Michael McAfee thinks he’s starting the new year with a bout of sinusitis that will require a trip to the doctor for relief. Banks and other creditors of North Little Rock businessman John Rogers are looking to McAfee to help alleviate financial headaches that began throbbing a year ago — and in some cases even longer.
The Little Rock business consultant stepped into the role of court-appointed receiver on Jan. 5 to oversee the liquidation of photo archives and sports memorabilia assets amassed by Rogers.
“There are people talking about coming in and doing due diligence and possibly buying everything,” McAfee said. “This is the type of workout where we’re going to kiss a lot of frogs. I don’t know if any of them will be a prince.”
At last count, creditor claims against the millions of photos and more collected by Sports Cards Plus Inc., Planet Giant LLC, Digital Stock Planet LLC and Photo Archive Partners LLC have topped $19.1 million.
Rogers has touted the value of the combined assets at $300 million based on an appraisal by Penelope Dixon & Associates of New York. But that’s a hard number to grasp considering the business hasn’t cash flowed during the last five years, according to a forensic audit. The examination of operations back to 2011 was prompted by the IRS, which last month filed a 2011 tax lien of $92,730 against Rogers and his ex-wife, Angelica. The corporate financial records are in such a state that an assessment of operations prior to 2011 was deemed of questionable value for now.
The forensic audit reveals the operating norm was expenses exceeding revenue, an imbalance kept from tipping by investors and debt until last year.
The precarious balancing act came crashing down on Jan. 28 when federal agents executed search warrants at the North Little Rock office and home of Rogers as part of a criminal investigation.
Counterfeit sports memorabilia is cited as a focal point of the FBI probe, and sources indicate that supporting evidence was seized from Rogers.
The raid resulted in added scrutiny of Rogers by his corporate lenders. Officials at First Arkansas Bank & Trust of Jacksonville and Bank of Little Rock uncovered what they be-lieve to be evidence that Rogers committed loan fraud.
Last month, First Arkansas obtained a $14.8 million default judgment against Rogers in connection with loans that include possible fraud.
Bank of Little Rock made a fraud claim against Rogers in connection with a December 2013 loan of $900,000. Rogers personally guaranteed the loan, which is in default with an outstanding balance of $590,833.
The loan was supposed to buy business equipment for Sports Cards Plus Inc., which did business as Rogers Photo Archive, but wasn’t used for that purpose. Frederick “Tripp” Wetzel III, attorney for Bank of Little Rock, declined to say what happened to the money.
More details are expected to emerge in the coming weeks on loans that Rogers initiated with the banks that allegedly financed phantom or inflated transactions. Rogers has not been charged with any crime.
“I think it’s important to tell there are problems here, but we’re moving forward in a new and positive way,” McAfee said.
Rogers was removed from operational control of the businesses after the FBI raid, but he remains as a personal guarantor on millions of dollars of debt.
Rogers relinquished his ownership of the ventures along with his grand Park Hill manor to his ex-wife, Angelica. That transfer occurred as part of the property settlement in their speedy divorce case. She filed for divorce in August and the petition was granted in October.
McAfee and a skeleton crew have busied themselves taking inventory of assets. Last March, the North Little Rock enterprise employed about 100. That number was sliced to about 20 when the extent of its financial problems became known.
During the past six weeks, that staff was further reduced to six, including part-timers. McAfee said more help might be hired to finish scanning photo archives.
“If there’s an opportunity to finish contracts, then we will add a little to the head count,” he said.
McAfee is working with a string of lawyers to sort through conflicting claims of ownership or a collateral interest in assets under his supervision.
Among the disputed assets is the Conlon Collection, an estimated 8,400 glass plate negatives created by Charles Conlon (1868-1945), who was considered one of the greatest baseball photographers.
So far, ownership claims of the Conlon Collection total 140 percent.
Mark Roberts of San Francisco, a former baseball memorabilia investor with Rogers, claims 25 percent ownership purchased for $1.1 million in October 2010.
In a February 2014 lawsuit in San Francisco County Superior Court, Roberts accuses Rogers of fraud in connection with the purchase of historic baseball photographs totaling nearly $2.6 million. His complaint alleges that Rogers sold him scores of counterfeit items.
Rogers countersued Roberts in Pulaski County Circuit Court last month claiming he was defrauded into entering a settlement agreement over the dispute.
George Demos of Kenosha, Wisconsin, claims a 50 percent interest in the Conlon Collection. Details about his connection to the collection await future disclosure.
Doug Allen, Mark Theotikos, Bill Fulton and Dale Huizenga have possession of some of the Conlon plates. The ownership of Allen, Theotikos and Fulton is tied to Legendary Auctions LLC, which has a 40 percent stake claimed through a March 2011 purchase agreement.
Allen and Theotikos both pleaded guilty last year to fraud charges related to the sale of memorabilia, the outgrowth of a national investigation into criminal activity in the business. Allen also is identified as tipping off Rogers about the FBI raid.
Huizenga is linked with a 25 percent ownership claim connected with a December 2012 sales agreement. The $500,000 transaction also includes a 50 percent interest in a 1956 Mickey Mantle-signed, game-used New York Yankees home jersey.
The Conlon Collection is just one asset that McAfee is charged with preserving until conflicting claims are resolved. Others include:
- The George Burke & George Brace Collection, the subject of a July 2014 lawsuit filed in Pulaski County Circuit Court by Mary Brace of Chic-ago. The complaint alleges Rogers owes $765,000 on the purchase contract of the epic collection of an estimated 250,000 original negatives of baseball players.
- The Hoffman Collection, the subject of a November 2014 lawsuit in Pulaski County Circuit Court filed by David Hoffman of Santa Cruz, California. Hoffman is seeking $80,000 owed on the $325,000 sale of his namesake video and photograph archive in May 2012.
- The Arthur Rickerby Col-lection, photos and negatives of President John F. Kennedy taken by Arthur Rickerby claimed as collateral securing the unpaid balance of the Hoffman contract. Mark Roberts also holds a security interest in the Rickerby Collection.
- The Fairfax Archive, a collection of photos from the Sydney Morning Herald, The Melbourne Age and New Zealand publications. Fairfax Media Management PTY Ltd. sued Rogers and others to recover its archive alleging breach of contract.
McAfee was ordered to return all materials associated with The Age to Fairfax and to gather all other Fairfax archive material to the Sports Cards Plus facility in North Little Rock and hold these assets separately. Fairfax claims
Rogers was selling archive assets before making digital copies available to Fairfax per the $244,000 purchase contract.
Standing in the wings to resolve conflicting claims is Pulaski County Circuit Judge Chris Piazza. His court will clear up lingering issues over who owns what and who has a security claim on which asset.
His rulings will provide clear title to help McAfee turn assets into cash for the creditors.