No. 1 Arkansas Turns Solid Red
On Nov. 4, Arkansas voters gave the state’s Republicans the keys to both Capitols, state and federal, electing the first all-GOP congressional delegation since Reconstruction, handing them all seven of the state’s constitutional offices and increasing their strength in the state House and Senate.
Elections have consequences, as someone once said. Those consequences in Arkansas include Republican control of both the executive and legislative branches of state government along with oversight over elections, now that the GOP holds a majority of the state’s constitutional offices and is officially the state’s majority party. As such it controls two of the three seats on each of Arkansas’ 75 county election commissions.
In addition, should Republicans hold onto any two of the offices of governor, attorney general and secretary of state in the 2018 elections — and incumbents usually have the advantage — they’ll have control of legislative redistricting after the 2020 census.
Political analyst Rex Nelson summed up the situation in a post-election column in the Arkansas Democrat-Gazette: “We’ve gone from a one-party Democratic state to a two-party state to a one-party Republican state in just three election cycles. And I don’t think it’s going to change anytime soon.”
In Arkansas, the midterm election was dominated by out-of-state special interest advertising that decried the evils of Obamacare and linked all Democrats to the man in the White House for whom the health care legislation is named.
Ads totaling $41.1 million in cost and 96,000 — not a typo — in number flooded Arkansas media, according to the Center for Public Integrity. Arkansas ranked No. 8 overall in terms of money spent and was No. 4 in terms of money spent per voter: $14. The U.S. Senate race that saw incumbent Democrat Mark Pryor losing to first-term Arkansas congressman Tom Cotton was responsible for most of that, 65,700 ads costing $29.4 million.
In these last few weeks before the inauguration, the centrist Gov. Mike Beebe, who was term-limited from office, is making way for Republican Asa Hutchinson, the man Beebe defeated in 2006. This time, however, it’s Hutchinson who delivered the shellacking, overcoming Democrat Mike Ross with 55.4 percent of the gubernatorial vote compared with Ross’ 41.5 percent.
To the victor belong the spoils, etc., and Hutchinson has begun naming the directors of top state agencies — those new, those he’s asking to stay and those who are being shown the door. With the offices of lieutenant governor, secretary of state, attorney general, auditor, treasurer and land commissioner all also now in the hands of Republicans, the state’s bureaucracy is likely to be transformed in the next four years.
Arkansas’ election results mirrored those of the nation and, in particular, the South, which went a deep red in the midterm. The GOP now dominates every legislative body in the South except for Kentucky’s House of Delegates.
The Arkansas House will have 64 Republicans and 36 Democrats when the 90th General Assembly meets Jan. 12, while the state Senate will have 23 Republicans and 11 Democrats. The 35th seat is that of state Sen. President Pro Tempore Michael Lamoureux of Russellville, who resigned after Gov.-elect Hutchinson chose him as his transition director and chief of staff. But that position also appears headed for Republican control: Three Republicans have filed to run but no Democrats.
The Republican rout threatens Arkansas’ widely heralded “private option” health insurance program. Many legislative candidates campaigned promising to fight funding for the program, the state’s Medicaid expansion that is its private enterprise-friendly method of implementing Obamacare.
Appropriations — such as funding for the private option — require a “supermajority,” or three-fourths, vote for approval, making survival of the Arkansas program even more tenuous.
However, signs of Republican softening on the private option were apparent earlier this month at a panel discussion in Rogers at which legislators appeared. “If the private option doesn’t pass again, it’s going to kill Asa Hutchinson’s budget,” Jana Della Rosa, a Republican elected to the state House last month, said, according to the Democrat-Gazette reporting on the meeting. “There’s such a huge hole that suddenly appears. I don’t think there’s really any interest in doing that.”
Also appearing at that meeting was state Sen. Jon Woods, a Springdale Republican. “When people run for office, they’re new,” Woods said. “They say, ‘Let’s cut taxes.’ They say all these things, but then once you get in, you truly understand how the government’s role is in society.”
