Chambers Bank named in lawsuit
Posted on Saturday, June 21, 2008
A group of investors, most from Fayetteville, has sued Chambers Bank of North Arkansas and several developers, claiming they were misled about a Florida waterfront development and that their investments were co-mingled with other projects without their knowledge or approval.
The lawsuit filed Thursday in U. S. District Court in Fayetteville also claims that Chambers Bank loan officer John Russell Meeks was given a $ 1 million stake in the project, called Eastpoint Redevelopment LLC, without putting up any money.
The plaintiffs claim they invested $ 3. 2 million in a project that never got off the ground, and that Eastpoint has defaulted on a $ 14 million loan from Chambers Bank.
“It was a scheme to defraud these investors out of their money,” said Christy Comstock, one of the Fayetteville lawyers representing the investor group.
Eastpoint, Fla., is an unincorporated community near the eastern end of the Panhandle. The Franklin County Commission last year approved a mixed-use development called Porthaven that is to include small shops, restaurants, apartments, townhouses and singlefamily homes.
The Growth Group LLC of Fayetteville, one of several entities named as defendants in the lawsuit, is the developer of the 31-acre project. Two telephone numbers listed for the Growth Group in Fayetteville were not working Friday.
The project that won approval in Eastpoint does not match the description of a townhouse project that investors claim in their lawsuit was described to them.
Robert Taylor, Chambers Bank’s chief executive officer, said the company had just been served papers on the lawsuit Friday afternoon and he could not comment.
Plaintiffs listed in the case are Badger Capital LLC, LR Holdings LLC, Powell Properties LLC and GWE Holdings LLC, all of Fayetteville, and individuals James Renner, Arthur Starr, Scott Smith, S. Bradley Daniels, Terry Harper and David Mix, all of Fayetteville; James and Laura Stilwell of Benton; and Jay and Karen Garnett of West Plains, Mo.
The defendants include two “John Does” who work at Chambers Bank, developers Mitchell Massey, Edward Davis, Morgan Hooker and Rich Hancock, and several companies those individuals are connected with.
The plaintiffs say they were told they were investing in a 16. 9-acre townhouse project. They contend that George Byram, a Fayetteville accountant they hired to review Eastpoint Redevelopment’s records, found that the company failed to keep accurate accounting records; failed to keep Eastpoint’s funds separate from the investors ’ funds; failed to keep Eastpoint’s funds separate from other corporate entities the defendants created; borrowed money without informing investors; and diverted $ 150, 000 to a Bank of Fayetteville account, then borrowed it back and booked it as a loan, among other potential irregularities.
To contact this reporter: spainter@arkansasonline. com
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