Kade Holliday: Former County Clerk Accused of Fraud, All That Jazz

Kade Holliday: Former County Clerk Accused of Fraud, All That Jazz
Kade Holliday, the former Craighead County clerk, made a commitment of $500,000 to establish jazz studies programs at Arkansas State University. That was before he was accused of embezzling $1.6 million from the county, which is suing to get its money back.

Five weeks after allegations surfaced that former Craighead County Clerk Jacob “Kade” Holliday had embezzled more than $1.6 million from taxpayers, another purported victim was still looking for answers.

“We’re all still trying to figure out what happened,” said Rose Hankins, who in 2015 partnered with Holliday in a private enterprise, Twisted Foods of Jonesboro. She got him to oversee the financial side of her meal preparation startup three years after Holliday was elected as the state’s youngest county clerk in 2012.

“He hasn’t had to answer for anything yet,” Hankins said. Investigations and lawsuits are “going on right now and [there are] no real answers.”

Hankins closed her company, which had 55 employees, after she learned that her friend from childhood was accused of embezzling hundreds of thousands of dollars over four years. She is suing Holliday, 32, for fraud, claiming he diverted more than $500,000 in company funds to himself.

Craighead County, too, is suing, saying Holliday embezzled $1.6 million from county coffers between January and June. The lawsuit said that Holliday repaid $168,000 of that amount before the theft was discovered, leaving a balance of $1.4 million. The county’s civil lawsuit was filed June 29.

In court filings last week, Holliday denied the allegations of wrongdoing in both cases.

On July 9, Craighead County Circuit Judge Richard Lusby issued a preliminary injunction against Holliday, requiring him to provide the county with a list of the traceable proceeds of the money within 10 days. Holliday’s attorney, Patrick Benca of McDaniel Wolff & Benca of Little Rock, agreed to the language in the injunction. But as of last Monday, the county had not received the information, the county’s attorney, Kimberly Dale of Branch Thompson Warmath & Dale of Paragould, told Arkansas Business.

A contempt hearing was scheduled for Thursday afternoon, after Arkansas Business’ weekly deadline.

“Complicated financial cases like this take time, but we are working productively with the prosecuting attorney and Craighead County’s civil counsel,” another of Holliday’s attorneys, Dustin McDaniel, said in an email. “We want to assure the Court that Mr. Holliday is complying with all orders and is not violating any of the terms of his release.”

Holliday also has been charged criminally with 13 counts of theft of property and one count of abuse of office. Holliday has not entered a plea and his next court appearance is set for Oct. 29.

Holliday’s alma mater, Arkansas State University at Jonesboro, also was stung.

In September, Holliday pledged $500,000 for a professorship and scholarship in jazz studies at the university.

Arkansas State University Foundation Inc. said in a statement that Holliday donated $25,000 toward the $500,000. The fund balance of that gift was $24,000 “due to investment value fluctuations,” the foundation said. And on March 11, Holliday donated $30,000 to a jazz studies discretionary fund that was separate from the endowment pledge. Of that amount, $5,000 was distributed, leaving a balance of $25,000. (The same date he made the donation, Holliday allegedly embezzled $180,000 from the county, according to court filings.)

“Both accounts have been frozen, and no further activity will be processed until legal proceedings direct us on distribution of the remaining funds,” the foundation said in the statement.

Procedural Problems

Meanwhile, Craighead County is making changes to guard against future thefts by elected officials.

Craighead County Judge Marvin Day told Arkansas Business that the county is interviewing accounting firms and working with Arkansas Legislative Audit and other elected officials to put policies and procedures in place to help prevent such thefts. “Unfortunately, the way the [Arkansas] Constitution is written and that autonomy that each elected official has, it’s just hard to do a lot with that,” Day said.

In county government, elected officials have their own responsibilities. “But as far as true checks and balances, there is not a situation where the circuit clerk is checking in to make sure the county clerk is doing what they’re supposed to be doing,” said Dale, the attorney.

Holliday, who was the official bookkeeper of the county government and handled the payroll for all county employees, also allegedly didn’t make payments to the IRS or the Arkansas Public Employees Retirement System.

“Whenever accounts were delinquent, there needs to be other mechanisms in place for individuals to be notified,” Dale said. “If those notifications keep going to the … embezzler, then there is no accountability for other individuals to be put on notice.”

Dale said that elected officials have fidelity bonds, which would cover the county from losses from fraud by officials. However, she said it’s not “an absolute” that the bond will cover the losses tied to Holliday.

A Name for Himself

Weeks after he resigned from office, friends still have a hard time believing that Holliday, who was working on his sixth degree from A-State, allegedly stole millions.

A Jonesboro native, Holliday had already made a name for himself in Craighead County when he was elected county clerk at the age of 24.

In 2016, Arkansas Business recognized him in its annual 20 in Their 20s feature. At that time, Holliday said public office had not been on his radar in 2012. “I was preparing to get a doctorate in finance, … but some people discussed with me potentially running for county clerk,” he said.

He entered the race after the filing deadline, running on the Green Party ticket, and won. Before running for re-election in 2014, he switched to the Republican Party.

During his first two terms in office, he addressed outstanding IRS issues left by the previous clerk, streamlined a number of processes within the department and reduced the office’s budget.

In 2016, Holliday said he was considering his future in county and state politics. But for the next four years he remained county clerk and expanded his business ventures.

Twisted Foods Venture

Hankins first met Holliday in elementary school in Jonesboro. Hankins, 32, told Arkansas Business that she had always been an entrepreneur and had launched “a little boutique” after graduating from college.

