeck also faced three counts of making false statements to the Arkansas Insurance Department.

The charges stem from financial dealings between Signature Life and Winrock Grass Farm Inc., both owned by Whitbeck.

Whitbeck is accused of diverting more than 80 percent of Signature Life's assets to himself and other companies he controlled. The charges are linked with Signature Life's annual statements for 2001, 2002 and 2003 filed with the state Insurance Department.

According to the allegations, Whitbeck falsely described loans to his Winrock Grass Farm as residential mortgages, falsely described the loans as first liens and falsely described Winrock as an unrelated third-party borrower.

Insurance regulators said Whitbeck should have categorized the loans to Winrock Grass Farm as commercial mortgages. Other lenders already had first liens on the property, and the Signature loans to the grass farm were never filed of public record, which made the debt unsecured.    

 

 

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