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Schwyhart Creditor Raises Fraud ClaimLock Icon

6 min read

The financial fires that engulfed the business ventures of Bill Schwyhart have reignited after smoldering for four years.

A renewed debt collection effort against the once prominent Rogers real estate developer has followed him to Texas and rekindled the interest of dormant creditors.

The dogged pursuit of a 7-year-old $369,000 judgment drove Schwyhart and his wife, Carolyn, to seek bankruptcy court protection through a Chapter 7 filing in Dallas in July.

That defensive move culminated in Schwyhart seeking to shed upwards of $90 million of potential debt claims linked with banks and business associates. It also subjected his sometimes shadowy financial dealings to additional legal scrutiny.

Emerging details surrounding the veiled ownership of a grand 9,484-SF home in Rogers that he once lived in have given rise to allegations of fraud.

Under oath, Schwyhart disclaimed any interest in the residence in the gated Pinnacle Country Club development. He professed to not know much about the benefactor who gave him free rein over the property after Schwyhart moved into it, for the second time, in 2014.

However, his curious rent-free, utilities-paid living arrangement as caretaker of the property has brought that professed ignorance into question by the bankruptcy trustee and creditors.

If his hidden ownership of the $1.5 million-plus manor at 9 Clubhouse Drive is proven, it will expose the debt-free property to other creditor claims.

The door was opened to that possibility in February when legal action was initiated to seize Schwyhart’s personal property at the home to satisfy a $222,444 judgment landed by Regions Bank in 2011.

That judgment against Schwyhart and his Schwyhart Holdings LLC was tied to the bank’s 2009 lawsuit to collect on three loans. Seven years of post-judgment interest increased the total judgment to $369,000 by the time the debt was acquired by a local investment group, CHP LLC.

“They said, ‘We’re going to buy other notes,’ and I didn’t like that …,” Schwyhart said of the decision to file bankruptcy during a creditors meeting in August. “That’s what pushed us off the cliff.”

Thwarted by Schwyhart’s claims of owning no personal property and having no assets, CHP went after 9 Clubhouse Drive before the Schwyhart bankruptcy.

In May, the group filed a fraud suit in Benton County Circuit Court alleging that Schwyhart is the home’s true owner. That position is based in part on information gleaned from Schwyhart during a deposition earlier that month.

The questions included his unusual relationship with the house he owned outright in 2001, lost through foreclosure in 2012, moved back into in 2014 and moved out of in March.

On paper, the property adjoining the ninth hole of the Pinnacle Country Club golf course has been owned by Pinnacle Villa LLC since June 2014.

The home furnishings also are owned by the limited liability company, and the sole owner of Pinnacle Villa is Harmic Davidkhanian, according to court filings.

CHP alleges that Davidkhanian of London, England, is a college classmate of Schwyhart’s son, Alex.

Last year, property taxes for the home were paid through TWG Resources LLC, owned by Alex Schwyhart.

Bill Schwyhart hand-delivered a $22,751 check from TWG Resources to the Benton County tax collector to pay property taxes on the residence. When deposed, Schwyhart portrayed his role in the check delivery as nothing more than a helpful errand for someone else.

‘Nothing but a Sham’
In laying out its dot-connecting evidence, CHP had a different take on the Pinnacle Villa-Schwyhart relationship.

“Pinnacle Villa LLC is nothing but a sham of Bill Schwyhart and subject to veil piercing and collections,” according to an affidavit by Brian Ferguson, partial owner of CHP.

The alleged sham is cloaked by a 2014 confidential settlement agreement that resolved an array of litigation including lawsuits between Schwyhart and former business partners in the mammoth Pinnacle Hills office and retail development: Johnelle Hunt and Tim Graham.

The dispute was exacerbated by the financial aftershock of 2008’s bursting real estate bubble, which hammered Schwyhart and his northwest Arkansas holdings.

Among the creditors listed in his bankruptcy petition are Hunt’s J.B. Hunt LLC, $10.7 million; and Graham’s Low Tide Holdings, $4.5 million.

Lenders with potential claims include Bank of America, $18 million; Great Southern Bank of Springfield, Missouri, $14 million; and Simmons Bank of Pine Bluff, successor of Little Rock’s Metropolitan National Bank, $5.1 million.

Real estate records indicate no money changed hands when Pinnacle Villa took ownership of the Rogers home from Graham’s Low Tide Holdings.

The limited liability company recovered the property from Schwyhart’s 9CH LLC in a $2.5 million foreclosure sale tied to a $4.5 million judgment.

Low Tide gained its creditor position on the house by acquiring debt secured by the property. That debt included loans totaling $1.5 million from Great Southern Bank.

CHP alleges that Low Tide transferred ownership of the house to Pinnacle Villa and covered the details as part of the confidential settlement agreement, an accommodation that allowed Schwyhart to hide the asset from his creditors.

While the existence of the confidential settlement was confirmed through depositions, its contents remain under wraps.

But the peculiarities surrounding the Rogers house were substantial enough for the bankruptcy court to order that the agreement be provided for private inspection by CHP.

The order, issued last Wednesday, also covers any correspondence regarding the settlement that involves Bill and Carolyn Schwyhart and her daughter, Kim Steerforth; TWG Resources; the Ayres law firm of Dallas; the Story Law Firm of Fayetteville; and Pinnacle Villa.

Other Oddities
During his battle with CHP, Bill Schwyhart revealed in deposition testimony that he hasn’t filed tax returns since 2008 because he hasn’t made enough money to declare any income.

CHP attorneys questioned why the financial benefit of living in the fabulous rent-free, utilities-paid home in Rogers didn’t necessitate filing.

Schwyhart was questioned in his bankruptcy case about the financial sources that made it possible for him and his wife to live on their stated monthly income of $1,167 while their monthly expenses totaled $6,475.

He attributed his ability to make ends meet to family and friends who helped cover the monthly shortfall of more than $5,000.

Schwyhart was questioned about receiving funds from HMG Investments LLC, an entity formed in 2003 that he once controlled. In a May deposition, Schwyhart said his wife owned 100 percent, but in a bankruptcy creditors’ meeting a couple of months later he didn’t know who owned it.

Ferguson: “You have an obligation to disclose any equitable interests that you have in an asset like that.”

Schwyhart: “Well, there’s no equity in HMG, if that’s what you think.”

Ferguson: “It’s an equitable interest in that LLC if you are able to get money out of it to pay [your bankruptcy attorney Seth Moore],” Ferguson said.

Schwyhart: “We borrowed money from the LLC.”

Ferguson: “I see. Who owns the LLC?”

Schwyhart couldn’t say.

Ferguson: “So when you wanted to go get money from HMG, who did you talk to?”

Schwyhart: “Well, Carolyn was on the account for HMG … She could write the checks and sign the checks. I was not.”

Ferguson: “So she took the last bit of money out of HMG, and it went to Mr. Moore. Is that what I’m hearing?”

Schwyhart: “Yes …”

Ferguson: “Of the $490,000 that you say that you owe HMG Investments, can you give me an idea of when that took place, when those funds were disbursed?”

Schwyhart: “Over the last 22 years.”

Ferguson: “Were there any promissory notes related to that?”

Schwyhart: “I don’t know.”

Ferguson: “Did you ever make an interest payment to HMG Investments?”

Schwyhart: “No.”

According to Bill Schwyhart, he and his wife have lived on retirement funds for the most part during the past 10 years.

On Thursday, HMG was ordered to provide a 12-point list of documents and records to CHP. The last item on the list: any facts or circumstances that would tend to prove the company is more than a sham entity by debtors to keep assets out of the reach of judgment creditors.

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