by Mark Friedman on Monday, Nov. 5, 2018 12:00 am 10 min read
Monte Johnston was a successful Springdale businessman with several lucrative companies, a wife and four daughters, a big house and write-ups in local publications.
Johnston, 48, even came from an impressive family: His father is the former Tyson Foods Inc. CFO Gerald Johnston.
But in the summer of 2015, Monte Johnston’s life started falling apart, personally and professionally.
On Aug. 5 of that year, Johnston was arrested by the Springdale police for possession of marijuana. One day later, his then-wife, Brooke, raised, in an order of protection, the first in a series of public allegations of domestic abuse.
Six months later, the Arkansas attorney general’s office filed a consumer protection lawsuit against Johnston’s Automatic Auto Finance Inc. of Springdale and related companies.
The civil suit accuses the companies of predatory practices, alleging that they sold used cars at high prices to customers who were likely to default. When customers did default, their cars would be repossessed, leaving consumers still owing money, and the vehicle would be resold to other consumers “to repeat this same scheme all over again,” the lawsuit said.
Johnston’s legal problems show another side of the man who was honored in 2005 as a 40 Under 40 by the Northwest Arkansas Business Journal (then a sister publication to Arkansas Business).
The attorney general’s lawsuit and court records paint a troubling picture of Johnston, a man with assets of more than $30 million, according to a person who recently reviewed his tax records but didn’t want to be named. Johnston’s divorce settlement agreement in 2016 also signaled his financial success. The settlement called for Johnston to pay his wife $10,000 a month in alimony and $7,500 a month in child support for their three minor children — a total of $210,000 a year.
Since Johnston’s wife filed for divorce in August 2015, three other women have alleged domestic abuse at the hands of Johnston. One said he choked her to the point of passing out; another said Johnston caused a facial fracture, according to Springdale Police Department reports and court filings.
The attorney general’s suit and four felony charges tied to domestic abuse are pending in Washington County Circuit Court. Johnston has pleaded not guilty to the criminal charges and denies the allegations about his companies.
But his problems continue. He was arrested yet again on Oct. 23, for alleged possession of a controlled substance and public intoxication, according to a Washington County Sheriff’s Office report. He bonded out of the Washington County Detention Center later that day.
As of Thursday, he hadn’t been charged in Washington County Circuit Court in connection with that arrest.
‘It Looks Worse on Paper’
Johnston did not respond to messages left on his cellphone. Shane Wilkinson of Bentonville, the attorney representing him on the felony charges, told Arkansas Business that a lot of the allegations made against Johnston “have turned out not to be true, or at least that’s what [the women] say now.”
“We’ve taken statements from some of these people and they have quite frankly said differently,” Wilkinson said. “It looks way, way worse on paper than it is in reality. It just does, and that’s sometimes true and sometimes not in these types of cases.” Wilkinson declined to get into “specifics as to who is saying what.”
In addition to the criminal charges, two of Johnston’s former girlfriends have taken the unusual step of filing civil lawsuits against him in Washington County Circuit Court for assault and battery.
“My clients made a decision that the best way to take their power back, the power that Johnston had robbed them of, was to expose the abuse they endured and allow the community to hold him accountable,” the women’s attorney, Bill Horton of Rogers, said in an email to Arkansas Business.
Betina Henschell of Fayetteville reached a confidential settlement with Johnston and the case was dismissed Aug. 2. Maureen McCulloch of Connecticut filed her lawsuit against Johnston in December and that case is pending.
McCulloch said in her lawsuit that while she was in Johnston’s house in August 2017, Johnston placed her “in a choke hold and began beating her face with his right hand.”
Johnston asserted his Fifth Amendment privilege, the constitutional right against self-incrimination, when asked in court filings about the chokehold and beating allegations.
The criminal cases against Johnston shine a light on domestic abuse, a problem less publicized than sexual assault, said Ruth Glenn, president and CEO of the National Coalition Against Domestic Violence.
“Oftentimes, domestic violence is seen as a mutual thing,” said Glenn, who was unfamiliar with the allegations against Johnston and was speaking more broadly. The victims are “always questioned, Why do they stay? Why are they allowing this to happen to them?” she said.
Glenn said many factors lead domestic violence victims to return to their abusers. “It’s not because the victim wants the abuse,” she said.
In part of a court-ordered evaluation in May, Johnston told Stephen Nichols, a clinical psychologist in Fayetteville, that he didn’t abuse people.
Wilkinson, Johnston’s criminal defense attorney, had stated in a March court filing that Johnston was planning to use the defense of having a mental disease or defect. Washington County Circuit Judge Joanna Taylor then ordered Johnston to be examined.
