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Pig Farmer Accused of Hogging Loan ProceedsLock Icon

5 min read

Arvest Bank has accused a Fulton County pig farmer of submitting false financial statements to obtain millions of dollars in loans to raise pigs, instead using the money for other debts.

The Fayetteville bank wants to prevent Dennis Hurblee Everett of Salem from discharging all or a portion of the $6.7 million he owes the bank through his Chapter 7 bankruptcy liquidation.

Everett, who did business as Southern Pork, filed for bankruptcy protection in October, listing $9.4 million in debts and $1 million in assets. Southern Pork bought, fed and cared for pigs until they reached market weight and then were sold, Arvest said in court filings.

Arvest said in a February filing that Everett submitted “numerous” financial documents to Arvest “which were materially false.”

Arvest relied on those statements to continue lending money to Everett until it discovered that he was using that money to pay for margin calls on his brokerage accounts instead of operating Southern Pork, as he should have been. The bank wouldn’t have made the loans “but for Everett’s false representations,” the suit said.

Everett last week denied Arvest’s allegations. “Just because they said it don’t mean it’s true,” he told Arkansas Business, but he declined to comment further on Arvest’s claims.

Everett said he had been in the hog-raising business for 45 years, but began losing money in the last couple of years, citing declining hog prices. In July 2017, hog prices in the United States were $67.40 per 100 pounds. By July 2018, the price had fallen to $59.20 per 100 pounds, and in September 2018, the price had dropped to $43.70.

Everett’s bankruptcy attorney, James Smith of the Barber Law Firm of Little Rock, didn’t return a call for comment. An answer to Arvest’s complaint hadn’t been filed as of Thursday morning.

One of Arvest’s attorneys, Randy Grice of Hilburn & Harper of North Little Rock, also didn’t return a call for comment.

But Everett’s bankruptcy filings and statements he made during bankruptcy proceedings provide some insight into his financial collapse.

Payment Due

Everett has an ownership interest in several entities involving the raising of pigs, including Everett Brothers Inc., Everett Brothers Trucking Inc. and North Dakota Sow Center Inc.

In 2008, Everett signed for a $9 million line of credit with Arvest for his Southern Pork business. The collateral included Everett’s hog inventory. On Nov. 1, 2018, Arvest and Everett agreed to reduce the line of credit from $9 million to $3 million.

Terms of the loan called for Everett to submit to Arvest financial documents prepared by his accountant. The financial statements of Sept. 30, 2018, showed that Everett and his wife, Pam, had $3.2 million in cash and brokerage accounts, according to Arvest’s filing, with $2 million of that in cash.

The financial statements said the Everetts had a net worth of $11.6 million. For the nine-month period that ended Sept. 30, 2018, Southern Pork listed sales of $17.4 million and net income of $1.4 million.

The financial documents reported that Everett had prepaid $2.5 million for feed to operate Southern Pork, according to Arvest’s suit.

Arvest said it would later learn that those numbers in the Everetts’ financial statements weren’t correct.

When a $500,000 payment was due on July 1, 2019, Everett told the bank that he “was unwilling to make the payment stating the money could be better used elsewhere,” according to the suit. “As a result, Everett was ultimately declared to be in payment default.”

The loan was then assigned to Arvest’s Special Assets Department in an attempt to arrange for a payment plan and protect the bank’s collateral.

“During this time Arvest learned that Everett did not have the amounts of money in cash and brokerage accounts nor net worth that he had repeatedly represented in his Statements of Financial Condition.”

The bank also said it learned that Everett didn’t have the millions of dollars in prepaid feed that he had indicated. Instead, he owed about $1 million for feed and other management services, Arvest said.

In an August 2019 meeting, Arvest quizzed Everett about the representations made in his financial statements. According to Arvest, Everett said the cash and brokerage accounts on the financial statements “had been liquidated and that the feed inventory number ‘needed [to be] adjusted,’” the suit said.

Everett said in a January bankruptcy proceeding that he had trading accounts at several institutions.

“I’ve been trading futures [to] try and make more money,” Everett said. He said he had been trading hog futures for several years, and the trading activity was separate from his hog-raising operation.

Chapter 7 Panel Trustee Hamilton Mitchell of Little Rock asked Everett where he got the money to make the trades.

“I have a line of credit with Arvest Bank,” Everett said. “So I used that money to make money.”

He also said he had money in his checking account and from sales of hogs.

But those trades weren’t making him money. Everett’s 2018 tax form showed capital gains losses of about $6.7 million, and in 2019 the loss was about $1.4 million, Mitchell said during the proceeding.

Everett said he didn’t know how much he lost in 2020.

Meanwhile, Arvest said it wasn’t getting any payments from Everett. In September 2019, Everett told the bank he still didn’t have the money to pay the loan. And the company Arvest had hired to manage Southern Pork submitted a $1 million bill to the bank for vet services and other fees, the suit said.

Road to Bankruptcy

After Arvest sold Southern Pork’s pigs, it sued Everett in Washington County Circuit Court on April 6, 2020, seeking to collect the outstanding loan. In June 2020, Everett settled the case with Arvest and agreed to pay $6.7 million.

But Everett’s financial condition was worsening.

For the 2019 tax year, Everett owed $1 million to the IRS, an amount he hadn’t anticipated, he said during a bankruptcy proceeding.

He also withdrew about $10,000 from his bank account on July 30, 2020, and a few days later he took out another $19,700.

Everett said that the money was used to pay bills. “Times were bad for a couple years,” he said. “I wouldn’t have money to live on.”

On Oct. 6, Everett filed for Chapter 7 bankruptcy. He said in the filing that he was not employed, but he received about $1,900 a month in Social Security.

Everett’s other top creditors include the Bank of Salem, which said it is owed $1.5 million, and Anstaff Bank of Green Forest, which is owed $200,000.

Arvest filed its suit in Everett’s bankruptcy case in February, arguing that all or some of the debt he owes shouldn’t be discharged because of his “false representations.”

That case and Everett’s bankruptcy are pending in Bankruptcy Judge Phyllis M. Jones’ courtroom.


Dennis Everett’s Chapter 7 Bankruptcy

Total Assets

$1,008,900

Total Liabilities

$9,416,602

 

 

Largest Creditors

Amount Claimed

Arvest Bank of Fayetteville

$6,691,602

Bank of Salem

$1,553,327*

Internal Revenue Service

$1,050,000

Anstaff Bank of Green Forest

$200,000

Centennial Bank of Conway

$100,000

*Total amount in the claims register, which is different from the debt Everett listed in his bankruptcy
Source: Everett’s bankruptcy filing filed Oct. 6, 2020
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