Little Rock businessman Stephen Kirl Parks, who for years has been the target of an Internal Revenue Service effort to take millions of dollars in cash and property that it said he illegally obtained, pleaded guilty Wednesday to a single count of wire fraud.
If the plea agreement he negotiated with federal prosecutors is ultimately accepted by a judge, he will spend 27 months in federal prison but will be able to keep his Heights home, valued at $1.5 million, and $73,643 in cash seized from the home. The government will be able to keep about $7.5 million and other assets it has already seized from him and his wife, including a house, an office building, two investment accounts, a 2008 Bentley and four other vehicles.
Also, his wife, Anna Harper Parks, who operates Anna's Estate Sales in Little Rock, won't face any charges, and the couple will drop a civil-rights lawsuit they filed against the IRS.
While U.S. Attorney Chris Thyer said the plea agreement also "contemplates $845,000 in restitution" to the IRS, as well as the forfeiture of all jewelry purchased with money obtained from the illegal sale of tax credits, defense attorney Dustin McDaniel took issue with the restitution amount, which will be determined at sentencing.
McDaniel, the state's former attorney general, is representing Parks, along with Little Rock attorneys Patrick Benca and John Kennedy.
The negotiated agreement requires approval by U.S. District Judge Leon Holmes after he reviews a report on a pre-sentence investigation that has not yet begun. If Holmes rejects the agreement, Parks will be free to withdraw his plea. If Parks were tried and convicted on the wire fraud charge, he could face up to 20 years in prison and a fine of up to $250,000.
McDaniel said the charge to which Parks pleaded guilty involved "a single transaction conducted by a company other than those originally involved in the investigation."
The charge refers to a company called Global Coal LLC, which Thyer said Parks formed on about June 1, 2010, and for which Parks served as chief executive officer, president and manager. A forfeiture complaint that the government filed in 2013 focused on two other limited liability companies of Parks' -- Ecotec Coal and King Coal -- which McDaniel said weren't involved in any fraudulent activity. He said Parks has agreed to divest himself of all three companies.
"Two and a half years after search warrants were served causing a significant interruption of Mr. Parks' business, no charges related to the original allegations were filed or ever will be filed," McDaniel said. "Mr. and Mrs. Parks are getting their home back in exchange for today's plea and his agreement not to keep fighting over tax credits related to the original businesses."
McDaniel emphasized that "Anna Harper Parks did nothing wrong and has been released from any further criminal inquiry in this matter. Her reputation, business and health have all been impacted by an investigation that ultimately yielded one wire fraud charge against her husband for an unrelated transaction."
He added, "These are very complicated business transactions that would have led to significant expense and risk for all sides at a jury trial. This plea is fair, but heartbreaking for Mr. Parks and his family."
While McDaniel said Parks "regrets the mistakes that he made in the course of extremely complicated business dealings," Thyer didn't use the term "mistakes."
"Stephen K. Parks' fraudulent sale of non-existent refined coal tax credits was a flagrant abuse of the tax code," Thyer said in a news release Wednesday afternoon. "Despite the fact that no federal tax return for Global Coal LLC was filed; no coal was produced, refined or sold to an unrelated third party; and Global Coal had no facility in place to refine coal, Parks approved the sale of the non-existent federal tax credits. He then used the fraudulently obtained funds to give his wife $40,000 and purchase a house in the Heights, which was intended to be torn down and used as a back yard for his family."
Thyer said a cashier's check of $301,271, purchased with proceeds from the fraudulent tax credit sale, was used to buy the house at 4817 Stonewall Road, behind the Parkses' main residence at 2020 N. Spruce St. Both houses are in the Heights area of Little Rock.
McDaniel disputed the allegations that Stephen Parks' coal businesses didn't actually produce coal.
"Mr. Parks strongly contends that King Coal LLC was actually in the process of producing refined coal," he said. "The government seized neither the mining equipment nor supplies, and they are at the coal mine in western Arkansas today."
The case is so complicated that a three-page "statement of facts" was attached to the criminal information -- the written version of the charge to which Parks pleaded guilty -- and a written plea agreement.
The criminal information states that the refined coal tax credit was added to the tax code by the American Jobs Creation Act of 2004 as an incentive to produce refined coal to help the environment by reducing emissions from the usual methods of coal production. Thyer said the credit requires that 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 during the 10-year period.
The charge alleges that from late 2011 through Jan. 13, 2012, Parks devised a scheme to defraud an investor who was interested in purchasing such credits.
The document states that despite Parks' claims to the investor, Global Coal never sold any refined coal to an unrelated third party and did not produce any refined coal or have a qualified facility in place to refine coal. It says, "Global Coal did not generate or create any refined coal tax credits. Despite these facts, Parks by and through [an unnamed person] and others, represented to investors that the refined coal tax credits for Global Coal existed and that they were available for sale."
It states that on Jan. 13, 2012, the investor wired $549,250 to King Coal Holding's bank account in exchange for $845,000 in Global Coal Refined Coal Tax Credits, and that checks that led to the purchase of the Stonewall Road house followed in April and July.
The news release issued by Thyer, the IRS and the FBI, which also participated in the investigation, said that from the proceeds of the tax credit sale, Parks wrote a $40,000 check to his wife for "Coal Rights Arkansas," and that the check was "part of approximately $1.3 million paid to Parks' wife from 2008-2012 for 'advanced royalties.' According to a 'royalty agreement' backdated to Dec. 1, 2007, Parks' wife 'controls certain mineral rights ...' In fact, 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.'"
"With today's guilty plea, Parks admitted his role in a scheme to finance his own lifestyle at the expense of the American taxpayer," said David Shepard, the FBI's Little Rock agent in charge.
Metro on 05/28/2015
Print Headline: LR man reaches a deal in IRS case