“Based on his history and clinical presentation, he does not meet the criteria for any form of mental dysfunction,” Nichols wrote in his evaluation.
During the examination, Johnston also said he had never had problems with alcohol or illegal drugs. Johnston maintained that “he has never had the opportunity to defend himself regarding the incidents related to the” allegations from the women, Nichols wrote.
“Although I strongly suspect that he has difficulty controlling his temper, I have no independent information which would document such a diagnosis.”
Johnston is “of normal intelligence” and has “been involved in several successful businesses,” Nichols wrote.
Making of a Businessman
After graduating from Springdale High School, the Fort Smith native went to the University of Arkansas at Fayetteville, where he received a business degree in 1992.
Early business ventures included a temporary employment agency and a food brokerage company.
But what appeared to be Monte Johnston’s biggest business success came in 1997 when he started Automatic Auto Finance. AAF “sells and finances vehicles and then we assist customers in maintaining the vehicle,” Johnston told Strathmore’s Who’s Who in February 2016, a transcript of which is posted on Monte Johnston Ventures’ website. “We are more transparent. That’s our goal always, to be as transparent as possible with the drivability and the affordability that somebody wants and needs.”
The Arkansas attorney general’s office had a different view of Johnston’s business plan, marketed as a “buy here, pay here dealership” where used car sales are coupled with in-house financing.
Many of AAF’s customers have low credit scores and don’t qualify for traditional financing from banks, credit unions or other lenders, according to Arkansas Attorney General Leslie Rutledge’s complaint in Washington County Circuit Court.
“The consumers targeted by Defendants’ Buy Here Pay Here tactics need viable vehicles to get them to work, the grocery store, and deliver children to school,” the suit said. “What they ultimately receive is a long-term debt obligation, sometimes in the form of a judgment or garnishment, but no vehicle.”
The attorney general’s office started investigating AAF in June 2014, more than a year and a half before it filed the consumer protection lawsuit. It names defendants including AAF; Jorja Trading Inc., a financing and collection business in Springdale; and Johnston, who according to the suit directly and indirectly controls the actions of the companies. As of June 2017, the attorney general’s office had received more than 330 consumer complaints against the defendants.
The lawsuit alleges that when customers walk on the car lot they see used cars that are being sold at prices “well above” fair market value, in some cases two to three times higher than value listed for the same vehicles by Kelley Blue Book or other similar services.
When applying for credit, potential buyers are not required to provide any information on employment history, other sources of income or other data traditionally used in determining the creditworthiness of a buyer, the lawsuit said.
Instead, the credit applications “do require that a consumer state the amount of their take home pay, the amount of last year’s tax return and detailed directions to their home,” the lawsuit said.
After a customer defaults, the vehicle is repossessed and sold at what the defendants say is a private sale; but in fact, the sale is to AAF or an affiliate of Johnston’s companies, and it typically leaves a balance for the consumer, the suit said.
The vehicle then goes back on AAF’s car lot to be sold to a different customer at a much higher price than the defendants paid at the private sale, the attorney general’s office said.
The subsequent retail sale is not credited to the amount owed by the defaulting customer, the lawsuit said.
“These sales procedures are carried out in an astounding percentage of sales,” the suit said. “These procedures are frequent enough that they demonstrate the deliberate and routine business practice of Defendants.”
AAF or Jorja, the financing company, also would sue the defaulting customer in small claims court to obtain judgments.
Between 2010 and 2016, the companies filed 4,577 small claim cases naming 5,459 defendants. In some cases, two people were on the loan or one person acted as a co-signer for another.
(AAF and Jorja agreed not to file any more lawsuits in small claims court until the case with the attorney general’s office is completed, said Scott Wray of the Bassett Law Firm of Fayetteville, who is representing the defendants.)
Of the nearly 6,000 vehicles sold by AAF from 2011 to 2015, about 40 percent were sold by AAF more than once. The attorney general’s office also found that the same 269 vehicles were sold by the defendants 917 times.
The attorney general’s office is seeking a judgment to stop the alleged deceptive practices, and is asking for restitution to Arkansas consumers affected by the dealings detailed in the lawsuit. It also wants $10,000 for each alleged violation of the Arkansas Deceptive Trade Practices Act. The lawsuit didn’t allege how many violations there were.
Cars’ Pricing Defended
Wray said in his court filings that the attorney general’s suit should be dismissed because it failed to show any deceptive or misleading acts in his clients’ business practices.
The vehicles are sold “as-is” and the prices are agreed upon by the willing buyer and the willing seller, Wray said in the filing.
In addition, consumers can inspect and take the vehicles for a test drive before buying.
