Posted 10/28/2013 12:00 am
David Henry told Arkansas Business in 2011 that he met and befriended Landan Mitchell in 2009 or so. Around the same time, Henry revealed that Henry Corp. needed a new head accountant, and Landan recommended his cousin Samuel for the job.
“I was in between controllers,” Henry said, adding that Samuel was working as a payroll manager at the time.
In 2005, at age 24, Landan was charged in Pulaski County Circuit Court with warranty rebate fraud, to which he pleaded guilty. A year later, he was charged again, this time with embezzling more than $150,000 from Banyan Realty Group Inc., one-time manager of the Block 2 lofts in downtown Little Rock.
He was hit with five years of probation for the latter charge, as well as $10,000 in restitution.
Later, he was charged with breaking that probation when he traveled out of the country without notifying his probation officer.
But these crimes didn’t show up on a background check Henry said he performed on Landan.
After the Mitchells were hired, Henry said, business appeared to improve, but there were still issues with accounting.
“It was still a mess and wasn’t getting any better,” he said in 2011. “In December of , I decided I was either going to replace my controller or hire a CFO to help Sam out at the time.”
Samuel Mitchell wasn’t delivering regular financial reports. But before Henry had a chance to hire a CFO, in April 2011 — a day before Henry’s brother’s funeral — Henry’s auditors told him there were serious problems with his balance sheets.
“They flew in and told me I’ve got some gross mismanagement, negligence and some huge accounting irregularities,” Henry said. “We researched it and within one day I visited with them and they told me, hey, I have to terminate [the Mitchells].”
He did. But his troubles were far from over.
Henry said he contacted the Little Rock Police Department, the FBI and the U.S. Marshals Office.
By Aug. 30, 2011, Landan and Samuel Mitchell were charged with multiple counts of theft of property, laundering criminal proceeds and attempting to evade state taxes. In particular, they were charged with bleeding Henry Corp. of more than $150,000, with Landan Mitchell diverting company funds toward things like his mortgage and improvements on his home in Little Rock.
“It was $185,000 we have substantiated as hard dollars,” Henry said. “There’s probably significantly more.”
Henry said his close friendship with Landan Mitchell — which Landan’s lawyer described as something more than platonic — was “all part of the deception. I wouldn’t be surprised if I wasn’t targeted from Day One. The thing is, regardless of how good your internal controls are, if your two top people — management and operations — are in cahoots together, there are no controls to be able to stop that.”
He said there was no doubt in his mind that the Mitchells were guilty. After a grueling nine-day trial, a Little Rock jury agreed with him — partially.
In December 2011, Landan Mitchell was sentenced to 12 years in prison, but Henry was denied his requested restitution. Landan Mitchell was fined $150,000 but had to pay Henry only about $30,000.
Samuel Mitchell pleaded guilty to his role in the scams, but, having no prior convictions, he was sentenced to just 10 days in jail. He was fined $1,000 and had to join Landan Mitchell in repaying the $30,000 restitution to Henry.