Dale Bartlett's petition to be relieved of about $48 million in unsecured debts has drawn objections from three parties to his bankruptcy case, including one who accuses the former Turner Grain Merchandising Inc. official of larceny.
Attorneys for the trustee in the Turner Grain Merchandising bankruptcy case and for Southern Rice & Cotton LLC, a creditor of both Bartlett and Turner Grain Merchandising, have asked a judge to give them until March 15 to decide whether they wish to oppose Bartlett's request.
Attorneys for a group of Lonoke County farmers, meanwhile, asked that Bartlett's request be denied outright.
Kendel Grooms and Donald K. Campbell III, representing the Lonoke County farmers, asserted in a Jan. 15 filing in Bartlett's bankruptcy case that he took part in a Ponzi scheme by selling their clients' rice and using the proceeds to pay off other growers and to make personal expenditures.
Those actions, the filing says, constituted acts of larceny that should preclude forgiveness of Bartlett's unsecured debts under U.S. bankruptcy laws.
Bartlett has testified that he was fired from Turner Grain Merchandising before the Lonoke County farmers signed contracts with the company. During a December hearing before Judge Richard Taylor, three of the farmers acknowledged that the contracts for their rice were signed by Jason Coleman, the company's president, rather than by Bartlett.
Bartlett filed for personal bankruptcy in September 2014, initially listing about $5.5 million in debts and about $1.2 million in assets. In April 2015, his case was converted to Chapter 7, under which a trustee is named to sell assets that are exempt from protection under bankruptcy law and most unsecured debts are forgiven.
Since then, creditors have filed 34 unsecured claims against his estate totaling $48.2 million, according to court records. Creditors also filed secured claims totaling $409,207 and priority claims totaling $2.2 million, the records show.
Turner Grain Merchandising of Brinkley was shut down in August 2014 when U.S. Department of Agriculture agents found no grain in the company's elevators despite certificates on the premises saying otherwise. The company filed for bankruptcy in October 2014, listing liabilities of $24.8 million and assets of $13.8 million.
Numerous lawsuits were then filed against Turner Grain Merchandising, and most became part of the defunct grain dealer's bankruptcy case. Farmers who filed suit say the company never paid them for their grain.
Richard Cox, the trustee in Turner's bankruptcy case, said in his Friday filing that he needed more time to decide whether to object to Bartlett's request for relief from his unsecured debts. Cox said he had hired forensic accountants "who are actively evaluating any potential claims" against Bartlett that might warrant an objection.
Lyndsey Dilks, attorney for Southern Rice & Cotton, said in her Friday filing that she needed more time in part because Bartlett has revised his list of assets "numerous times" after creditors have discovered "a concealed and/or omitted fact or asset." She said Bartlett's testimony "has been contradictory and raises many issues that must be investigated."
Dilks also noted that Bartlett is a party to several complex lawsuits arising from the failure of Turner Grain Merchandising and said she needs additional time to investigate those claims.
The Lonoke County farmers -- Zero Grade Farms, Bigfoot Ag, and others -- have filed one such suit in Lonoke County Circuit Court.
In their filing in Bartlett's bankruptcy case, Grooms and Campbell elaborated on arguments made in the Lonoke County lawsuit.
The filing contends that Bartlett and Jason Coleman were part-owners of Turner Grain Inc. -- which, unlike Turner Grain Merchandising, was never registered to do business in Arkansas. Turner Grain brokered sales between grain producers and grain purchasers, the filing says, and set up an escrow account to facilitate transactions.
Some farmers asked that their payments be held in the escrow account "for tax purposes and various other reasons," the filing says, adding this was sometimes done "for an extended period of time."
Eventually, the escrow account "grew to contain millions of dollars" held for the farmers by Bartlett, Coleman, Turner Grain Inc. and Turner Grain Merchandising, according to the filing. Bartlett and Coleman used that money "for their own personal gain, including the purchase of farm land, equipment and vehicles," the filing says, contending those actions constituted larceny.
As a result, Turner Grain was forced to delay payments to farmers for their grain, according to the filing. To entice the Lonoke County farmers to enter contracts with Turner Grain, the filing says, Bartlett, Coleman and possibly other Turner partners began offering higher prices than purchasers were actually willing to pay. Turner Grain then took possession of the Lonoke County farmers' rice but never paid for it, according to the filing. Any proceeds from the sale of that rice went to pay off growers with earlier contracts, creating a Ponzi scheme, the filing says.
The Lonoke County farmers also allege Bartlett transferred property and income from his farm to his wife to keep it from his creditors.
Separately, the trustee in Bartlett's bankruptcy case has asked Taylor to allow him to sell 11 guns as well as property in Monroe and Lee counties. Proceeds from the sale would help pay off at least some of Bartlett's creditors. Parties to the case have until Feb. 8 to object to the sale.
Business on 01/20/2016