HARDY - For two decades, people in this northcentral Arkansas town saw Wayne Watkins as a visionary who created resort developments along the scenic Spring River and boosted the area economy. Now, people he lured here to buy property see him as a thief.
Watkins created a rustic resort called the Spring River Beach Club and then several elopments around it. He borrowed about $2.6 million from at least seven banks to buy thousands of acres of rolling hills. He subdivided the land and sold everything from camper lots to 5-acre parcels, mostly to out-of-towners looking for vacation and retirement property in what salesmen called the next Branson."
He collected down payments from buyers and hadthem sign installment land sales contracts and agreements that let him automatically withdraw monthly payments from their bank accounts.
The buyers - hundreds of them - thought they were buying a piece of paradise.
But when Watkins defaulted on his loans, he and the thousands of dollars he had taken from each of them disappeared, along with any legal claim the buyers had to the land. The buyers had no claim in part because of the installment land sales contracts. Under such contracts, the buyer pays monthly installments, just like a regular mortgage, but doesn't receive a deed until after making the last payment.
When some buyers complained to government agencies that they'd been bilked, they were told nothing could be done.
The state attorney general's office has taken no action against Watkins and is not investigating complaints it received as far back as 2003.
The Real Estate Commission investigated and then dismissed the one complaint it received.
Local law enforcement officials have made little discernible progress since issuing a warrant for Watkins' arrest on a felony theft charge, which stemmed from an investigation that began in the fall of 2006.
Several buyers said Watkins' salesmen led them to believe that Watkins owned the property outright, and in at least one case, actively discouraged a buyer from doing title searches that would have revealed complications.
Watkins did not record many of the buyers' contracts at the courthouses in Sharp or Fulton counties. Although installment land contracts are not mortgages, real estate attorneys advise buyers to have such contracts recorded at the office of the circuit clerk of the county where the land lies.
Had Watkins or the buyers done so, the filing would have given notice to any lender or prospective buyer that they had an interest in the land and given them a better chance of convincing a judge it belonged to them.
Watkins' cousin, Virgil Griffin, estimates Watkins sold between 1,000 and 5,000 acres broken into 3- to 5-acre lots. But only Watkins knows how many buyers lost their property and their money.
Some buyers found out what had happened only after they noticed the automatic bank drafts stopped. In some cases, Watkins continued drawing payments for as long as two years after closing his real estate business, leaving the country and losing control of his land because he owed banks and taxes, an investigation by the Arkansas Democrat-Gazette found.
Some people may have continued to pay even after their land had been foreclosed on and sold to other buyers because banks did not notify them.
States such as Ohio and Pennsylvania limit installment land contracts like the ones Watkins used, by requiring developers to record contracts in county clerk offices and by requiring the seller to have clear title or to disclose encumbrances.
Arkansas has no such requirement.
Some real estate experts say Watkins may have violated federal disclosure laws by not revealing that he had outstanding loans on the property.
Now, several buyers are scrambling to try to recoup their money or gain title to land they believed was theirs. Still others don't yet know that land they've been paying on does not belong to them.
The state land commissioner is preparing to auction hundreds of parcels from Watkins' developments - 57 as early as this July - because the taxes haven't been paid in at least three years.
Typically, the buyer is responsible for paying taxes. But many people who bought land from Watkins say they were told their payments would cover the taxes.
Land Commissioner Mark Wilcox's staff has known about Watkins' financial troubles for at least a year and in February began hearing from buyers who believed they had been scammed. Yet his employees have no plans to conduct title searches on the auction-bound property. While title searches would reveal the defaulted loans and foreclosures, Arkansas law does not require them.
Watkins has moved to Mexico, where he sells real estate. The warrant for his arrest remains unserved.
Lynne and Ronald Falanga used their American Express cardto pay $1,500 down on six parcels of land in Watkins' Turkey Pen development. The Memphis couple signed a contract to pay $319 a month for 10 years for land where they dreamed they would spend their golden years.
They saw the deal as their best chance to own retirement property because they had weak credit and could make payments by having money drafted automatically from their checking account.
When the drafts stopped in November, the couple had paid about $23,000. They phoned Spring River Beach Club but the line had been disconnected.
They later called the Hardy Chamber of Commerce, which referred them to Griffin, Watkins' cousin.
"He told me that Wayne had skipped the country and gone to Mexico," Lynne said. "I was crying on the phone. I said, 'This is our retirement!' "
The Falangas never met Watkins. Instead they dealt with one of his salesmen, Howard Baswell.