No. 2 Obamacare Re-energizes Hospitals
Going into 2014, Arkansas hospital executives were unsure what the Affordable Care Act would mean for their business. Beginning Jan. 1, the centerpiece of the legislation known as Obamacare required individuals to have health insurance and offered assistance for those who couldn’t afford it on their own.
“We’re in so many uncharted waters right now,” Gary Bebow, CEO of White River Health System in Batesville, told Arkansas Business in May 2013.
But the impact of Obamacare turned out to be better than the hospitals expected.
Thanks to the “private option,” Arkansas’ innovative program that uses federal Medicaid expansion dollars to buy insurance for low-income workers, about 200,000 Arkansans were newly insured in 2014.
The number of uninsured patients admitted to hospitals in Arkansas dropped by nearly half in the first six months of 2014 when compared with 2013, according to a survey released in November by the Arkansas Hospital Association and the Arkansas Chapter of the Healthcare Financial Management Association. The study also found that hospitals’ losses related to uninsured patients improved by 56.4 percent (to a loss of $53.4 million) during the first half of the year.
Hospitals trimmed their own expenses and thought merging was a way to save on health care expenses.
In April, Catholic Health Initiatives of Englewood, Colorado, and its affiliate, CHI St. Vincent Health System in Little Rock, completed their purchase of Mercy Hot Springs’ hospital and physician clinic. The terms of the purchase weren’t disclosed.
In December, White County Medical Center of Searcy said it would buy the 133-bed Harris Hospital in Newport and related outpatient services from Community Health Systems Inc. of Franklin, Tennessee.
In July, Baptist Health of Little Rock broke ground on a 216,000-SF hospital in Conway. The campus of Baptist Health Medical Center-Conway will sit on 37 acres and is expected to open in 2016 at a cost of $130 million.
But not all news in 2014 was good for hospitals.
In August, after struggling for years and failing to find a buyer, Crittenden Regional Hospital of West Memphis announced that it would close its doors by Sept. 7.
“Despite our best efforts, the combination of challenges we’re facing — a changing health care industry, a recovering economy and one of the toughest reimbursement climates in the nation — continues to place mounting financial pressures upon our organization,” the hospital’s CEO, Gene Cashman, said in a news release. Only a few weeks after closing, Crittenden Regional filed for Chapter 7 bankruptcy protection and listed $33.3 million in debts and $27.75 million in assets.
No. 3 Tyson Buys Hillshire
Tyson Foods Inc. of Springdale was originally willing to pay nearly $7 billion to purchase Hillshire Brands Co. of Chicago.
Tyson ended up spending $8.55 billion after it had to outbid a competitor for Hillshire. Months after the July acquisition, which was finalized in August, Tyson doesn’t have any buyer’s remorse.
Company officials said they expect about $500 million in synergy savings by 2017. Tyson reported net income of $864 million for fiscal 2014 and, thanks to the Hillshire acquisition, predicts 12 percent growth in 2015.
Tyson CFO Dennis Leatherby called the acquisition a “one-plus-one-equals-three opportunity.”
Tyson had been trying to expand its prepared foods division, and Hillshire was its fourth acquisition in 18 months following the 2013 purchases of Circle Foods LLC and Don Julio Foods and the January 2014 purchase of Bosco’s Pizza Co. The acquisition of Hillshire, which became a wholly owned subsidiary, was more than double Tyson’s previous largest purchase of $3.2 billion for IBP Inc. of Dakota Dunes, South Dakota, in 2001.
Hillshire had annual revenue of $4 billion but, more importantly, had top brands in many important categories for Tyson through its Jimmy Dean sausage and Ballpark hot dogs. After the merger, Tyson stood with the No. 1 brand in nine categories and ranked behind only Nestle as the largest frozen food company in the world with $3.7 billion in sales.
