The search for nearly $3.2 million from a once-secret 2013 settlement and possession of a grand home valued at $1.9 million by the Benton County assessor remain at center stage in the bankruptcy of Bill and Carolyn Schwyhart.
The pile of cash and the mansion in the gated Pinnacle Country Club were allegedly hidden from creditors by the once high-flying northwest Arkansas developer.
The first in a series of expected rulings in battles over subpeonas and attorney-client privilege was handed down recently.
After review by Bankruptcy Judge Harlin Hale, Fayetteville attorney Travis Story was ordered to provide documents to CHP LLC, a Schwyhart creditor led by Rogers attorney Brian Ferguson.
The documents covered in the order represent 14 items and related documents sought under subpoena by Ferguson in advance of his questioning of Story regarding Schwyhart business dealings.
CHP and Scott Seidel, trustee of the Schwyhart bankruptcy estate, continue to dig into what they believe is an elaborate scheme orchestrated by Bill Schwyhart to defraud creditors.
CHP, which holds two judgments against Schwyhart from his post-2008 financial meltdown, is battling to find where the nearly $3.2 million was transferred after tracking the money back to a Schwyhart attorney.
Scott Seidel, trustee of the Schwyhart’s bankruptcy estate, is seeking an order to dispel the home’s alleged ownership charade.
Seidel wants the property declared an asset of the Schwyharts or require its owner of record, Pinnacle Villa LLC, to pay the cash value of the home to the bankruptcy estate.
Ferguson and Seidel are both pursuing more information that lawyers are shielding under claims of attorney-client privilege.
The bankruptcy trustee is seeking a court order for Story to turn over all documents related to his firm’s representation of Schwyhart Holdings LLC.
Seidel claims the documents should be under his control as caretaker of Schwyhart’s bankruptcy estate, which includes Schwyhart Holdings.
Two limited liability companies have pending motions to quash subpoenas issued by Ferguson’s CHP.
The motions were filed by TWG Resources, led by Schwyhart’s son, Alex, and Recipio Investments Strategic Fund I, led by Alex Schwyhart’s former classmate, Harmic Davidkhanian.
The subpoenas are searching for the destination of $3.2 million that flowed into the client trust account of Fayetteville attorney Stanley Bond as part of Schwyhart’s once-secret 2013 settlement with Chicago billionaire John Calamos and Johnelle Hunt, widow of the founder of J.B. Hunt Transport Services of Lowell.
The settlement brought an end to a swirl of litigation surrounding corporate jets sold to Calamos and a parting of the ways with Hunt involving millions of dollars in northwest Arkansas real estate and debt.
CHP also has pending a motion to compel the cooperation of Bond regarding bank records linked with the transfer of the $3.2 million from his client trust account.
Still awaiting judicial hearing is a motion for contempt against Bentonville attorney Josh Mostyn to fully comply with a subpoena from CHP.
The Mostyn subpoena covers documents tied to several limited liability companies that Ferguson believes are alter egos of the Schwyharts:
► Recipio Investments Strategic Fund I, originally owned by Alex Schwyhart and later by Davidkhanian, his former classmate. The entity was used to facilitate the distribution of assets from the 2013 settlement. Billing invoices for Recipio legal work and credit card records for HMG Investments from four years ago indicate that Carolyn Schwyhart paid the bill.
► Pinnacle Villa, which became the owner of record of the 9,484-SF former home of the Schwyharts in Rogers after the 2013 settlement. Harmic Davidkhanian of London, England, is listed as the controlling party of Pin-nacle Villa. However, the Schwyharts allegedly paid expenses on the home from their HMG Investments through Mostyn’s trust account.
► HMG Investments, owned and controlled by the Schwyharts through a web of limited liability companies. Since July 2014, the couple has spent more than $600,000 that flowed into HMG’s bank account from their son’s TWG Resources.