John Stacks, as seen in the online video "Rampant Injustice."
John Stacks, owner of Mountain Pure LLC, was convicted Thursday on seven felony counts related to a Small Business Administration loan he took out after his property in Van Buren County was hit by a tornado in May 2008.
A federal court jury deliberated for most of three days before reporting that it was hung on three additional counts of money laundering. Stacks was convicted of three counts of wire fraud, three counts of making false statements and one count of making a false and fraudulent claim.
Another count of making a false statement was dismissed by prosecutors before reaching the jury.
Tim Dudley of Little Rock, Stacks’ defense lawyer, said he was disappointed with the result of the trial, which began Sept. 29 and went to the jury after closing arguments Tuesday morning. When asked whether Stacks would appeal, Dudley said that might not be necessary if U.S. District Judge Leon Holmes grants the motion for a new trial that he intends to file.
Stacks, the former CEO of HomeBank of Arkansas, was indicted last December, nine months after Mountain Pure, his son and several employees filed a civil suit claiming civil rights violations by federal agents who exercised search warrants at the water bottling plant in southwest Little Rock in January 2012.
The charges all related to $526,100 in loans he got from the SBA to replace storm losses under the terms of a federal disaster declaration. Federal prosecutors presented witnesses who said that water-bottling equipment that Stacks listed as lost in the storm were not on the property at Damascus in the first place, and they argued that Stacks misrepresented his financial condition in order to get the loan.
The prosecution was led by Assistant U.S. Attorneys Pat Harris and Angela Jegley.
Stacks took the stand in his own defense on Monday morning, and Dudley introduced printed photos of some of the equipment that appeared to be in a storage barn on the Damascus property.
Stacks said his 37-year-old son, Court Stacks, had found the digital photos on a Mountain Pure computer the previous Friday, five days into the trial. He testified that the photos were made shortly before the tornado, but he couldn’t say exactly when the photos were made.
In testimony that ultimately didn’t persuade the jury, Stacks said he only took the SBA up on its offer of a loan after discovering that his storm-damaged property was under-insured. He denied trying to mislead the SBA.
He acknowledged being frustrated with having to deal with “15 to 25” different people at the SBA, and he said he eventually complained to his U.S. senator and representative, but he didn’t say which ones. He took his complaints public after federal agents from the FBI and SBA raided the plant by producing and posting online a “re-enactment” called “Rampant Injustice.”
According to Stacks’ testimony, he claimed personal net worth of $21 million as of June 2008, just after the storm, and $29 million the following January, when he was finalizing the SBA loan.
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