If the customer defaults, an offer is made to settle the debt for a fraction of the amount owed, typically $500 to $1,000, the filing said. If the buyer doesn’t settle, then
AAF or Jorja could go to court to collect the judgment.
Wray also said in the filing that AAF and Jorja further reduce the amount owed to keep the case in the jurisdiction of small claims court, in which a maximum of $5,000 can be claimed as damages.
“Part of the AG’s biggest complaint is that they don’t like the pricing of the cars,” Wray said. “Well, I think AAF is pricing its cars consistent with its competitors. And how else would you price those cars?
“Does AAF need to call the AG every time it’s getting ready to put a car out for sale on its lot?”
‘Splashes of Happiness’
Outside his business life, Johnston once appeared to have a good relationship with his wife, Brooke, whom he married in 1991. CitiScapes Magazine, the northwest Arkansas lifestyle publication, devoted nine pages in its July 2015 edition to the couple’s 6,758-SF Springdale house, which they bought for $900,000 in August 2012 and renovated.
The article — titled “Splashes of happiness and fun fill this family-friendly home both outside and in!” — said the family, including four daughters who then ranged in age from 5 to 21, “embraces busy schedules and sibling banter, and enjoys spending time together in their home overlooking Lake Springdale.”
Brooke Johnston, who filed for divorce weeks after the article appeared, told the magazine that she and her husband knew the home was for them when they first saw it. “We had barely stepped into the foyer, Monte paused for a minute and then said, ‘Yeah, this is a good house, a really good house,’” she told the magazine.
She also noted that it was hard to hear sounds from one room to the next in their house. “There can be all kinds of chaos going on and you never realize it,” Brooke Johnston told the magazine. “So, I can close the door and just have some alone time if I need it.”
By October 2015, just a few months after that feature appeared, Monte Johnston had been charged with felony possession of a controlled substance in Washington County Circuit Court.
In December 2015, Johnston pleaded guilty to the reduced charge of misdemeanor possession of a controlled substance and was fined $2,500. The charge was reduced because the amount of marijuana he had was right at the threshold for a felony, Matt Durrett, Washington County prosecuting attorney, said in an email to Arkansas Business. “There was no evidence that he was selling what he had,” Durrett wrote, and Johnston didn’t have a criminal history.
Brooke Johnston filed for divorce on Aug. 28, 2015, and Monte Johnston wasted no time returning to dating. In a deposition taken in June 2018 for her lawsuit, filed in Washington County Circuit Court, Betina Henschell said she and Johnston started dating on Aug. 29, 2015.
In June 2016, while the couple was in Hawaii, Johnston choked Henschell and hit her in the face, causing a fracture, her lawsuit says.
Johnston apologized and promised it wouldn’t happen again, and she accepted the apology and remained with him, the lawsuit said.
“I was still in love with him,” Henschell said, according to a transcript from an August 2017 protective order hearing held in Washington County Circuit Court.
“Your brain can’t compute the difference between being so in love with somebody one minute and then the next minute them hurting you so bad,” she said in the transcript.
Back in Arkansas, the alleged abuse continued. On Feb. 4, 2017, Johnston “was not in a stable place” while Henschell was at his house, so she tried to de-escalate the situation, according to a petition for an order of protection that she filed Aug. 2, 2017. But her attempts to calm the situation failed.
Johnston choked her “worse than he ever had. I thought he was going to break my neck or windpipe,” she wrote in the order of protection filing.
Other women have also raised domestic abuse allegations against Johnston.
Reports by the Springdale Police Department show that Johnston also was accused of choking Ashley Biswell of Springdale more than once. On Jan. 4, 2018, Johnston choked Biswell until she lost consciousness, according to a police report.
Springdale police took another report on Aug. 12. Biswell was “extremely upset and crying profusely” when she told an officer that Johnston “had snapped” while they were cooking at his house. He called Biswell by his ex-wife’s name and by that of his ex-girlfriend, Tina. “She stated that Mr. Johnston had choked her and hit her head on the ground,” the police report said.
The officer said he saw marks on Biswell’s neck and lacerations on her left forearm and knee.
“She believed she was going to die and that she almost black[ed] out,” the report said.
That incident resulted in Johnston being charged on Sept. 17 of this year with one count of felony aggravated assault and one count of felony domestic battering in the third degree, along with a misdemeanor of false imprisonment in the second degree, resisting arrest and fleeing.
He has pleaded not guilty to those charges, which are pending.
Henschell did say that her entire time with Johnston wasn’t all bad. Between Aug. 29, 2015, and June 1, 2016, she said in a June deposition, their relationship was “really good. And I thought that we were going to have a promising future together.”
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