LITTLE ROCK — Little Rock developer Roger Stephen “Steve” Clary said under oath Tuesday in a bankruptcy proceeding that if he were asked questions about allegations of fraudulent use of proceeds from a loan, he would refuse to answer under the protection of the Fifth Amendment.
Alex Gray, an attorney for Banc of America Leasing and Capital LLC, one of the banks Stephen Clary is accused of defrauding, posed the question during a conference in the U.S. trustee’s office in Little Rock.
Clary and his wife, Cynthia, filed for Chapter 7 bankruptcy protection in July. According to a filing last week updating their debt, they owe $168.6 million to creditors and list $1.4 million in assets. No other creditors showed up for the conference.
Their biggest asset is a $1.2 million home at 12 Hickory Hill Circle in Little Rock.
Clary started developing Shackleford Crossings in west Little Rock in 2005, but the project took longer and cost more than he anticipated. Fifteen stores are open and a Wal-Mart is under construction. J.C. Penney, another anchor, is open.
Randy Rice, who was named trustee by the U.S. Bankruptcy Court for the Eastern District of Arkansas, said that he hopes he can work with the couple to liquidate some holdings, but that it remains unclear how much money could be produced for creditors.
Rice said after the conference that the Clarys’ bankruptcy is “extremely complicated and involved.”
At one point he asked Stephen Clary how he kept up with all his business dealings.
“Once you breathe life into a business they take care of themselves,” Clary said.
Rice told Clary to make a detailed list of all his potential assets before the two meet again so they could go through each one.
Rice said they could meet as early as next week.
During the conference the Clarys said they hadn’t had a bank account since January 2009, after a bank garnished what accounts they had, including most of the $27,000 he made from selling his 2004 Mercedes-Benz.
The Clarys said they have been operating on a cash-only basis since 2009.
In order to make mortgage payments, buy groceries and pay other expenses, the Clarys have been relying on donations from their church, family and friends.
Their biggest expense is their $5,600-a-month mortgage, they said. When Rice asked if the family hopes to keep the house despite having nine judgments against it, Steve Clary said, “That would be our desire.”
Rice said Cynthia Clary needed to get her jewelry and fur coats appraised.
On the criminal side of Steve Clary’s court proceedings, federal Magistrate Judge H. David Young last week assigned him a public defender to represent him at his May 16 trial.
Steve Clary pleaded innocent July 20 to four counts of wire fraud and one count of mail fraud. He faces up to 30 years in prison on each federal count. The indictment charges that in 2008 Clary took out a $4.5 million loan from Banc of America Leasing and Capital LLC for a custom bus outfitting and leasing company called Destination Ventures LLC.
Clary asked the bank to distribute some of the money to vendors for buses or bus equipment. The indictment says one of the vendors, Bruce Coach Inc. of Salmon Arm, British Columbia, was asked to send the $1.6 million it received to two Clary companies that weren’t involved in buying or outfitting buses.
Steve Clary also posted bond in a Gwinnett County, Ga., theft-by-taking case related to the bus leasing business. Clary was charged by police in that case.
It will be presented to a grand jury before moving further, Gwinnett County Detective R.A. Herndon said.
Business, Pages 25 on 09/22/2010