Bankruptcy Case Winds Down For Felonious Exec, Steve Clary

by Mark Friedman  on Monday, Feb. 18, 2013 12:00 am  

Steve (inset) and Cynthia Clary’s $1.2 million home in west Little Rock was his main asset in his Chapter 7 bankruptcy. They listed $168.6 million in debts.

As convicted felon Roger Stephen “Steve” Clary of Little Rock awaits sentencing in U.S. District Court for one count of mail fraud, his bankruptcy case is nearing an end.

Clary, 60, filed for Chapter 7 bankruptcy protection in July 2010 and listed $168.6 million in debt and only $1.4 million in assets, which was mainly his $1.2 million, 7,200-SF home in the gated Hickory Hills neighborhood in west Little Rock.

Reached at the home last week, the Little Rock businessman declined a request for an interview.

“We simply don’t discuss these things in the paper,” he said. “You need to write your story and say what you will.”

Attorney Frederick Wetzel III of Little Rock, who is representing Clary and his wife, Cynthia, said last week that most of the couple’s debts were discharged, except two totaling nearly $7.6 million. He said the case is still open and referred questions to U.S. Bankruptcy Trustee Randy Rice. Rice didn’t return several calls seeking comment.

The Clarys received a discharge from bankruptcy in December 2011, but that order was withdrawn in May 2012 after it was discovered that the Clarys didn’t complete a required financial management course. The filing indicates that the couple still hasn’t completed the course.

The largest debt that wasn’t discharged is owed to Waterford Investors LLC of Oklahoma City, which sued Clary in bankruptcy court to prevent him from discharging a debt of $6 million and alleged that he committed fraud. Clary agreed to the amount and a judgment was entered in May 2011.

Waterford’s attorney, Stephen Moriarty of Oklahoma City, said last week that he didn’t think Waterford has been paid any money. But Moriarty said that Waterford can continue to pursue the debt even after the Clarys’ bankruptcy is closed until it’s paid.

Still, there’s not much hope that unsecured creditors, which held $138.5 million in claims, will receive money from the Clarys after his assets, which represented just $14,100 in personal property, have been distributed.

“If you look at the bankruptcy schedules, there doesn’t look like there was anything of significant value that wasn’t pledged or mortgaged to a specific creditor,” Moriarty said.

The other debt that won’t be discharged is related to a $4.5 million loan he received in 2008 from Banc of America Leasing & Capital LLC. That loan is also the basis of the federal criminal charge to which Clary pleaded guilty on Feb. 7.

The money was supposed to go to one of Clary’s companies, Destination Ventures, to buy and customize six buses for lease. But Clary “directed the vendor who was to outfit the buses to redistribute the funds once the vendor received them,” according to a news release from the U.S. Attorney’s Office in Little Rock.

 

 

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