Baswell, who markets "ownerfinanced" land in the Ozarks on a Web site created in 2008, didn't respond to phone and e-mail messages left by the Democrat-Gazette. Baswell's Web site includes photos that appear to feature Spring River Beach properties.
Griffin said he doesn't have an address or phone number for Watkins, but said his cousin calls periodically to talk about University of Arkansas Razorbacks sports and local happenings.
Through Griffin, Watkins declined to comment for this story.
The Falangas and other families, however, want to talk to Watkins.
"I'm sure Wayne Watkins didn't set out to do this," Lynne said.
She paused, then added, "... or maybe he did."
The Falangas later contacted Ash Flat attorney and District Judge Mark Johnson. Johnson has had the onerous task of explaining to many people the mess Watkins left behind.
"They've been paying for property they will never own, and they likely won't get their money back," Johnson said. "The house of cards started to crumble about a year ago. I was getting two or three calls a week for a while."
Johnson advises most people who call him to give up the fight because banks and other creditors are ahead of them in line to get money back from Watkins.
"I tell them they can give me $1,000 [to represent them], and I'll give you a $5,000 judgment against a turnip."
In the years before Watkins' developments unraveled, he made sure his favorite bar, the Copper Feather in Cherokee Village, stocked Ketel One vodka - the most expensive one behind the bar - for his vodka tonics.
He waltzed in as a big spender, buying women round after round.
Watkins continued that lifestyle even after his business began to falter. But at closing time, Watkins went home alone, often drunk and without paying his tab.
Prospective buyers had no idea they were purchasing land from a man who couldn't cover his bar tab.
They usually dealt with salesmen - in his heyday Watkins had more than 100 working to secure his dream of making Hardy and surrounding areas the tourist hot spot in Arkansas.
Had buyers asked some folks in Hardy, they would have heardglowing reviews of Watkins.
"I'm tickled to death that he came here to begin with because I watched the benefits that we got," Hardy Alderman Bob Gilliland said recently. "He brought millions of dollars into this area."
Gilliland estimated that Watkins brought in 10,000 families a year who arrived in town for free vacations as part of his sales pitch.
"You ain't gonna get me to say anything bad because he brought this county back to its feet," Gilliland said. "He brought a whole lot more good than bad."
Watkins, 59, started with a small operation in the 1980s, when he purchased an old camp from Jesus is Lord Ministries (which later sued Watkins to get its money) and opened the Spring River Beach Club. Later, he took out loans to buy larger adjacent properties, subdivided them and sold the parcels along with membership that allowed buyers to use the Beach Club.
Spring River Beach Club was a family recreational center reminiscent of the summer club featured in the movie Dirty Dancing - cabins line a small lake and the Spring River. Amenities included tennis courts, swimming pools, miniature golf, horseback riding, fishing, hiking and canoeing.
Today, weeds sprout along the boundaries of the tennis court, the pool is filled with brown water and the miniature-golf course sits unused.
Watkins' ex-wife, Carrie Mathis, remembers the place fondly.
"It was absolutely a paradise for people because it was a [less expensive] place that families could go," she said. "I would sit in my office and look out the window [and] it would make me almost cry because I was from a big family, and we were poor.
"I thought, 'Man if we just had something like this.' "
Watkins later opened an RV park called Riverbend, parts of which also are involved in foreclosure proceedings. He also started several other large developments in Sharp and Fulton counties, and he opened the Spring River BBQ restaurant and a gas station.
"He had a big vision for Hardy," Hardy Mayor Nina Thornton said, "but after that, I don't know."
The problems surfaced slowly.
In the late 1990s, Watkins promised to donate land for a new Nine Mile Ridge Volunteer Fire Department.
"We waited for about six, eight months for paperwork because we couldn't start anything until we had the title," said Chief Gary Gilliland, Alderman Bob Gilliland's brother.
But Watkins couldn't prove he had clear title, one free of liens and questions of ownership.
Finally, the Fire Department gave up on Watkins and bought another piece of property. By then, some of Watkins' salesmen had been telling prospective buyers about Watkins' charitable contribution to the Fire Department.
"We just told them they didn't help us, so we didn't want them to use that in their sales [pitch]," said the chief, who had worked for Watkins over the years.
Watkins is a nice guy and easy to work for, the chief said. But he had "money problems."
"I don't know why, but he always had a lot of problems getting his money situation taken care of - even years back," he said.
In fact, land commissioner records show that as far back as 1988 Watkins had failed to pay some of his property taxes.
