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.

The vendor did as he was told, and $1.595 million of the loan proceeds went to companies in which Clary had a financial interest, but not for the buses.

In July 2010, Clary was indicted by a federal grand jury on four counts of wire fraud and one count of mail fraud in connection with misappropriating the funds.

Under the plea deal, the four counts of wire fraud were dismissed. Clary could face up to 30 years in federal prison and a $1 million fine, but the terms of his plea deal suggest that the sentencing guidelines will call for 33 to 41 months in prison. The judge in the case, U.S. District Judge J. Leon Holmes, does not have to abide by the guidelines.

Clary also agreed to pay $1.595 million in restitution to Banc of America. The lender sued Clary in bankruptcy court in November 2010 to prevent the debt from being discharged. He agreed in July 2011 that the debt wouldn’t be discharged from his bankruptcy case.

Bankruptcy Meeting

In September 2010, Clary sat for a bankruptcy proceeding and told trustee Rice that his businesses started to fail in 2008. But court records indicate Clary was having financial troubles in 2007 when he posted a business loss of $13.3 million.

Clary, who had an ownership interest in 21 companies as of July 2010, is known for his development of the Shackleford Crossings retail center in west Little Rock through his Clary Development Corp. of Little Rock.

Rice quizzed Clary on how he kept all his business records straight if he didn’t keep all his records in one place.

“We had good people in our office, and then once you breathe life into each of these, you generally know what’s going on,” Clary said.

He said that the turning point for his companies came when the financial firm Lehman Brothers Holdings Inc. of New York declared bankruptcy in 2008, helping to trigger the Great Recession.

“That began, you know, it complicated everything for everybody,” Clary said during the meeting. “So September of ‘08 I would say was a very significant date.”

In 2008, Clary said he wasn’t receiving any money from his companies and started borrowing or receiving money from family, friends and his church to make ends meet.

 

 

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