Tyson announced its intention to buy Hillshire with a $6.8 billion bid on May 29, two days after Pilgrim’s Pride offered $5.58 billion. Pilgrim’s Pride raised its offer, forcing Tyson to go to $8.55 billion.
Tyson CEO Donnie Smith said the company had been interested in Hillshire for more than a year before announcing its bid.
The merger was completed after both companies reached a settlement with the U.S. Department of Justice over antitrust concerns. In July, a coalition of 82 farm, consumer and community groups had urged the Justice Department to extend its review of the deal.
As part of the settlement, Tyson agreed to sell its Heinhold Hog Markets subsidiary, which produced $270 million in revenue in 2013, to alleviate concerns about the merged company’s potential domination of the hog market.
Tyson also had to pay Pinnacle Foods $163 million to terminate its deal to buy Hillshire Brands.
“We operate in a competitive and complex marketplace that demands bold steps to remain an industry leader,” Smith said in a statement at the time of the purchase. “I am confident that together Tyson Foods and Hillshire Brands have the right products and the right people to create years of enhanced shareholder value and ensure more choices for our customers and consumers.”
No. 4 Banks Go on Buying Spree
Big transactions by public companies highlighted merger and acquisition activity in the Arkansas banking community during 2014.
Leading the way was Bank of the Ozarks Inc. of Little Rock announcing its largest acquisition ever in January: the purchase of $1.2 billion asset Summit Bancorp Inc. of Arkadelphia. The $216 million deal, which closed in May, marked its first in-state transaction since buying River Valley Bank of Russellville in 2003.
The acquisition extended Bank of the Ozarks into new markets in Malvern, Arkadelphia, Hope and Magnolia and expanded its presence in the Garland, Saline, Pulaski and Faulkner county markets.
The size of the Summit transaction was topped with the August announcement of a purchase agreement for $1.6 billion-asset Intervest Bancshares Corp. The $228.5 million deal, expected to close in the first quarter of 2015, will add six Florida locations in the Clearwater market.
The acquisition will push Bank of the Ozarks to about $7.8 billion in total assets, second only to Arvest Bank Group Inc. of Bentonville among bank holding companies based in Arkansas.
Simmons First National Corp. of Pine Bluff announced two large out-of-state acquisitions this year: a $243.4 million deal to buy $1.9 billion-asset Community First Bancshares Inc. of Union City, Tennessee, and a $206.9 million deal to buy $1.1 billion-asset Liberty Bancshares Inc. of Springfield, Missouri. Both transactions were pending at press time.
The acquisitions will mark the company’s entry in Tennessee and Missouri. Simmons added to its Arkansas holdings with the purchase of $422 million-asset Delta Trust & Banking Corp. of Little Rock in August for $66 million.
In June, Harrison’s First Federal Bancshares of Arkansas Inc. became Bear State Financial Inc., days ahead of its $124 million acquisition of First National Security Co. in Hot Springs.
The deal tripled Bear State’s total assets to more than $1.4 billion.
The $986 million-asset First National Security was the parent company of First National Bank of Hot Springs and Heritage Bank of Jonesboro, which Bear State continues to operate independently of its original charter, First Federal Bank.
The only common market is Little Rock, where First National Bank and First Federal each have one branch.
First Federal’s network of 12 full-service branches stretches across north Arkansas from Mountain Home to Fayetteville.
First National operates 19 full-service branches across southwest Arkansas along with two in Oklahoma. The Heritage Bank network numbers seven in two northeast Arkansas counties: Craighead and Mississippi.
Home BancShares Inc. of Conway completed two Florida transactions this year, buying $307 million-asset Florida Traditions Bank of Dade City in a $39.5 million stock swap deal in July and $179 million-asset Broward Financial Holdings Inc. of Fort Lauderdale in a $33.1 million deal in October.