Not many people knew that side of Watkins.
They knew the self-assured man who announced on Hardy billboards "Wayne is back " when he returned from regular winter trips to Mexico. They knew the man who peddled his Spring River property across the country and online.
"I've devoted my career to the development of the Spring River Beach Club," Watkins wrote on a Web site that remains online.
"So for a day, a week, or a lifetime, come and see what we have to offer. You'll really be glad you did."
"Take over payments on a cabin in the woods in the Ozark Mountains," read a 1996 ad in Colleen Crowley's newspaper, the Peoria Observer in Illinois.
The cabin sounded cozy to Colleen. Watkins' company enticed her and her husband, Steve, to come to Arkansas by offering a free weekend at the Beach Club - if they listened to a 90-minute sales pitch.
Living paycheck to paycheck back then, Colleen and Steve couldn't really afford a cabin but they were working hard to establish themselves and didn't think it would hurt to look.
"Don't you buy anything," Colleen ordered her husband before arriving.
But when they saw the amenities at the Beach Club and the lush acreage that surrounded it, they were convinced.
The cabin they'd seen in the newspaper, however, had sold that day, a salesman named Rusty told them.
Rusty, who wore the biggest belt buckle Colleen had ever seen, urged the couple to buy one of the empty lots Watkins owned because they'd be investing in the "next Branson."
The Crowleys put part of the down payment on a credit card and signed a contract that day for almost $7,000. Watkins financed the deal, and the Crowleys agreed to automatic monthly drafts from their bank account.
"I'm so embarrassed. We paid 10 percent interest," Colleen said recently. "We were young. We were not financially savvy."
But they thought they were making a smart decision for the future.
"I think buying property is always a great investment," Colleen told her husband that day, "because you can't make more land, and they can't take it away from you."
With Watkins unavailable to explain to people what happened to their "great investment," those who know him have offered several theories: Floods, his divorce, bad business deals.
None of them thought he willfully took money from people in exchange for land that he knew they'd never get.
"He wouldn't have intentionally done anything. I'm not defending him. He owes me lots of money, and I'll never get it back," said his former business partner Carroll Caldwell. "[But]if you own a piece of property and your camper gets washed away ... people quit making payments."
But the flood Caldwell referred to happened in 2006, four years after court records show Watkins began getting behind on his bank loans and three years after the first foreclosure lawsuit.
Mathis, Watkins' ex-wife, said two sides of Watkins' personality were always in battle.
"His mom and dad were salt of the earth," she said. "He tried on one side of himself to fit that mold."
Griffin, his cousin, said he isn't sure what caused Watkins to stumble financially, but says Watkins has too much pride to file for bankruptcy. Watkins has defaulted on loans at two or three more banks that have yet to foreclose, Griffin added.
"I'd like to see the Houdini who could figure this out," he said. "I just don't know if anybody will ever figure it out."
Some people who lost money, along with attorneys advising them, said Watkins is the only one to blame for their predicament.
"[The buyers] were just unsuspecting and not educated in the law," said Jonesboro attorney Scott Emerson, who has talked with some of the buyers, "and Wayne Watkins was fast and loose and knew what the hell he was doing."
Brenda and Jim Roweton, now of Hernando, Fla., became interested in the land when they spotted it on a Web site in 2003. They lived in Ohio at the time, were planning to retire and wanted property in Arkansas.
Jim, a disabled veteran, has trouble traveling, so he dispatched his son to check out the land. The couple, who never saw the lots, bought about 5 acres through overnight mail.
"I had been through Arkansas but had never spent much time there," Jim said. "I thought it was beautiful. We knew we were going to retire in Florida, but we wanted to summer somewhere up in the mountains."
"We signed a contract that was supposed to be a binding document," Brenda said. "We were to own the land outright."
They expected to pay off the property in 2013, and had paid more than $8,000 when the bank drafts of $116 per month stopped in December.
Unable to contact the defunct Beach Club, the couple began madly calling any Hardy number they could find. They finally reached a clerk at the Best Western who nonchalantly told them that Watkins cheated an untold number of people before skipping town.
"They were the only ones in Hardy who would answer the phone," Jim complained. "I was aggravated. Everybody up there seems to know what's going on, but they're really close-mouthed about it. It's like pulling teeth to get an answer from anybody." Hardy boasts about 575 residents and a charming downtown where tourists are always welcome - and always noticed.
"Hardy is a town where it seems like everybody knows everybody, and they don't want this going nowhere," Jim concluded.
