The corporate veil protecting Bill Schwyhart from creditors holding millions of dollars in claims is showing further signs of fraying.
A U.S. trustee for the Department of Justice is seeking court approval to question the once-prominent northwest Arkansas developer and his wife, Carolyn, under oath regarding details of their Chapter 7 bankruptcy filing.
The Nov. 15 motion also asks the court to order the Schwyharts to produce a roster of financial and business records.
The move by the DOJ follows a push for a fraud investigation by Rogers lawyer Brian Ferguson, a lead protagonist among Schwyhart creditors.
Through his CHP LLC, Ferguson leveled allegations of fraud against Schwyhart while working to unravel the curious ownership of Schwyhart’s residence in the gated Pinnacle Country Club development and perfect his lien claim on the Rogers house.
Ferguson continues to pull at this thread and others after chasing Schwyhart from his unusual rent-free, utilities-paid caretaker residency in his former home in March to Texas bankruptcy court in July.
More details are coming to light on how a third-party security claim in a Schwyhart lawsuit turned into shadowy ownership of his former home in a transaction covered in the protection of a secret settlement.
Along the way, friends, family and business associates of Schwyhart pop up among the parade of corporate entities.
Ferguson is convinced Schwyhart orchestrated it all to hide assets and regain the mansion he lost in a $2.5 million foreclosure sale in 2012 and to shield it from creditors by creating a corporate façade of unrelated ownership through Pinnacle Villa LLC.
According to court filings by the limited liability company, “Pinnacle Villa shares common membership with entities that own and hold multiple claims and judgments against Bill Schwyhart, and these entities will likely be significant creditors in this bankruptcy case.”
However, Pinnacle Villa isn’t listed as a creditor in the Schwyhart bankruptcy. So far, no new creditors of significance have joined the contentious case either.
Harmic Davidkhanian was described as the sole member of Pinnacle Villa when his name first cropped up in court filings.
In recent bankruptcy court filings, CHP alleges that Davidkhanian is a mere strawman for the Schwyharts’ “fraudulent schemes to keep their assets, including their multimillion-dollar trophy home, beyond the reach of their creditors.”
CHP also draws a personal connection between the Schwyhart family and Davidkhanian, noting that he graduated from the London School of Economics at the same time as Schwyhart’s son, Alex.
In later court filings by Pinnacle Villa, the limited liability company is described as an affiliate of Recipio Investments Strategic Fund I LLC.
From CHP’s perspective, Recipio is an entity associated with Alex Schwyhart and a murky conduit that facilitated the transfer of Schwyhart’s grand home from former partners turned creditors as part of a 2014 settlement with Johnelle Hunt and Tim Graham.
Earlier Fraud Allegation
Five years ago, Hunt’s legal team considered Schwyhart/Recipio to be part of a fraudulent charade to thwart collection efforts by her J.B. Hunt LLC and Big Horn Lodge Financing LLC.
At the time, the two limited liability companies held joint and several judgments totaling more than $17 million against Schwyhart and his business partner, Robert Thornton, and his Thornton LLC.
According to court filings by Pinnacle Villa, Recipio bought loans in 2011 made by Danville’s Chambers Bank to Schwyhart. In the paper trail of the transaction, Alex Schwyhart signed as authorized agent for Recipio.
Among the security for the delinquent loans purchased by Recipio were any proceeds that Bill Schwyhart might receive in a lawsuit with Chicago billionaire John Calamos Sr. and his Ajax LLC.
Schwyhart filed a lawsuit over the soured sale of corporate jets to Calamos and Ajax on Aug. 10, 2011. Recipio was formed at the Delaware Division of Corporations eight days later.
Travis Story, Bill Schwyhart’s long-time attorney, filed a series of Uniform Commercial Code financing statements on behalf of Recipio claiming a security interest in the Calamos lawsuit on Feb. 27, 2012.
The “inference that he settled with Calamos and directed his funds to sham entities is so clear that a blind man could see it and a deaf person could hear it,” Ferguson wrote in court filings.
Neither Recipio nor Pinnacle Villa was a party to Schwyhart’s settlement with Hunt and Graham, according to court filings on behalf of Pinnacle. However, Recipio/Pinnacle Villa was a beneficiary.
Recipio formed Pinnacle Villa to take ownership of the house as part of the 2014 settlement between Schwyhart/Thornton and Hunt/Graham, according to court filings by Pinnacle Villa.
The details of who knew what remain partially shrouded by a confidentiality agreement covering the settlement. The Calamos settlement and Hunt settlement are among the items the U.S. trustee wants to examine.
As of June 1, 2014, Recipio was no longer in good standing with the Delaware Division of Corporations for failure to pay taxes.
During the August creditor’s meeting in his bankruptcy case, Bill Schwyhart said that as the caretaker of his former house he sent the bills to a lawyer for payment but couldn’t remember the name.
Ferguson later learned the name of that attorney was one Schwyhart should’ve easily recalled: Travis Story.
Among the assets Bill Schwyhart listed in his bankruptcy filing is a 2004 Sierra GMC pickup valued at $6,083. Wrapped around the truck is a high-interest loan with no repayment terms to a nonexistent entity.
Brian Ferguson of CHP LLC considers the odd financial arrangement secured by woefully inadequate collateral another Schwyhart gambit to block creditors like himself.
Schwyhart bought the truck for $3,500 in May 2014 financed with a $10,000 loan bearing 21 percent interest with no specified terms for periodic repayment or stated maturity date.
Questioned under oath about the truck debt during an Aug. 14 meeting of creditors, Schwyhart said he had never made a payment on the loan and didn’t know who the individuals were behind the lender: Sterling Management LLC.
The promissory note signed by Schwyhart and the lienholder of record with the Arkansas Department of Finance & Administration lists Sterling’s address at 807 W. Hudson Road in Rogers.
According to court filings by CHP, no entity named or doing business as Sterling Management LLC has operated at that location or anywhere else in Arkansas. But Ferguson believes there is a Sterling-Schwyhart nexus.
At the time Schwyhart signed the promissory note, the address was leased to the Mostyn Prettyman law firm. Joshua Mostyn, a member of the firm, is the son of Linda Mostyn, whom Carolyn Schwyhart described as her “best friend” during the creditors meeting.
While Sterling Management LLC presents as a phantom entity, another similarly named venture once existed and provides more links to Schwyhart.
Joshua Mostyn pops up on the Benton County real estate records signing as an authorized agent for Sterling Management Co. Inc. The controller of the corporation formed in 2009 was Iris Martin, a long-time employee of Schwyhart.
The status of the venture is listed as revoked by the Arkansas Secretary of State.
Carolyn Schwyhart’s daughter, Kimberly Steerforth, once signed as a guarantor on a loan to Sterling Management Co. That loan also was secured with promises from Bill Schwyhart and Robert Thornton.
Ferguson finds all this more than coincidental.