The $2.9 million sale of a Benton County custom blinds company has left wreckage in its wake, with the buyers filing for personal bankruptcy and the sellers suing the deal’s broker, alleging fraud.
The messy unraveling of Parsons Blind Co. in Hiwasse began in 2016 when Donnie and Lisa Parsons moved to sell PBC Ventures LLC, the legal name of Parsons Blind.
The Parsonses, who started the blind installation company in the mid-2000s, turned to CBI Business Advisors Inc., which operates as Confidential Business Intermediaries and CBI + Team of Springdale.
CBI + Team has helped sell more than 750 businesses, with sale prices ranging from less than $100,000 to almost $8 million, according to its website.
CBI brought the Parsonses a $2.9 million offer from James “Les” and Barbara Davis of Tulsa, according to Parsons Blind’s lawsuit, filed last month in Washington County Circuit Court.
The suit says the Parsonses didn’t know then that Les Davis had a prior business relationship with CBI. The Parsonses allege their listing intermediary, Corby Wright, also was working with Les Davis. Wright, also a defendant in the suit, couldn’t be reached for comment.
CBI told the Parsonses that a lender would lend the Davises only 75% of the purchase price, the suit said. To make the deal work, CBI said, the Davises would have to put in $362,500, 12.5% of the purchase price, and the Parsonses would owner-finance the rest, the suit said. The Parsonses agreed.
Immediately after the sale on Sept. 30, 2016, Wright and Les Davis went outside and shook hands. Wright told Davis that he accepted his offer, according to the lawsuit. Wright then took an ownership position with Davis’ business and began working for him, the suit said. Wright’s business card — which he handed out after the closing — listed him as owner/COO of Parsons Blind, the suit said.
“It is only now apparent that Wright had divided loyalty,” the lawsuit said. “After the closing, Wright’s wife reported that Wright had been working day and night for weeks to get things ready for the closing.” But he had not been working for Parsons Blind, the lawsuit said. “He clearly was working with and advancing the interest of the Buyer.”
Parsons Blind, whose allegations include breach of fiduciary duty and fraud, seeks unspecified damages. Its lawyer, Charles Harwell of Crouch Harwell Fryar & Ferner of Springdale, didn’t respond to an email seeking comment.
To prove the fraud, the plaintiff will have to show misrepresentation that was “basically knowingly made and that the recipient of the misrepresentation relied on it to their detriment,” said Joshua Silverstein, a professor at the Bowen School of Law at the University of Arkansas at Little Rock. He wasn’t familiar with the Parsons suit in particular.
Silverstein said the misrepresentation can be an explicit false statement or it can be a failure to disclose a fact, if there is a duty to disclose it. “Generally when you have a fiduciary relationship with someone, you have a duty to disclose,” he said. “So failing to disclose that you’re representing someone with contrary interests probably would be a problem.”
Carl Grimes, CBI’s owner, told Arkansas Business last week that he couldn’t comment on the details of the lawsuit in which he is also named as a defendant.
“We strongly dispute the allegations made in the complaint and look forward to vigorously defending against those claims.” He said his company believes “in the integrity of our processes and our teams.”
After the Sale
The lawsuit didn’t say what happened to Parsons Blind after the sale.
But by the fall of 2017, the new owners had sold their 2000 Ford Excursion and duck hunting boat “to pay for living expenses and pay bills during [a] business downturn,” according to the Davises’ May bankruptcy filing.
In February, the Arkansas Department of Finance & Administration closed Finish Strong LLC, which did business as Parsons Blind, for failing to pay its taxes. The Davises listed personally owing $37,600 to the state of Arkansas for 2018 unpaid taxes.
The Davises also didn’t make payments to the Parsonses, which resulted in the Parsonses’ company, PBC Ventures, filing a lawsuit against the couple in May. The Davises represented themselves in the case, filed in Benton County Circuit Court, and lost on a default judgment. PBC Ventures was awarded $400,000, which included the amount of the promissory note plus interest and other costs.
In May, the Davises filed for Chapter 7 bankruptcy in U.S. District Court in Oklahoma, listing $4.7 million in debt and $491,000 in assets.
The bankruptcy is pending.
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