LITTLE ROCK — Fayetteville developer John David Lindsey said Wednesday that the economy’s fluctuations skewed property values after he applied for loans from two institutions now accusing him of deliberately misleading them concerning his financial standing.
The Bank of Fayetteville and Trans Lease Inc. filed complaints Monday as adversary proceedings in Lindsey’s $169.5 million Chapter 7 bankruptcy case originally filed April 20.
“I have never deliberately misrepresented anything. Most of my assets were in Northwest Arkansas real estate, and once our economy turned negative those values began to decline on a daily basis. Any documentation that I presented to lenders was based upon the most current information that I had available and presented in an open and honest fashion,” Lindsey said in an emailed statement.
The Bank of Fayetteville is asking the bankruptcy court to order that the $1.77 million Lindsey owes on the unpaid balance of the loan not be discharged because the loan was obtained with false statements of financial condition.
The complaint stated that Lindsey knew the financial statements were false and intended to deceive the bank in order to get the loan. A supporting document with the compliant lists various assets, including his 33 percent share - valued at $69,077,305 - of a family trust. He will receive half of his share of the trust when he turns 40, sometime in the next year.
In Trans Lease Inc.’s complaint, Lindsey submitted a financial statement with an application on April 2, 2008, to lease 18 dump trucks for 60 months for JDL Leasing, one of his business entities. The trucks were repossessed March 17 this year and sold, leaving a deficient balance of $554,215.83.
Chapter 7 bankruptcy allows for liquidation of assets to satisfy outstanding debts. Lindsey filed for individual bankruptcy but marked the debt as primarily business-related.
The total liabilities represent Lindsey’s guarantees against loans for which he may not owe the entire amount. Some listed liabilities were unknown, so final totals may be higher or lower.
Lindsey is the principal broker and general manager of Lindsey & Associates, the real estate company founded by his father, Jim Lindsey, a past chairman of the University of Arkansas board of trustees, as well as a former Razorback and former professional football player.
Lindsey obtained a $1.74 million loan from the bank on Sept. 11, 2009. As part of the application process, Lindsey submitted written statements about his financial condition to loan officers. In that letter, Lindsey stated he had equity, or positive net worth, of between $64.98 million and $69.99 million.
Five financial statements dated between March 1, 2005, and May 1, 2008, report a positive net worth of between $55.94 million and $77.83 million, the bank stated in the complaint.
The schedules of assets and liabilities Lindsey was required to file under oath as part of his bankruptcy request lists total assets of $9.99 million and total liabilities of $169.6 million, the complaint stated.
Lindsey’s financial statement reported a total income of $3.46 million and expenses of $95,000, both numbers misstated in Lindsey’s favor, Trans Lease’s complaint stated.
If the court rules the debts are not dischargeable, Lindsey will still be liable to pay the loans and accumulated interest.
Lindsey & Associates is a real estate investment and management company with more than 200 agents in Northwest Arkansas, according to its website.
John David Lindsey invested in residential and commercial real estate and operated dirt excavation and transport services through various companies.
Business, Pages 25 on 06/24/2010