But she didn’t like running the store and was looking for another business. She came up with the idea for Twisted Foods, which provided customized meals for any diet, allergy, lifestyle or medical issue.

Holliday said, “I’ll invest. I love it.”

Hankins agreed to give Holliday 30% ownership in Total Healthcare LLC, which operates as Twisted Foods, in exchange for his accounting and financial management services. The operating agreement said neither one would take money out of the company for at least five years. “But little did I know he was just taking money for all five years,” Hankins said.

Still, Hankins said the business took off. In the first year, it had sales of $200,000.

“We went from a small, podunk town business to a nationwide meal service business,” Hankins said.

She had plans to grow the business through franchising. And in late 2018, she approached Holliday about opening a location in Nashville, Tennessee. He agreed.

As Hankins prepared for the Nashville location, Holliday’s other business opportunities were blossoming.

Hankins said she didn’t ask him about his other ventures, and she had no reason not to trust him. “I made a million jokes over the four years, stating, ‘I won’t have to worry about my business because I have a government official who would never do anything wrong,’” Hankins said.

Becoming a Philanthropist

Holliday also became a property owner. He registered Holliday Development & Management LLC in April 2019, which was used for rental properties.

In September, HDM spent $325,000 on the building that housed the Edge Coffee House at 1900 Aggie Road in Jonesboro.

In November, he bought a 2,184-SF home in Jonesboro for $225,900, and in December he bought two rental properties for a total of $293,000.

Holliday appeared to be doing so well financially in 2019 that he pledged $500,000 to A-State to create an endowed professorship of jazz studies and an endowed scholarship for outstanding jazz students.

In an email to A-State on Aug. 19, Holliday suggested that the gift was part of a tax strategy. “After reaching out to accountants and doing everything, this is what they would like for me to agree too [sic] if it is within the interest of the University,” Holliday wrote in the email, which was released to Arkansas Business under the state Freedom of Information Act.

“Based on this schedule I will be able to take the full tax benefits that this gift would afford me over the coming years … as my income continues to expand as we venture into the Aggie market in Jonesboro and Nashville with other businesses.” Holliday didn’t elaborate on what the Aggie market was.

The payment schedule went through 2025, according to the email.

A-State issued a press release on Sept. 20 about the gift, and video of the announcement is on YouTube. “There is a very special pride that the university feels when a graduate thinks enough of his alma mater to invest in its future,” A-State Chancellor Kelly Damphousse said in the news release.

Holliday received his undergraduate degree in finance, with corporate finance, insurance and banking emphases, according to the news release. He also received an MBA and a credential as a specialist in community college teaching. At the time, Holliday was working on a doctorate in educational leadership from the university.

“We’re so proud of him,” Damphousse said at the news conference. “He’s a product of Arkansas State and is a wonderful example of what our alumni do once they’ve become successful in their own field of endeavor to give back to the university.”

Wearing a scarlet jacket, Holliday told the crowd, “It’s an honor for me to be able to do this.”

He said that music has had an impact on his life, even though he wasn’t a music major.

“I’m looking forward to watching the impact that it makes, not just on the jazz program here, but on the arts culture here in northeast Arkansas and all around the state,” Holliday said.

“I’m just so thankful and humbled that I had the opportunity to be able to do this.”

Within nine months, the accounts for the gift would be frozen.

While Hankins has alleged that he was stealing from their business for years, Holliday’s embezzlement from the county government appears to have started early this year. He allegedly made his first theft from the county’s account on Jan. 23 for $86,500, according to the county’s lawsuit. The second theft, $102,000, happened six days later, the suit said.

By June 24, Holliday had allegedly transferred $1.6 million of the county’s money to himself or his HDM. As of Aug. 3, Dale, who is representing the county in the civil suit, said the case continues to be reviewed, but “we have not uncovered any other potential fraud or embezzlement.”

The initial tip, according to County Judge Day, came in late June when a bank official noticed something suspicious about the county’s account and contacted him. From there, the alleged embezzlement was discovered, according to court records.

On Monday morning, June 29, Holliday was arrested in the parking lot of the Craighead County Courthouse, Day said.

While Holliday was being arrested, Hankins was working at the Twisted Foods location that had opened in Nashville on June 1. The company had grown to $1.3 million in sales and 466 clients.

Then she learned about Holliday’s arrest.

“That was on a Monday and that’s my busiest day, so I actually had to finish working,” Hankins said. But during the day, she was crying and thinking, “Oh, my God, this can’t be true,” she said. “But it definitely was.”

Hankins later discovered that Holliday was using at least nine separate accounts at four different banks to receive and transfer money belonging to Twisted Foods, according to her lawsuit, filed July 10 by Tony Wilcox of Jonesboro. Holliday allegedly took more than $500,000 in more than 100 separate transactions.

‘We Couldn’t Afford It’

Twisted Foods’ business accounts had been “depleted, and in some instances overdrawn,” the suit said.

Hankins said that the company’s accounts were going through a forensic audit. Some of the money Holliday took went to his other companies and personal expenses “including online gaming accounts,” the suit said.

Dale said that some of the county’s money also went to online gambling debts, but “a lot of money went to various places. Unfortunately, I don’t think we have discovered necessarily that there was one particular pot of gold where he’s been holding this money in a particular account.”

Holliday took a couple of vacations a year, including cruises, Hankins said. Meanwhile, her pay remained $600 a week as she worked to build up the Twisted Foods business.

“I would have been living better, but he told me we couldn’t afford it,” Hankins said.