The selloff of surplus branches acquired in last year’s Metropolitan National Bank transaction brought new players this year to central Arkansas markets, Relyance Bank of Pine Bluff and Malvern National Bank; and to northwest Arkansas, First National Bank of Paragould.
No. 5 Turner Grain Goes Bankrupt
The bankruptcy of Turner Grain Merchandising Inc. of Brinkley is expected to prompt new legislation in an attempt to prevent other companies from experiencing a similar collapse.
In October, Turner Grain filed Chapter 11 bankruptcy, listing $24.8 million in debts and $13.8 million in assets. Some of the larger claims include Southern Rice & Cotton LLC of Harrisburg, $3.228 million; Zero Grade Farms of Blytheville, $2.293 million; and Kennedy Rice Dryers LLC of Mer Rouge, Louisiana, $2.285 million.
Revelations of more debts may be coming. Earlier this month, Turner’s receiver, attorney Kevin Keech of North Little Rock, said in a court filing that he plans to file Chapter 11 bankruptcy protection for several of Turner’s related companies. Keech said the companies — with names that include Agri-Petroleum Sales LLC, Brinkley Truck Brokerage LLC and Ivory Rice LLC — are so intertwined that they shared money and other assets with Turner Grain.
Trouble for Turner Grain began in August when questions surfaced about its handling of grain and its finances. Incorporated in 2002, Turner Grain acted as a middleman between the farmer and the client who wanted to buy the grain. It would buy the farmer’s supply and hold it until a customer wanted to purchase it. But holding grain can be risky because of swings in commodity prices. A source told Arkansas Business that Turner Grain came out on the losing end when it hedged its bets against volatility in the market. The source said that when Turner tried to make up for losses, the losses only increased. Turner Grain President Dale Bartlett and Vice President Jason Coleman never responded to requests for comment.
As the farmers’ concerns increased, Arkansas House Speaker Davy Carter, R-Cabot, sent a letter to state Rep. Matthew Shepherd, R-El Dorado, chairman of the House Agriculture, Forestry & Economic Development Committee, seeking help for state farmers who might be left with breached commodities contracts in connection with Turner Grain.
Days after the letter was sent, on Aug. 20, a group of farmers sued Turner Grain for fraud, saying they hadn’t been paid for grain they sold to Turner. The eight farmers, who have fields in Monroe, Phillips and Lee counties, said in a lawsuit filed in Lee County Circuit Court that they had commodities contracts to sell grain to Turner. But they said Turner either hadn’t paid them for their products or that checks they received from the company didn’t clear.
More lawsuits against Turner followed until the company filed for Chapter 11.
Arkansas Secretary of Agriculture Butch Calhoun told Arkansas Business in October that he was working on legislation that he hoped would prevent another Turner Grain. “You could be out here buying millions of dollars worth of grain and reselling them,” he said. “And nobody’s checking your books and nobody’s doing anything.”
Calhoun is retiring at the end of 2014, but the draft of the legislation will move forward, according to the Arkansas Agriculture Department. The issue is likely to be taken up when the General Assembly convenes in January.
No. 6 White-Collar Fraud Makes News — Again
2014 was a year of reckoning and revelation regarding several long-running, high-profile fraud cases in Arkansas.
Brandon Barber was sentenced on Oct. 28 to 65 months in federal prison and ordered to pay restitution for loan fraud involving lenders in connection with his real estate development ventures in northwest Arkansas.
How much the restitution should be remains in dispute. The U.S. Attorney’s Office puts the number at $16.2 million. Barber pegs the figure at $550,000 and claims the higher figure wrongly includes amounts tied to civil judgments against him by Legacy National Bank of Springdale ($8.5 million) and Enterprise Bank & Trust of Clayton, Missouri ($7.6 million).
Barber pleaded guilty to conspiracy to commit bankruptcy fraud, conspiracy to commit bank fraud and money laundering.
James Van Doren, a former friend and Barber investor, was sentenced on Nov. 3 to 15 months in federal prison after a failed attempt to withdraw his guilty plea.
