Steve Parks
Pleading guilty to a coal tax-credit scheme and entering federal prison last year didn’t settle the legal issues surrounding Little Rock businessman Stephen K. Parks.
Earlier this month, federal prosecutors in Little Rock filed a civil forfeiture lawsuit so the government could keep jewelry and almost $81,000 seized on Dec. 4, 2013, from seven different bank accounts that they said were tied to the coal tax scheme.
This was in addition to the $6.2 million in cash and the five vehicles that federal agents seized in February 2013 from Parks and two of his companies, King Coal LLC and Ecotec Coal LLC.
The civil case alleges that the purchasers of the tax credits pumped $22.5 million into Parks’ companies based on misrepresentations from Parks and others. So far, Parks is the only person to be charged.
Meanwhile, in U.S. Tax Court in Washington, Ecotec Coal is challenging Internal Revenue Service rulings that disallowed $147 million worth of tax credits sold for tax years 2008-11.
If the IRS rulings stand, they could cause havoc for the approximately 200 people who bought tax credits through Ecotec.
Those who claimed the credits on their taxes could possibly face additional income tax, penalties and interest, said attorney Christopher Brockett of Ozark, who is representing Ecotec. “You’re talking 200 people out there that have to go amend their tax returns,” he said.
A trial is set for June 2017, and Parks is expected to testify, Brockett said.
Brockett also said he was disappointed after reading the facts in the new forfeiture case because Ecotec and King Coal have never been implicated in any type of fraud. It was a third company, Global Coal, that Parks, as part of his plea agreement on a federal charge of wire fraud, admitted improperly sold tax credits.
In fact, Brockett said, 2013 was projected to be spectacular for Ecotec and King Coal until federal agents raided Parks’ home and office and seized assets in February of that year, effectively killing both businesses.
As part of the plea deal in May 2015, the U.S. Attorney’s Office for the Eastern District of Arkansas said it wouldn’t seek additional criminal charges against Parks for the sale of tax credits by Ecotec Coal. But Parks, 62, admitted that he sold bogus tax credits for Global Coal, which never refined or sold any coal, as was required to qualify for the tax credits.
He began serving his 27-month sentence three days after Christmas at the federal correctional institution at Texarkana, Texas. He has a projected release date in December 2017.
Parks was ordered to pay $845,000 in restitution to the IRS, which was the ultimate victim of the Global Coal tax credit scheme. But Parks also agreed to forfeit $7.5 million, an office building in Little Rock, jewelry and a 2008 Bentley, suggesting that there was more money involved than the restitution amount.
(Also see: Stephen Parks’ Failed Attempt to Become a Coal King)
New Filing
The civil forfeiture lawsuit filed on March 2 and filings in U.S. Tax Court provide a clearer picture of what was going on in Parks’ companies.
The civil forfeiture suit accused Parks and, for the first time, his Missouri accountant “and others” of using misrepresentations to entice investors to give them $22.5 million in return for tax credits sold by Ecotec Coal.
CPA Douglas A. Richardson of Lebanon, Missouri, began working for Parks in 2010, has not been charged with any crime and vehemently disputes the narrative in the complaint filed by Assistant U.S. Attorneys Cameron C. McCree and Stephanie Mazzanti. (He is not J. Douglas Richardson, a CPA with Frost PLLC in Little Rock.)
“Mr. Richardson had nothing to do with” Global Coal, his attorney, Keith M. Kannett of Fort Smith, told Arkansas Business. Richardson was the CPA for King Coal “for a time,” Kannett said.
The government seized nearly $51,000 from Richardson’s bank account on Dec. 4, 2013, and said that money came from Ecotec Coal tax credit purchasers.
Kannett said he’s working with the federal prosecutors and will determine if Richardson will fight the lawsuit. “I think there are grounds to contest it,” he said.
Chris Givens, an assistant U.S. attorney and spokesman for the office, said he couldn’t comment on the pending civil case and couldn’t say whether there are ongoing investigations.
The forfeiture complaint, assigned to U.S. District Judge Leon Holmes, asked that almost $81,000 seized be forfeited to the federal government. Four of the accounts had Richardson named as an owner. Two were King Coal accounts opened by Parks and an employee named Laney Briggs, according to the government’s lawsuit.
