LR entrepreneur's reversal of fortune.
As chief executive officer of Total eData, Blankenship pocketed a tidy cut of the transaction, valued at between $10 million and $20 million.
But that was seven years ago.
These days, Blankenship is battling lenders and accusations of fraud, haggling with the Internal Revenue Service over unpaid taxes and watching his real estate holdings dwindle along with his net worth.
Along the way, he has lost a 14,100-SF home he built in west Little Rock but never occupied, a 4,200-SF lake house in Heber Springs, a 19.4 percent stake in the 300 Third high-rise condominium project in downtown Little Rock and eight undeveloped lots encompassing more than 55 acres in the Waterview Estates neighborhood overlooking Lake Maumelle and the Arkansas River Valley.
This portfolio is now the property of Searcy's First Security Bank, which landed a partial summary judgment of $7.3 million against Blankenship, his wife, Brenda, and his JEBCO Holding Co. LLC.
A lull in the battle with First Security, which recovered the properties in a $5 million foreclosure sale, is entering its fifth month. The bank also holds a $2.3 million deficiency judgment against the Blankenships along with claims of loan fraud.
Despite the momentary respite, other financial travails have kept Blankenship on the firing line.
Metropolitan Nation Bank of Little Rock is pursuing a $7.1 million foreclosure action on a proposed project in Florida called Snug Harbor Marina & Condominiums.
"That one there, we're still in discussion with them to settle," Blankenship said in a very short interview with Arkansas Business.
The 4.6-acre property along U.S. 98B in Panama City has 705 feet of waterfront on Watson Bayou, a deepwater inlet with access to St. Andrews Bay and the Gulf of Mexico beyond.
Plans called for 393 luxury condos, 140 boat slips and a dry dock storage building with 120 spaces.
Metropolitan launched its Florida foreclosure suit in October, a month after Blankenship ducked into bankruptcy court in Arkansas to delay First Security taking possession of his property. Questions about Metropolitan's lawsuit were referred to its Florida attorney.
"We're still in the discovery phase of the case, so there's not much I can say," said Courtney Witte in the Orlando office of Greenberg Traurig.
The foreclosure blowup in Florida represents a near miss for First Security, which funded the purchase of the property. Metropolitan's August 2006 loan of $7 million replaced a $6.1 million loan First Security made in July 2005.
"We feel relatively fortunate that we got the things done that we did in the time frame we did," said Bill Scholl, president and CEO of First Security in Little Rock.
Some have connected the dots to conclude that Jeff Hildebrand's 2007 departure as president of First Security was tied to Blankenship loans.
Was Hildebrand a casualty of Blankenship's financial distress?
"Not at all," Hildebrand said. "I'm sure some people might think that, but I was gone from the bank when his troubles began."
Blankenship's four-month detour to bankruptcy court last year only temporarily delayed his family's forced exodus from their $1.2 million lake home in Heber Springs. First Security's lawsuit against Blankenship remains open after Pulaski County Circuit Judge Tim Fox upheld the $5 million foreclosure sale that transferred the house and other Blankenship properties to First Security.
Meanwhile, Blankenship continues wrangling with the IRS after he was hit with a nearly $4.6 million tax lien in January 2008, the first public sign of his declining fortunes. The lien covers the tax years 2002, $4.18 million; 2004, $386,827; and 2005, $27,857.
"We're close," he said of reaching a settlement with the IRS.
Blankenship still owns two Heber Springs houses, with 2,300 SF and 1,677 SF under roof, four undeveloped Eden Isle lots and two undeveloped Heber Springs lots. Rounding out his Cleburne County holdings are two 4,100-SF Eden Isle residences, homes for his father and in-laws.
Blankenship's heightened interest in real estate grew out of his desire to share the fruits of his financial success following the sale of Total eData.
The transaction closed on April Fool's Day 2002, which marked the beginning of a seven-month, $3 million buying spree in west Little Rock.
Blankenship indulged in purchasing a 4,250-SF home for his in-laws in the Glenn Johnson Ranch neighborhood, $623,000; a home site in the Hickory Creek neighborhood where he thought about building, $200,000; a 5,600-SF home in the Belle Pointe neighborhood, where he moved his father, $600,000; and a 7,650-SF home in the Chenal Circle neighborhood, where he later moved, $1.6 million.
Blankenship already owned a 6,750-SF Hickory Creek home, where his father, stepmother and grandmother lived, and a 75-acre residential spread near Roland, where he lived.
During the next few years, Blankenship would buy and sell four more upscale Little Rock residences: two on Chenal Circle, one in the Glenn Johnson Ranch subdivision and a condo in the First Security Building in downtown Little Rock.
But his most extravagant statement of all was reserved for No. 5, the 14,100-SF monster home he had built in Valley Falls Estates. Though completed in 2006, Blankenship never moved into the hilltop mansion.
Designed to accommodate members of his immediate and extended family, the house was never furnished and remains vacant.
"It's move-in ready," said Casey Jones of the Janet Jones Co., which is listing the property for First Security Bank.
Just another $2.9 million listing?
"Just another real special opportunity," Jones said.
The three-story residence, with an elevator, wine cellar and more, is laid out with five to six bedrooms, seven full baths and four half-baths.
Blankenship is tight-lipped about the circumstances surrounding his cash flow problems. But something, or a series of somethings, ate up his financial windfall and exposed the bottom of his eData pot of gold.
"He decided to make certain investments," said one insider, declining to elaborate. "Some are more ill-advised than others, which may have eaten up his cash."
And what about all those houses?
"It was a phenomenal enigma to me," one banker said.
By George Waldon
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|Date:||May 4, 2009|
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