U.S. District Judge P.K. Holmes III enforced his plea agreement to one count of money laundering as part of a conspiracy to defraud creditors of Barber. Van Doren said he was innocent of the charge and wrongly agreed to plead guilty.
He asked to withdraw his guilty plea in June, days after Holmes took the unusual step of ordering the retrial of Vaughn Knight on five counts of money laundering and one count each of conspiracy to commit bankruptcy fraud and bankruptcy fraud. The judge also acquitted Knight of making a false statement. In November 2013, a jury had found Knight guilty on all eight counts.
Jeff Whorton, another Barber cohort, was sentenced on Nov. 5 to 14 months of home detention after pleading guilty to one count each of conspiracy to commit bank fraud and money laundering.
Brandon Rains, another Barber associate, was fined $5,000 in federal court on Nov. 6 but given no prison time after pleading guilty to making a false statement.
In October, a federal grand jury in Little Rock found John Stacks, owner of Mountain Pure water bottling company, guilty of seven counts related to a Small Business Administration loan. But U.S. District Judge J. Leon Holmes took the unusual step of setting aside the jury’s verdict, expressing concern that “a serious miscarriage of justice may have occurred.”
On Dec. 2, Holmes ordered a new trial on three counts of wire fraud associated with three loan installments received from the SBA, one count of making a false and fraudulent claim and one count of making a false statement. He acquitted Stacks outright on two counts of making false statements.
Former Mount Ida insurance executive Steve Standridge was sentenced on Dec. 5 to five years in federal prison and ordered to pay $7.1 million in restitution in connection with loan fraud involving banks, insurance companies and individuals. Standridge pleaded guilty in U.S. District Court in Hot Springs to two of 35 felony counts as part of a plea agreement. Standridge is scheduled to report to prison on Jan. 14.
Federal investigations continue into two cases that have not resulted in criminal charges:
- Details of alleged loan fraud arose concerning Dennis Smiley, the former Arvest Bank executive who overpledged $552,000 worth of collateral to a long line of lenders in debts totaling an estimated $4.5 million.
- Questions surrounding the financial dealings of fallen sports memorabilia dealer-photo archive buyer John Rogers took wing thanks to an FBI raid and lawsuits by banks, investors and others.
No. 7 Trucking Turns the Corner
You could forgive USA Truck officials if they have been in a celebratory mood this year.
The beleaguered Van Buren company has posted five consecutive annual losses, but things are looking a little rosier this year. In the second quarter, USA Truck reported income of $700,000, which may not sound like much, but it was the first positive quarter since 2011.
Then, in the third quarter, USA Truck made it two in a row, reporting income of $1.85 million, the best quarter the company has had in eight years. For the year, USA Truck is ahead $1.85 million — compared with being $4.4 million in the hole for the same three quarters a year ago — so snapping its five-year decline is a possibility.
“It was another strong quarter for USA Truck as we made further progress with the turnaround plan we implemented last year,” USA Truck CEO John Simone said in a conference call. “We’re especially proud of the fact that it was our eighth consecutive quarter of improved financial results.”
Along the way, USA Truck fended off a takeover attempt by Knight Transportation of Phoenix and added three members to its board of directors, including two representatives of United Shareholders for the Benefit of USAK, which owns about 28 percent of USA Truck’s shares.
Simone said better efficiency and concentration on better producing regions have helped the turnaround.
Another trucking company that has put its struggles in the rearview mirror is PAM Transport Services of Tontitown. PAM lost nearly $19 million in 2008 but has posted positive years recently.
PAM reported almost as much income ($5.05 million) in the third quarter of this year as it made in all of 2013 ($5.91 million). For the year, PAM is up more than $11 million and has seen its share price go from $20.65 at the start of the year to just under $50 this month.
“I couldn’t be happier or more excited about what’s going on here,” said PAM CEO Dan Cushman.
