Arkansas Razorbacks Football Coach John L. Smith's $40 Million Mistake

by Mark Friedman  on Monday, Nov. 5, 2012 12:00 am  

In 2009, the need for cash intensified for Canfield’s business entities. Various loans were going into default, according to court documents.

Meanwhile, after two years out of coaching, Smith was hired as outside linebackers coach and special teams coordinator at the University of Arkansas.

He was earning more than $200,000 in both 2009 and 2010, but his real estate investments were being sacked.

Through a self-named trust, Rhodes, a member of Terra Acquisitions LLC and Terra Acquisitions II LLC, loaned a total of $600,000 to the LLCs in two separate promissory notes in March and July 2009.

Rhodes probably infused the project with cash to keep the appearance that Canfield Developments wasn’t in financial trouble, said the real estate agent who asked not to be named.

“It behooves everyone to keep the product first class,” the agent said.

“It would be the kiss of death … if any developer of that kind declared bankruptcy.”

Rhodes, when reached at his mansion in Louisville, declined to comment. He said he has a lot to say about Smith, but his attorney told him not to comment.

In his affidavit, Smith re-called that in September 2009 “Rhodes approached the members of [the LLCs] and demanded that they needed to ‘take care of’ the loans that the Rhodes Trust allegedly made to” the LLCs, Smith said in his affidavit.

So Smith and the other members signed a document that refinanced and consolidated the loans on Sept. 1, 2009. After the loans were consolidated, Smith made two payments that totaled $70,000.

Smith said, “I believed that these amounts were being applied, in part, to pay the Rhodes Trust for my supposed personal liability upon the Note.”

But those payments weren’t being applied to the loans.

 

 

Please read our comments policy before commenting.
Search

Latest Arkansas Business Poll

Do you approve of the president taking executive action on immigration?