Briggs referred questions to his attorney, Patrick Benca of Little Rock, who was one of Parks’ criminal defense attorneys. Benca told Arkansas Business that Briggs didn’t do anything wrong and pointed out that he hasn’t been charged with any crime.
“I never felt that he was the subject matter of any investigation while I represented Mr. Parks,” Benca said.
But prosecutors say Briggs played a role in setting up the accounts that are the subject of the new forfeiture complaint.
On Feb. 1, 2013, the feds seized $6.2 million in cash and five vehicles from Parks, King Coal and Ecotec. Three days later, Briggs formed Terra Dura.
Benca said Terra Dura and King Coal shared office space and some resources. “But that was it,” he said.
The federal government, however, sees it differently. The civil forfeiture case linked Parks to the placement of $5,700 in Terra Dura’s bank account, which is “subject to forfeiture as proceeds of wire fraud,” the lawsuit said.
The government also wants to keep 10 pieces of jewelry surrendered by Parks and his wife, estate sale operator Anna Harper Parks.
“At the time Parks pleaded guilty to a wire fraud offense, he executed an agreement with the United States to surrender all jewelry purchased with the fraud proceeds,” the suit said.
No dollar value is assigned to the jewelry, individually or as a group, but it included a gold Tiffany & Co. bracelet; a man’s Rolex watch; a French-made gold and diamond brooch set with 88 small diamonds; and a gold and diamond Swiss-made Cartier watch, also set with an estimated 88 diamonds.
Benca said that Parks believed what he was doing was legal.
“But I think he also recognized that people may not see it from his point of view,” Benca said. “But I truly believe that he felt what he was doing was aboveboard.”
Parks also dreamed big.
“I had a vision and I had a dream to do something that I felt like was really special and really good,” Parks told Judge Holmes on Oct. 7, the day he was sentenced. “I made a bad decision along the way, and I’m ready to pay for that.”
A Coal Company Timeline
• Dec. 22, 2005
Geotec Inc. of Delray Beach, Florida, creates Ecotec Coal LLC to produce refined coal in several locations around the country.
• Dec. 27, 2006
Ecotec Coal signs a contract with Universal Coal to buy 20 million tons of coal. Bradley T. Ray, the CEO of Geotec, owns and operates Universal Coal. The transaction allows Ecotec to generate refined coal tax credits.
• 2007
Ray and others from Ecotec approach Stephen Parks of Little Rock and ask him to become involved in Ecotec. Parks agrees.
• Nov. 30, 2007
Parks establishes King Coal LLC to develop a deep mine in Scranton (Logan County).
• Early 2008
Parks, a shareholder in Geotec, becomes president of Ecotec Coal.
• During 2008
Parks continues to develop the mine in Scranton and hopes to develop a second, smaller mine in Logan County. Both sites would be used for Ecotec to refine coal.
• Early 2009
Parks takes on more manager duties with Ecotec Coal.
• May or June 2009
Parks exchanges his 4 million shares of Geotec for the ownership of Ecotec.
• June 1, 2010
Parks forms Global Coal LLC.
• Oct. 3, 2012
IRS employees and other government agents raid the Ecotec Coal and King Coal offices.
• Feb. 1, 2013
The federal government seizes approximately $6.2 million in cash and five vehicles from Parks, King Coal and Ecotec Coal. The seizures essentially shut down the two businesses.
• August 2013
The IRS rules Ecotec can’t use the refined coal tax credits and other administrative expense deductions. Ecotec challenges the ruling in U.S. Tax Court in Washington.
• March 13, 2015
Parks files a lawsuit in U.S. District Court in Little Rock against the federal agents who searched his home and business in October 2012. He argues his Fourth and Fifth Amendment rights were violated.
• May 27, 2015
Parks pleads guilty to wire fraud for a coal tax scheme related to Global Coal LLC.
• Oct. 7, 2015
Parks is sentenced to 27 months in federal prison and ordered to pay $845,000 restitution to the IRS.
• Oct. 15, 2015
Parks dismisses his lawsuit against the federal agents who searched his home and business.
• March 2, 2016
The U.S. government files a civil forfeiture proceeding to keep jewelry and almost $81,000 seized from seven different bank accounts that they say were tied to the coal tax scheme.
Source: Court filings in U.S. Tax Court and U.S. District Court
Sign up for Daily E-news