It’s not just the smaller trucking companies that have seen business pick up with the improved economy. Arkansas Best of Fort Smith changed its name to ArcBest in April, announced it would build a $30 million headquarters at Chaffee Crossing and then reported a string of positive quarters.
ArcBest’s third-quarter income of $19.6 million surpassed its entire year of 2013. The company also continues to benefit from a labor agreement reached with the Teamsters, and it moved up 38 spots to No. 889 in the Fortune 1000.
J.B. Hunt Transport Services of Lowell, the largest trucker operating in the state, reported income of $264.5 million for the first three quarters of 2014, up from $250.5 million for the same period of 2013.
No. 8 Wal-Mart Shakes Up Top Levels
When Doug McMillon, a product of Jonesboro and ultimate corporate insider, succeeded Mike Duke to become the fifth CEO of Wal-Mart Stores Inc. at the start of the fiscal year on Feb. 1, some industry observers expected more of the same.
“He’s a Wal-Mart guy from Arkansas, so I would be shocked to see dramatic changes in how the company is run,” USA Today quoted Faye Landes, an analyst at Cowen & Co., when McMillon’s coming ascension was announced in November 2013. “He’s not a person who is going to shake things up.”
It’s too soon to say whether the way the company is run is being changed dramatically by the man who previously ran Wal-Mart International, but a whole lotta shakin’ has been going on, especially in the Wal-Mart U.S. division, which recently managed its first tiny sales increase in almost two years.
In July, McMillon jettisoned Bill Simon, CEO of Wal-Mart U.S. since 2010, even as he praised him as the innovator behind the $4 generic prescription and smaller store formats. Simon, who had been considered a possible successor to Duke less than a year earlier, was replaced by Greg Foran, who joined Wal-Mart three years ago after a career in retail in Australia.
Foran, in turn, showed Duncan Mac Naughton the door in November. Mac Naughton had been chief merchandising officer, and he has not been replaced by Foran, who said he wanted to get closer to that part of the operation himself.
Then, as the holiday season reached its zenith, Foran named Judith McKenna to replace Gisel Ruiz as chief operating officer of the U.S. division. Ruiz, No. 28 on the list of most powerful women in business published by Fortune magazine in September, was not escorted out of the company, but she was transferred to the division that runs human resources internationally.
Attracting less attention stateside was the mass dismissal in November of approximately 30 executives in Wal-Mart’s Chinese operation and the retailer’s decision to close about 30 stores in Japan.
No. 9 Companies See Value in Spinoffs
There was a touch of spinoff fever in Arkansas in 2014 as several of the publicly traded companies based in the state continued or considered spinoffs.
One such spinoff ticked off its first full fiscal year, another Fortune 500 company announced plans for its own and an activist investor encouraged another.
The year opened with Murphy USA Inc., the gas station spinoff of Murphy Oil Corp. of El Dorado, continuing into its first full year as an independent company. In its third-quarter report in November, Murphy USA reported income from continuing operations of $67.2 million, or $1.36 per diluted share, on revenue of $4.68 billion.
That income was up from $36 million, or 77 cents per diluted share, in the same quarter last year, which was its first stand-alone quarter.
“Solid execution across the board in a favorable fuel margin environment paved the way for exceptional earnings in the third quarter,” Andrew Clyde, Murphy USA president and CEO, said in a news release.
In July, Windstream Holdings Corp. of Little Rock announced innovative plans to spin off certain assets, namely its fiber and copper networks, into a publicly traded real estate investment trust. The company said the move would cut its debt by $3.2 billion but also lower its dividend by 30 percent.
Windstream said it hoped to complete the spinoff by the first half of 2015 to allow the company “to accelerate network investments, provide enhanced services to customers and maximize shareholder value.”
Tony Thomas, who was selected to lead the REIT, took over as CEO of Windstream Dec. 12, after the surprise departure of Jeffery Gardner. Francis X. “Skip” Frantz, who will serve as the chairman of the REIT’s board, will lead the selection process for a new president and CEO of the spinoff.
