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Fed Uncaps Its Case Against Mountain Pure’s John Stacks

4 min read

The criminal trial of John Stacks, owner of Mountain Pure water bottler and former CEO of HomeBank of Arkansas, commenced last week before U.S. District Judge Leon Holmes, 12 jurors and two alternates.

Your Whispers staff is much too lean for gavel-to-gavel coverage of a trial expected to continue throughout this week.

We do know federal prosecutors began their case by going straight to the heart of the 11-count indictment against Stacks: Witnesses testified that pieces of water-bottling equipment that he claimed were destroyed in a tornado that struck his home at Damascus (Van Buren County) in May 2008 were never there to begin with.

And that matters because Stacks is accused of wire fraud, making a fraudulent claim, making false statements and money laundering for the $526,100 in loans he got from the U.S. Small Business Administration. Those loans were made specifically to replace the storm losses under the terms of a federal disaster declaration.

Stacks was originally indicted by a federal grand jury in December.

But the indictment against him was amended in January and then again last month, just two and a half weeks before the trial started.

The charges have not changed although the indictment grew from seven pages to 18 with the addition of specific details of the false information Stacks allegedly submitted to the SBA.

The allegedly false information includes rosy financial projections for Mountain Pure, and details include he allegedly hid $5.5 million in debt in addition to the $24 million in debt that he did reveal.

Don’t Go There

Stacks’ defense attorney, Tim Dudley of Little Rock, says Stacks will take the stand in his own defense Monday morning.

We don’t know all the evidence that will be presented, but we do know there are some things the jury won’t hear, thanks to an order issued by Judge Holmes.

Stacks will not be allowed to defend himself by pointing out that he has continued to pay on the loan.

“Neither the repayment of the loan nor the intent to repay the loan is relevant to the issues in this case,” Holmes wrote in his order. “The intent that the government must prove, and which is the subject of a good-faith defense, is the intent to deceive. … That the defendant may have intended to repay the loan is not a defense.”

Stacks also can’t claim that the SBA was negligent for giving him the loan in the first place, the judge ruled.

Prosecutors asked Holmes to bar Stacks from arguing that he and his companies are one and the same — “not only because the argument is wrong, but also because he has taken the opposite position” when defending himself against civil litigation by his primary creditor, Simmons First National Bank (as successor to Metropolitan National Bank).

Holmes, however, didn’t rule on that request, saying he would wait to hear the evidence.

No SWAT, No Spit

What was the first and biggest thing federal prosecutors asked Holmes to keep from the jury?

Stacks’ high-profile complaints about the way two search warrants were executed at the Mountain Pure plant in southwest Little Rock in January 2012.

The raid was the centerpiece of a re-enactment video called “Rampant Injustice” that Stacks produced and posted online.

In March 2013 — 14 months after the raid and nine months before Stacks was indicted — Mountain Pure, Stacks’ son Court, and other plant employees filed a federal civil lawsuit against federal agents over the manner in which the search warrants were executed.

The federal government remained virtually silent about the raid until this summer, after U.S. District Judge Kristine G. Baker rejected the government’s motion to dismiss the civil case, citing the alleged seizure of items not contemplated by the search warrants.

Baker also found that an allegation that an unnamed agent “pointed a loaded gun at … Court Stacks’s head when detaining him” could be a plausible claim of excessive force.

With the civil case moving forward, the government has started to tell its side of the raid on Mountain Pure.

In July, the agents who are defendants in the civil case admitted confiscating some cellphones and an iPod from plant employees during the raid and returning them when they left the building.

A flash drive that was seized turned out to be the personal property of an employee, and it was returned to the owner about a week later, the response said.

The government specifically denied that a gun was pulled on Court Stacks.

In the run-up to John Stacks’ criminal trial, federal prosecutors Patrick Harris and Angela Jegley asked Judge Holmes to bar Stacks and his defense team from repeating “false and/or misleading allegations” about the raid in front of the jury.

Their motion detailed 17 such allegations — including that guns were pointed at employees and that an agent tried to pick a fight with “Old Man Stacks” and then spat in Stacks’ face.

The civil suit’s claim that agents conducted “a SWAT team raid” is specifically disputed.

“…[N]o long guns, flash bangs, helmet or anything other than agency standard-issue body armor and federal agency issued handguns were worn or carried during the execution of the search warrant,” according to the prosecutors’ motion.

Stacks and his employees had estimated that 40-50 agents participated in the raid. The government says there were “approximately 39.”

Holmes granted the prosecution’s request, “with the caveat that if the government opens the door … defense counsel may go through the door.”

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