A version of this article originally appeared in Arkansas Business on April 10, 2000. It is being republished as part of Arkansas Business’ 30th anniversary issue. You can access the digital edition for free here.
Since the beginning of the year, Melanie Steele has paid $1 million for a home in Chenal Valley; $385,000 for a house in Canal Pointe and $92,000 for the lot next door; $357,500 for a house in the Lakewood section of North Little Rock; and $80,000 for a house that she then moved off its lot in Indian Hills.
All in cash.
She has incorporated two businesses, Avanti Cosmetics Perfumery LLC and Bainum Department Stores Inc., and set up an office for the latter in the Continental Building at 100 S. Main Street — a building Avanti Cosmetics Perfumery has a contract to buy.
Sources say the price will be more than $5 million. In cash.
She has frustrated competing bidders, alternately charmed and infuriated neighbors, and baffled real estate agents.
Just who Melanie Steele is remains something of a mystery.
Kay Stebbins, a public relations agent who said Steele had hired her to help publicize her companies, described Steele as “a successful businesswoman” and a “central Arkansas native who has returned home.”
The guidance office at North Little Rock High School confirmed that Steele graduated from what was then known as Ole Main High School in May 1980.
Where she’s been for the past 20 years is unclear, and she certainly hasn’t made herself available for interviews.
Widespread rumors — all completely unconfirmed — about the source of her fortune agree on the main point: that she is a stock market millionairess. But the details vary. She supposedly received stock in an Internet company — or was it a California trucking company? — from an ex-husband, or maybe it was a former boyfriend who repaid a loan with what had been worthless stock.
Residential Real Estate
What is known is that she moved into a modest brick house at 6500 Osage Drive in the Indian Hills section of North Little Rock sometime last year. She lived there with her young daughter for about six months before moving out earlier this year, according to her former next-door neighbor, Richard Scroggin.
Scroggin described Steele as an attractive divorcee in her late 30s who washed her own car and was friendly and well-liked in the neighborhood.
She — or, more precisely, the Melanie Steele Living Trust, with Bank of the Ozarks as trustee — purchased the Osage property for $80,000 in February. Scroggin said she told him she was planning to build a new house on the lot for an employee.
T.H. Epperson & Son House Moving took the existing house off the lot on March 31, and all that remained on the lot last week was a load of new bricks and the driveway. Epperson said he was hired by Mike Hill of MDH Builders of Little Rock, the contractor hired to build a new house on the lot.
Coincidentally — or not — Steele’s trust paid $1 million in February for Hill’s personal home at 28 Bretagne Court. And Hill confirmed that he is working with Steele on her plans to renovate the Continental Building. He referred all other questions to Stebbins.
The price Steele paid for Hill’s Chenal Valley house appears to be top-dollar but not out of line with the prices on other houses in the neighborhood, according to information provided by a real estate agent. The two-year-old house — which has six bedrooms and five full and two half bathrooms — is just under 7,000 SF, and Steele paid approximately $144 per SF. A 5,400-SF house on Bretagne sold for $124 per SF in October, and a 5,500-SF house on nearby LeCelle sold for $162 per SF last month.
Stebbins said Steele plans to live in the house on Bretagne but had not yet moved in as of last week. Residents in the gated Canal Pointe subdivision confirm that she lived in the house she bought at 1820 Canal Pointe for a matter of days in March. She apparently didn’t get along with the neighbors there as well as she did on Osage.
“Let’s say she thinks she can have her way,” said Marion Burton, a commissioner of the Riverdale Harbor Improvement District that includes Canal Pointe.
Burton said he never met Steele in person but had a heated telephone conversation with her after she insisted on installing an air-conditioning unit that included an outdoor compressor unit.
Exterior fan compressors are prohibited in the bill of assurance governing the Canal Pointe subdivision, Burton said, and neighbors asked him to intervene when Steele had one installed to replace or supplement the house’s existing geothermal system.
Burton said Steele told him she owned property all over the world and could do as she pleased with the house on Canal Pointe. Within days, Steele had moved out, leaving the offending compressor in place.
The $385,000 house is now occupied by Holly Vines, who confirmed that Steele is selling her the house for $1.
“Yeah, but we’ve been friends for 12 years. She’s a really good friend of mine,” Vines said. She then said any other statement would have to come from Steele’s PR agent.
