A Wisconsin finance company has accused a Searcy agricultural equipment dealership and its owner of taking more than $10 million “by fraud or pure theft.”
CNH Industrial Capital America LLC made the allegations in a federal lawsuit filed in U.S. District Court in Little Rock. CNH asked Judge Brian S. Miller in May for expedited discovery in its case against Venture Equipment LLC and Steve Merritt. CNH is seeking subpoenas to four financial institutions “to trace the funds taken by Venture Equipment and/or Merritt before any more money disappears,” according to its filing.
But the defendants said in a motion filed last month that the discovery should be stayed pending the outcome of “an overlapping criminal investigation” with the FBI.
That request is pending.
Suit Says Assets Missing
The lawsuit against Venture Equipment and Merritt is a little complex. But here’s the gist:
CNH is the captive finance company for CNH Industrial America LLC and finances the purchases of agricultural and construction equipment fleets for sale or rental by New Holland dealerships in North America, the suit said.
CNH entered into financing agreements with Venture Equipment in 2011 to pay for its inventory, according to CNH’s lawsuit, filed by attorneys Charles T. Coleman and Jaimie G. Moss of Wright Lindsey & Jennings of Little Rock. Merritt personally guaranteed the payments.
Merritt also served as president of New Holland’s Dealer Advisory Board, “an esteemed position among New Holland dealers in North America,” the suit said.
CNH discovered something was wrong in March when it conducted an on-site inventory audit of its collateral. That audit led to the discovery that 225 units of its secured assets were unaccounted for, the lawsuit said. CNH said a majority of the assets were sold by Venture Equipment, which kept the money instead of turning it over to CNH, as was required.
CNH said it found that it should have been paid $5.1 million.
In addition to that, Merritt allegedly created fraudulent retail notes that were sent to CNH to pay, the suit said.
“Venture Equipment, by Merritt’s own admission, assigned 151 retail contracts to CNH” with a value of $9.2 million “that were forgeries, fraudulent and/or violated” the retail financing agreement that CNH signed with Venture in 2011, the lawsuit said. As of May, $5.9 million remains on the fraudulent contracts, the suit said.
“Venture Equipment and Merritt repeatedly and over the course of several years prepared and submitted false financial documents, some even in the name of other individuals, fully aware that CNH would rely on those representations,” the suit said.
It’s unclear where the money went.
CNH allegations include breach of contract and fraud, and it is seeking at least $10.5 million in damages.
One of Venture and Merritt’s attorneys, John Holleman of Holleman & Associates of Little Rock, didn’t return a call for comment.