LR man gets 27 months for fraud

Judge accepts deal requiring him to pay $845,000 to IRS

Stephen Parks of Little Rock, who for three years fought the IRS' efforts to take more than $7.5 million in property and cash from him that it said was obtained by fraud, on Wednesday accepted a 27-month prison sentence.

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Parks negotiated the sentence, which also requires him to pay $845,000 in restitution to the IRS, when he pleaded guilty May 27 to a single count of wire fraud. The plea and sentence didn't become official, however, until Wednesday, when U.S. District Judge Leon Holmes accepted both after reviewing the results of a presentence investigation.

The charge to which Parks, 62, pleaded guilty accused him of carrying out a fraudulent investment scheme involving the sale of refined-coal tax credits.

In addition to the federal prison time, Parks agreed to forfeit jewelry purchased with proceeds from the fraudulent sale of tax credits, and agreed to surrender all property seized by the government so far, with the exception of $73,000 cash and the house at 2020 N. Spruce St., where he lives with his wife, Anna Harper Parks, and their daughter, Cooper, 14.

The already seized property includes $7.5 million in various accounts, in addition to real estate and five vehicles, including a Bentley.

Parks operated companies that he said refined coal, although federal prosecutors said that at least one of his companies, Global Coal LLC, which he formed on or about June 1, 2010, "has never refined any coal or sold any refined coal to an unrelated third party," as the law requires in order for a company to sell tax credits.

The refined-coal tax credit was added to the tax code by the American Jobs Creation Act of 2004, according to a news release from U.S. Attorney Chris Thyer; David Resch, special agent in charge of the Little Rock field office of the FBI; and Christopher Henry, special agent in charge of the IRS Criminal Investigation office in Nashville, Tenn.

They said the credit requires that the refined coal be produced by the taxpayer at a refined-coal production facility during the 10-year period beginning on the date the facility was originally placed in service, and sold by the taxpayer to an unrelated person.

Parks was chief executive officer, president and manager of Global Coal, and was also president of Ecotec Coal LLC and King Coal LLC.

The news release said that in addition to never refining coal, Global Coal has never had a facility in place to refine coal, and as of March has failed to file any federal income tax returns. It says the company also "has never purported to create refined coal tax credits pursuant to [federal law] in any federal tax return."

"Despite knowledge of these facts, Parks approved and facilitated the sale of nonexistent Global Coal refined coal tax credits through a broker to the investor, representing that the tax credits were valid and available for sale," the news release said. "Parks subsequently used a large portion of the proceeds of that sale for his personal use and the use of his family."

The release states that on Jan. 9, 2012, the unidentified investor agreed to purchase 845,000 Global Coal tax credits and 268,000 Ecotec Coal tax credits for $723,450. It states that four days later, the investor wired $549,250 from a bank in Iowa into King Coal Holding LLC's account at Delta Trust & Bank in Arkansas.

An invoice backdated to Dec. 30, 2011, reflected that the transaction provided $845,000 of refined-coal tax credits to the investor. The release also states that a separate invoice for the Ecotec Coal tax credits directed that $174,200 be wired into Ecotec Coal's account at Security Bank.

From the proceeds of the Global Coal tax credit sale, Parks wrote a $40,000 check to his wife for "Coal Rights Arkansas," according to the news release. It said the $40,000 "was part of approximately $1.3 million paid to Parks' wife from 2008-2012 for 'advanced royalties,'" and noted that an agreement backdated to Dec. 1, 2007, said that Parks' wife "controls certain mineral rights within the state of Arkansas and King Coal, LLC ... desires to extract coal from these properties. ..."

"In fact," the officials said in the news release, "Parks' wife had no interest in any land with coal rights in Arkansas and had no mineral rights to coal during the time she was receiving the 'advanced royalties."

A $301,271.50 cashier's check obtained from proceeds of the Global Coal tax credit sale was used to purchase a house at 4817 Stonewall Road in Little Rock for the purpose of tearing the house down and using the property as a backyard for the Parks family, according to the news release.

Parks told the judge Wednesday from a courtroom lectern, where he stood with his back to about 40 supporters who filled the benches: "Your honor, I feel terrible about the way things have unfolded and the situation that I made that has put me in this position, and that has had an effect on other people. It's been a long three years, and it's been really hard."

With defense attorney Dustin McDaniel at his side, Parks blamed his excessive use of alcohol for ruining his "vision and dream to do something very special," saying, "I made a bad decision along the way." He said that now, "I'm a better person than I was when I made that decision. Alcoholics Anonymous has done it for me. I have a new foundation and a new way of thinking."

The only testimony came from Anna Harper Parks and Dr. Leslie Smith, a psychiatrist who has been working with the couple's daughter. Both asked that Stephen Parks be allowed to report to prison after Christmas because of promises made to his daughter, who has Asperger's syndrome, a form of autism. The judge agreed, setting Parks' reporting date for Dec. 28, over the objections of Assistant U.S. Attorney Stephanie Mazzanti, who wanted Parks to report to prison within 30 days.

Holmes also imposed three years' probation and agreed to recommend to the U.S. Bureau of Prisons that Parks participate in an alcohol treatment program that, if successfully completed, could shave some time off his sentence.

As part of Parks' plea agreement, his wife, who operates an estate sales business in Little Rock, wasn't charged with any crimes and was released from any further criminal inquiry, and the couple agreed to drop a civil suit they had filed against the IRS.

McDaniel said after the hearing that the $845,000 in restitution will come out of the already seized assets and is expected to be paid by today.

Metro on 10/08/2015

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