Steele’s full-price purchase of the $357,500 Lakewood house at 2501 Justin Matthews recently closed. Like Hill and Vines, Steele’s real estate agent, Suzanne Best of Adkins McNeill Smith & Associates, referred all questions to Stebbins.
Stebbins said Steele “told me the bulk of the residential real estate she’s purchased has been for family, and she’s giving it to them. She does take care of the people she loves.”
Continental Building
What Steele — or, rather, Avanti Cosmetics Perfumery — plans to do with the Continental Building at 100 S. Main St. is subject to some inference. Steele apparently does not plan to tear it down to create parking space, as has been suggested as a possible use for the site. Stebbins said architectural plans for renovating the building, primarily the interior, would be made available to Arkansas Business after the sale of the building closes.
Makeshift paper signs pointing toward an office on the fifth floor were replaced last week with permanent signs reading “Bainum Department Store,” one of the corporations Steele registered with the state in January. The paper signs had “Ms. Melanie Steele” handwritten on the arrows pointing to the Bainum office.
Neither Bainum Department Stores nor Steele’s new limited liability corporation, Avanti Cosmetics Perfumery, has a telephone number, not even an unlisted one — at least not in those names. James W. Smith, an attorney with the Friday Eldredge & Clark firm, is the registered agent for both Avanti Cosmetics Perfumery and Bainum Department Stores. He referred all questions to Stebbins.
Workers in neighboring offices said they have never met the elusive Ms. Steele, although one who works in an adjoining office said he had sometimes heard voices on the other side of the wall.
Three sources familiar with negotiations on the building say Steele’s high bid was in the neighborhood of $5.2 million, a price that one source said included the real estate agents’ commission. The closing, expected in early June, is also expected to be a cash payment in full.
“She definitely had a higher price than we were thinking [of] — or somebody did, and I believe it’s her,” said Warren Stephens, chief executive officer of the Stephens Group.
The Stephens Group was interested in buying the building and its 162 parking spaces because they adjoin the Stephens-owned Capital Hotel, he said.
Since Then …
2014: Arkansas Business’ first article about Melanie Steele was a reader-pleaser in that it was the first attempt to explain an astonishing multimillion-dollar spending spree by someone completely unknown in Arkansas’ monied circles. But it was far from complete.
Steele never granted an interview to Arkansas Business, but she told the Arkansas Democrat-Gazette in late 2000 that she had cleared $14 million by selling her stock in an Internet grocery delivery company in San Francisco called Webvan. The company, which shortly thereafter went the way of many high-flying dot-coms, was founded by bookstore mogul Louis Borders, whom Steele claimed to have been close to marrying.
(When the Democrat-Gazette reached Borders and asked him to confirm Steele’s story, he hung up the phone.)
More stunning than her sudden wealth was just how quickly it was all gone. The paper trail of purchases began in February 2000 and ended abruptly in July 2001, when Steele bought the last of 12 houses.
During that time she had also spent hundreds of thousands of dollars, in cash, on cars, most of which she gave to friends and relatives. The Democrat-Gazette reported that she left $10,000 tips for waiters at Café D’Roma, a restaurant in Little Rock’s Hillcrest neighborhood that was apparently one of her favorites. The restaurant itself was one of the last things she impetuously agreed to buy.
But she never made good on that $85,000 obligation, nor on her plan to buy the Continental Building in downtown Little Rock. By 2002 it was clear that she was broke.
The IRS filed a $2.55 million lien for taxes due for 2000. Houses she had bought, even those she gave away, were placed back on the market and sold, invariably at a loss. Claims stacked up, some for ominously small amounts.
The resale of the home Steele bought at 41 Chenal Circle became a case study in the importance of title insurance. Steele had given the house to her boyfriend’s family, but the IRS had attached a lien to it anyway. When the house was sold in 2003, Stewart Title Co. overlooked the lien.
After the IRS threatened to seize the house, Stewart Title managed to settle with the IRS for $185,000, then got a judgment against Steele for that amount plus more than $70,000 in related expenses.
The Continental Building was ultimately purchased by Warren Stephens and razed to make room for the surface parking lot on the east side of his Capital Hotel.
At last report, Steele was living quietly in North Little Rock. And Webvan, the assumed source of her short-lived fortune, may have been ahead of its time. Wal-Mart Stores Inc. has been experimenting with a similar business plan for online ordering of groceries to be home-delivered and has been doing so in the San Francisco area where Webvan made its try.
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