Watkins' attorney, Larry Kissee, recently explained how his client created a quagmire of loans, debt and lines of credit.
"He'd finance the operations, and periodically, every year or two, he would have to refinance," said Kissee, who also serves as the part-time city attorney of Ash Flat, about 12 miles south of Hardy. "He had different banks financing different operations. When one [deal] went under, it was just like a ... snowball effect."
Attorneys for five of the banks that loaned Watkins money and then filed foreclosure lawsuits either declined to commentfor this story or did not return calls.
At some point, the juggling overwhelmed Watkins, Kissee said.
"I really don't think that Wayne knew which lots were in which category," the lawyer said.
He doesn't know how many buyers ended up with proper deeds to their property, how many may not have clear title or how many people may still believe they own property that is not theirs.
Jonathan A. Goodman, a Colorado real estate attorney, said it's difficult to tell from the paper trail Watkins left whether he set out to cheat people.
"In a situation like this, who knows how well-intentioned the seller is. Sometimes, the sellers are very well-intentioned and the circumstances unfold differently than they expect, and they bail and the buyers are left holding the bag," he said. "Sometimes, they just start out as con artists."
Intentional or not, Watkins set up the contracts and handled his business in a way that easily allowed this to happen.
At least one buyer said that Watkins' salesman discouraged title searches. Other salesmen targeted buyers looking for retirement property. And although the contracts Watkins used specified that buyers should pay their annual property taxes, some buyers say they were assured that their monthly payments would cover the taxes.
Even so, the buyers were responsible for the taxes.
"The law respects a written contract," said Tim Grooms, a Little Rock real estate attorney.
Buyers, he said, always should have a lawyer look at these types of contracts.
In a typical development, the financing allows partial release amounts: As each lot is sold, the developer gives the buyer's money to the bank so the lot can be released from the master development loan.
"The developer may later go into default," Goodman explained. "The developer may later skip town. The developer may later file for bankruptcy, but if the buyer is making their payments, the buyer won't be foreclosed on."
Watkins, however, used payments from buyers to make payments on his loans. Because buyers didn't conduct title searches, they didn't know Watkins' land was encumbered by banks.
Title searches are meant to protect the buyer, Grooms said.
Had buyers discovered bank liens during a title search, he said, they could have made arrangements to make their payments to a bank.
So why did banks continue to refinance loans and, in some cases, give Watkins additional money even after he defaulted on loans?
"If you borrow a little money, the bank's got you," Goodmansaid. "But if you've borrowed a lot of money, you've got the bank. You're too big to fail. They keep feeding you money, hoping that by buying time, the market rebounds and the project sells. There's nothing that stigmatizes the project more than foreclosures.
"They have egg on their faces for making the bad loan to begin with, and so it's hard forpeople to cut their losses."
Grooms said he refuses to draft installment land sales contracts because they're so risky.
"As long as everyone's honest in the transaction, everything works fine," he said.
By not recording the contract, a dishonest person could sellthe same property to someone else because the original buyer's name isn't attached to the land.
Land sold in this way often is billed as retirement property, Grooms said, because physically living on the land is consideredpossession and "possession is itself notice that you have an interest in the property."
Grooms said Watkins may have violated the U.S. Interstate Land Sales Disclosure Act, which regulates the sale of property using the mail or the Internet.
"The federal government has tried to protect buyers in situations like that, but other than that one law, there's not much else out there."
Richard Linquanti, a Tampa real estate attorney known as an authority on that federal law, said the act requires most developers to register their projects with the U.S. Department of Housing and Urban Development andprovide buyers with disclosure documents.
"It's possible that he violated a federal criminal statute," Linquanti concluded. "The purchasers have the right to cancel their contract and get all their money back from him. These consumers have a lot of claims. The problem is, they have claims against a guy they can't get to."
Watkins' developments don't appear to qualify for typical exemptions to the act, he said, such as land that is sold only to in-state customers or small developments with fewer than 100 lots.
Even if Watkins qualified for exemptions, he would have been required to disclose information to buyers that was not included in their contracts.
Linquanti said he sees possible violations under the act including fraud and misrepresentation.
Linquanti said the banks who loaned Watkins money may be liable, too, since some of them obtained lists of Watkins' buyers as collateral.
"It depends on what the lenders knew or should have known about the transactions between the developer and the purchasers," he said. "If those purchasers came to me, I would file a suit naming the lenders as joint developers because they participated in an obviously troublesome arrangement, and they should have the same liability as the developer to refund the money."
