The tally of fraud and forgery allegations surrounding Joseph Blake Smith and his troubled ownership of the SQRL convenience store chain continues to grow. Though the SQRL founder has tried to distance himself from the corporate crash, Smith’s west Little Rock home and office remain popular destinations for process servers.
Files Development LLC, led by the husband-wife team of Tim and Drew Files, joined the parade of litigation with tandem fraud-forgery lawsuits against Smith on July 31.
The circuit court complaints in Saline and Lonoke counties allege that Smith orchestrated the creation of fraudulent deeds on C-store projects in Bryant and England owned by Files Development.
“He ended up screwing me every which way,” Tim Files said. “Blake reached out to me, hoping we can kind of reach some sort of settlement. He told me, ‘I never meant to hurt you guys. We’re brothers in Christ.’ Yeah, right.”
The alleged bogus deeds, filed of public record with circuit clerk offices in Saline and Lonoke counties, indicate that Files Development sold the projects at 6101 Hwy. 5 in Bryant and 709 E. Fordyce St. in England for $4.6 million each.
The deeds bear a signature attributed to Timothy W. Files, manager of Files Development. But Files said his signature is forged and the transaction was never contemplated and never happened.
A noteworthy omission from the deeds is the signature of Drew Files. The operating agreement of Files Development requires the signature of both her and her husband to conduct business.
“We always sign on stuff together,” said Drew Files of their 50/50 ownership. “We’ve never sold a property without both our names on it.”
According to the Files Development complaint, Smith’s alleged co-conspirator to help execute the fraudulent transactions and forged real estate documents is Carrie Draper, a notary and transaction coordinator with SQRL Holdings.
Joining Smith and Draper as named defendants are the purported buyers: Cameron SQRL-Bryant LLC and Cameron SQRL-England LLC. The limited liability companies are affiliates of another named defendant: Cameron Property Co. LLC, an affiliate of Madison Capital Group in Charlotte, North Carolina.
Files Development is seeking unspecified actual and punitive damages.
When SQRL quit paying rent in March, Files Development says it was forced to step into the breach and get the England store back in operation.
That required shelling out more than $100,000 to cover unpaid vendors, unpaid employees and past due sales taxes, as well as restock empty shelves.
“That was the big slap in the face,” Tim Files said. “The tanks were completely out of fuel, and the store was bare bones.”
Helping sort through the mess following the exodus of SQRL as the leasehold operator of the England store is Blake Henderson, who stayed on to oversee the day-to-day management of the project for Files.
Developing a brand new C-Store in England was Henderson’s brainchild, an idea that dated back to 2015. His family was supposed to own a 20% stake in the project and a 50% share in the operations in partnership with Blake Smith.
“Smith called me one day, and said, ‘Congratulations, you own a convenience store,’” said Henderson, whose father, Pat, largely bankrolled the $185,000 site purchase in 2021.
However, the Hendersons never did receive ownership in the project despite their financial contribution.
“We now know he’s a crooked shyster and took our money,” Henderson said of Smith.
Files Development bought the England project for $3.4 million in May 2023 from Standard Development Co. LLC, led by Smith and his namesake irrevocable trust.
Smith couldn’t be reached for comment.
Earlier Alleged Fraud
On June 10, Cameron leveled its own fraud claims against Smith and his Standard Development Co. LLC in Florida’s Palm Beach County Circuit Court.
Cameron attempted to serve its court summons to Smith at his grand Florida manor in The Sanctuary, a gated waterfront neighborhood in Boca Raton, but found better hunting ground in Little Rock.
The 8,561-SF mansion on the Intracoastal Waterway sold for a reported $6 million on June 27. That’s a markdown from the $7.75 million that Smith reportedly paid for the mansion in November 2022.
The six-bed, 9.5-bath house was originally listed at $10.25 million back in July 2023.
Ownership of Smith’s Little Rock residence, a 3,661-SF house in west Little Rock’s Falstone Court neighborhood, was transferred to his wife, Amanda. A year ago, the property was held in the couple’s name along with his Standard Development Co. LLC.
According to its lawsuit, Cameron paid Standard Development more than $93 million for the 31 convenience stores in a sale-leaseback to Smith’s SQRL Service Stations LLC.
Cameron claimed it provided an additional $8.15 million for tenant improvements that supported the 20-year lease agreements. Smith allegedly absconded with the tenant improvement funds and left the properties spread across Florida, Texas, Arkansas and Oklahoma in disrepair.
Cameron’s experience with Smith shares similarities with another SQRL landlord, Chicago’s Blue Owl Real Estate Capital LLC, with more than $25 billion in assets under management. Like Cameron, Blue Owl hasn’t received any lease payments from SQRL since the monthly rent due on April Fool’s Day went unpaid.
In all, Blue Owl affiliates executed 16 master lease agreements with Smith’s SQRL Service Stations LLC in deals that encompassed 223 C-store projects located primarily in the Midwest and South.
The Blue Owl landlords are owed nearly $6 million for just one month’s missed rent, which led to a termination of the lease agreements and efforts to regain control of the properties.
In total, those 25-year leases added up to more than $1 billion.
The C-stores were part of SQRL’s much ballyhooed “acquisition” from an unnamed seller announced in October. Blue Owl’s name surfaced weeks later along with the true nature of the lease deal involving zero investment by SQRL.
Also like Cameron, Blue Owl provided tenant improvement funds that were allegedly misused by Smith’s SQRL Service Stations.
According to Blue Owl’s May 15 lawsuit filed in Chicago’s Cook County Chancery Court, SQRL Service Stations couldn’t provide much documentation to substantiate its claims of properly spending tenant improvement funds.
Allegations of fraud and forged signatures that began floating around the Blue Owl-SQRL leases in the spring surfaced during an Aug. 7 bankruptcy court hearing in Fort Smith.
The SQRL-Blue Owl lease documents include a purported guarantor listed as World Kinect Corp., c/o World Fuel Services, 11880 College Blvd., Suite 310, Overland Park, Kansas 66212.
A brief dive into problems with that guarantee was made during testimony by Andrew Morris, principal in the legal and compliance department of Blue Owl Capital Holdings.
While on the witness stand, Morris indicated the guarantee was not authentic and allegedly fraudulent. He also said the guarantee also lacked an authentic signature by a World Fuel official.
“I understand there are allegations that these leases are fraudulent, but I’m not ruling on that,” said Judge Bianca Rucker. Sorting out those allegations is for another court and another day, she said.
The focus of the Aug. 7 hearing was Blue Owl successfully extracting its property from the tenuous bankruptcy claims by Jamal Abdul Hizam and his Gas Hub Investment LLC. Hizam’s limited liability company bought control of SQRL Service Stations from Smith in a controversial $17.4 million transaction on April 5.
The bankruptcy move by Hizam proved to be a belated failed attempt to stop Blue Owl from taking possession of all the C-store properties after the lease defaults this spring.
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