Whitbeck Ordered To Explain Salary

by Arkansas Business Staff  on Monday, Jul. 28, 2008 12:00 am  

Frank B. Whitbeck is in hot water again.

U.S. Bankruptcy Court Judge James Mixon last week ordered the ex-insurance executive's Winrock Grass Farms Inc. to file paperwork documenting all money transferred to Whitbeck between July 25, 2007, and June 2008.

Whitbeck was in front of Mixon last week to explain his eye-popping salary of $235,000 for eight months of work, which averages out to be just under $30,000 a month.

After all the evidence is in, Mixon will decided how much, if any, Whitbeck will have to reimburse the company. The paperwork is due the first part of August.

And Mixon ordered that all future operating reports from Winrock be accompanied by cancelled checks and other documentation.

If you recall, Winrock Grass Farms filed for Chapter 11 reorganization in 2004. The assistant U.S. trustee recently filed a motion, however, to have the case dismissed or converted to Chapter 7 liquidation.

The assistant trustee, Charles Tucker of Little Rock, accused Whitbeck of mismanaging the grass farm.

From Jan. 1 through June 30, Winrock had sales of $691,000, but its loss was $22,700.

Tucker blamed the financial troubles partly on Whitbeck's salary.

"Such excessive salary to Whitbeck by a financially stressed company is indicative of waste and mismanagement, warranting appointment of a trustee," Tucker said in his motion.

A hearing on the status of the bankruptcy case is scheduled for Aug. 22.

Whitbeck also has a federal sentencing date hanging over his head.

In May, Whitbeck avoided a criminal trial by pleading guilty to one count of mail fraud in U.S. District Court. Whitbeck also had faced three counts of making false statements to the Arkansas Insurance Department.

He could serve up to 20 years in federal prison and a $1 million fine when he's sentenced on Oct. 23.

 

 

Please read our comments policy before commenting.