Talk of REITs also expanded to Dillard’s Inc. in November when Marcato Capital Management LP of San Francisco, which owns 4.9 percent of Dillard’s Inc. stock, said that it wanted the company to create one of its own.
One of Marcato’s managing partners said in a news release that the REIT would “unlock tremendous value” for Dillard’s and would increase the combined value of the companies to $193 a share, or a 75 percent increase. Dillard’s stock price’s all-time high was $123.80 on Aug. 8.
Not everyone was convinced about the value of a Dillard’s REIT.
Kenneth Leonard, principal of Leonard Associates of Chicago, which specializes in retailing and shopping center real estate, referred to the potential move as a “financial sleight of hand.”
“It doesn’t do anything ... except maybe fool the stockholders into thinking that there’s more collateral value to that stock and to that company than there is in the real world,” he told Arkansas Business.
No. 10 Public Officials Go Astray — Again
2014 brought another installment of “Badly Behaving Public Servants” as the state’s lieutenant governor, a former Arkansas treasurer, a circuit court judge and a former deputy director of
the Arkansas Department of Human Services became caught up in allegations, and findings, of misfeasance and malfeasance.
The year had barely begun before Lt. Gov. Mark Darr — after much indecision — announced Jan. 1 that he would resign effective Feb. 1. Calls for his resignation began in late 2013 after the Springdale Republican agreed to pay an $11,000 fine to the Arkansas Ethics Commission for violations of state ethics laws and regulations.
The commission found probable cause that, among other violations, Darr had made personal use of more than $31,000 of campaign funds and had improperly charged expenses to the state. Darr apologized for the mistakes but denied he’d had any “malicious intent.”
After Darr agreed to the fine, calls were made for him to resign with House Republican leader Bruce Westerman of Hot Springs calling Darr’s impeachment “inevitable” unless he left office.
Former Arkansas Treasurer Martha Shoffner, meanwhile, was found guilty in March by a federal jury of 14 counts of extortion and bribery stemming from a scheme in which she directed state business to bond broker Steele Stephens in exchange for $36,000 in cash.
In November, after U.S. District Judge Leon Holmes refused to accept her guilty plea, federal prosecutors dropped mail fraud charges against Shoffner, a Democrat, for using campaign money to pay personal credit card debts. Her sentencing on the extortion and bribery charges awaits a presentence report.
In the spring, the state’s Judicial Discipline & Disability Commission began an investigation of Circuit Judge Michael Maggio of Conway after the blog Blue Hog Report reported that someone going by the name “geauxjudge” posted online comments about sex, bestiality, race and an adoption case involving actress Charlize Theron.
Just a few days later, Maggio acknowledged making the comments and withdrew from his race for the Arkansas Court of Appeals.
Soon after, the commission went on to launch an investigation of Maggio over thousands of dollars in contributions made by Michael Morton of Fort Smith, owner of a number of nursing homes in Arkansas, to political action committees that gave money to Maggio’s campaign for the Court of Appeals. Morton gave Maggio’s PACs thousands of dollars the same day that the judge heard a plea from one of Morton’s nursing homes asking him to reduce a $5.2 million judgment in a lawsuit over the death of one of its patients. Three days later, Maggio cut the jury’s award to $1 million.
The FBI also began investigating the judge over the PAC donations, an investigation that continues.
In September, the state Supreme Court ordered that Maggio be immediately removed from his post.
And in October, Steven B. Jones, 49, a former deputy director of the Arkansas Department of Human Services, pleaded guilty to conspiracy and bribery concerning programs receiving federal funds.
Jones, of Marion, was accused of providing official assistance in exchange for bribes from the owner (identified by DHS as Ted Suhl) of two mental health care companies. Jones is scheduled for sentencing on April 2 before U.S. District Judge Billy Roy Wilson.