Pat Mann is angry that not only did all of this go on longer than it should have, but that Watkins hasn't been held accountable.
"There's nothing right that has happened here," she said.
In 1995, her husband, Billy, and his brother-in-law, Joe Shaver, signed a contract with Watkins to buy hunting land in Cherokee Village that would later be developed.
Watkins had gotten his start in the real estate business selling land there in the 1970s for developer John Cooper.
In October 2005, Billy and his brother-in-law finally paid the hunting land off much to the relief of Billy, who is disabled and was making payments on a fixed income.
"This was not money he had to just throw away," Pat explained.
They expected to receive a deed in the mail.
When they didn't, the families called the Beach Club. Joe's wife, Maryann, talked to Watkins. He promised that he'd take care of everything.
Finally, in August 2006, the persistent families received a deed, which had been filed at the Sharp County courthouse that showedthe land belonged to them.
A week later, the Sharp County assessor notified the Manns that Watkins did not own the property he had deeded to them. What they didn't know was that Watkins had used their land as collateral for a loan in 2002. When he failed to repay that loan, Regions Bank foreclosed on the property in May 2006 and sold it to someone else. That deed had been recorded before the Manns got their document.
Pat promptly called the local prosecutor. The two families filed complaints with the Sharp County sheriff's office. A judge signed a warrant for Watkins' arrest in January 2007, but he'd already left the country.
The families also filed a complaint with the state attorney general's office. In February 2007, Pat said she was told the issue "could not [be] resolved."
"You used to think that people went to jail for doing stuff like that," she said.
Instead, Watkins is in Mexico, and Pat worries he'll never face the charges filed against him. What makes this even worse is that she knows that her family isn't the only one that lost thousands of dollars and a dream.
"There's no telling how many people are out there."
Cheryl Ward, owner of Rapid Real Estate, uses a hillside office that overlooks the Beach Club. Ward, the former activities director for the Beach Club, now manages 28 properties once part of the club.
Her office is a natural stop for Watkins' former clients.
"I've had my hind end chewed out several times about something I don't have anything to do with," she said.
Ward said she's never sure what to tell the frantic people who visit or call.
"Most people around here would like it to go away," she said.
Many locals aren't eager to talk about Watkins, but some have said they've seen him in town since the warrant was issued.
Mayor Thornton swears she saw him at the Price Chopper grocery store a few months ago.
"He never fails to acknowledge you when he sees you," she said. "It's not like he's hiding out or anything."
Griffin, Watkins' cousin and the man who holds his power of attorney, said that he has not been asked for access to Watkins' business records. Such a search might provide names of people who paid Watkins thousands of dollars for land that they may not ever own.
Sharp County detectives have been telling buyers for at least a year that the FBI is investigating Watkins.
Steve Frazier, spokesman for the Little Rock FBI office, wouldn't confirm or deny that the agency is investigating Watkins but encouraged victims of "interstate fraudulent land schemes" to contact his office.
In March, Sharp County Detective Sgt. David Huffmaster sat at his cluttered desk, annoyed that Judge Johnson, an attorney who has been getting calls about Watkins, was referring a stream of people who feared they'd been swindled to him.
"Thanks a lot," the detective said wryly.
He couldn't answer the obvious question: "Where is Wayne Watkins?"
"Well, I know he's not in Sharp County."
But when another officer heard Watkins' name, he volunteered, "I saw Wayne Watkins two weeks ago at a funeral."
"Why didn't you arrest him?" Huffmaster barked.
"Why would I do that?" the deputy replied.
E-mail the reporters:
Coming Monday: Buyers wonder why authorities didn't do anything to stop Watkins or help them.
About these stories
Information for these stories came from interviews with 47 people as well as hundreds of public documents.
Court records in Sharp and Fulton counties provided details about the amount of money Wayne Watkins borrowed and how much he owed.
People who knew him or who bought land from him explained how Watkins handled his land transactions. Contracts given to the Arkansas Democrat-Gazette provided additional information.
The State Commissioner of Lands provided a list of all of Watkins' taxdelinquent properties.
Watkins' attorney, LarryKissee, confirmed the developer's whereabouts and current employment, backing up what many others told the Democrat-Gazette.
Details about people who lost money came from interviews with them and all the paperwork related to their purchases.
Information about Watkins' behavior at the Copper Feather came from a bar employee.
Several people in Hardy, including Mayor Nina Thornton, confirmed the message on Watkins' billboards.
The incident in the Sharp County sheriff's office between two detectives was witnessed by a reporter in February.