by Gwen Moritz
Posted 12/3/2013 09:36 pm
Updated 1 month ago
John Stacks, the owner of water bottler Mountain Pure LLC, was indicted Tuesday on 11 felony counts related to what federal prosecutors say was a fraudulent loan from the U.S. Small Business Administration in 2009.
In a news release, Christopher Thyer, U.S. Attorney for the Eastern District of Arkansas, said a federal grand jury had charged Stacks — who is also president and CEO of HomeBank of Arkansas — with three counts of wire fraud, three counts of money laundering, one count of submitting a false claim to the SBA and four counts of making false statements.
The indictment (PDF), which was not available until Wednesday afternoon, includes few details. It lists three wire transfers of loan proceeds totaling $526,100 from the SBA to Stacks' account at HomeBank in support of the wire fraud charges, and describes three other transfers of $10,000 or more in support of the money laundering charges.
According to the indictment, Stacks applied for a disaster loan from the SBA to replace Mountain Pure equipment "that was allegedly on the premises of his Damascus, Arkansas property at the time a tornado struck on May 2, 2008." In the process of getting an SBA loan for $703,300, Stacks allegedly "made and caused to be made false and fraudulent material oral and written pretense, representations and promises" about Mountain Pure and the Damascus property.
In support of one charge of making a false statement, the indictment says Stacks claimed in his loan application that Mountain Pure's Texas plan had "a contract to sell bottled water to an international third party vendor when, in fact, Stacks knew that was false." Other false statements charged by federal prosecutors include "false 2008 revenues and 2009 revenue projections" for the Texas plant and his subsequent representation to the SBA that "there had been no substantial adverse change in his financial condition" after he applied for the loan.
Stacks was not immediately available for comment on Wednesday. In an interview with Arkansas Business on March 22, Stacks said he had received a target letter from the U.S. Attorney's Office a couple of weeks earlier. At that time, he said Mountain Pure had received "a clean bill of health" from the Internal Revenue Service and the SBA loan was not in arrears.
"Even as we sit here today, we've never been a day late," Stacks said in March.
Mountain Pure and several of its employees — including Stacks' son, Court Stacks — filed a civil lawsuit in March alleging that federal agents violated their constitutional rights when they conducted a raid on the Mountain Pure plant southwest Little Rock in January 2012. That case is pending and tentatively scheduled for trial in federal court next August.
The case has attracted national attention in part because it was featured in an online video reenactment called "Rampant Injustice."