Condo Fray in Spa City entering ninth year.
Hampton blames Tankersley and his SJT Properties LLC of Hot Springs for causing a condominium development project on the shore of Lake Hamilton to end in foreclosure. As a result, Hampton said in court filings, she lost hundreds of thousands of dollars of her investment and her own $500,000 condo because it was pledged as collateral.
She accused Tankersley and SJT of fraud in a lawsuit in Garland County Circuit Court. In her complaint, she puts her actual damages at more than $1 million, and she also is seeking punitive damages of at least $10 million.
The trial was set to start at the end of February, but that has been put on hold because SJT Properties filed for Chapter 7 bankruptcy protection on Nov. 10. It listed $2.46 million in debts and just $100 in cash.
Tankersley denied Hamilton's allegations of wrongdoing in his court fillings. And his attorney, R. David Lewis, told Arkansas Business in his Little Rock office last week that Hampton herself caused the condo project to collapse by filing a notice of lis pendens that caused the project to come to a grinding halt.
"When there's a lis pendens, ... it's a notice of pending litigation," Lewis said. "It's to show the world that there's a cloud on this title."
As a result, he said, real estate agents wouldn't show the condos and banks wouldn't finance the purchases. "Once the lis pendens is filed, everything stops," Lewis said.
SJT said in its court filings that it lost millions of dollars in potential profits as a result of the lis pendens.
But Hampton claims she's the victim. Tankersley and his companies "engaged in a routine practice of financially over-extending themselves and borrowing more money than they could reasonably repay," Hampton's attorney, Louis "Brady" Paddock of Texarkana, Texas, said in a court filing.
Paddock said that Tankersley has been involved in the development of various properties either directly or through one of more entities in which he had an interest. Tankersley or his entities have been named in several lawsuits since 2009 for allegedly defaulting on more than $7 million worth of loans, according to Paddock's lawsuit. At the time of the filings, the outstanding amount owed was $5 million, he said.
Paddock said in the complaint that Tankersley shuffled money from one entity to another "in an effort to pay obligations as they became due, make improper distributions and/or payments to themselves for management fees, expenses resulting from self-dealing, and other improper and unearned expenses."
In June, Garland County Circuit Judge Russell Rogers granted Hampton's request to have a forensic accounting done of the Lake Hamilton project. As of last week, the report wasn't completed.
Tankersley's lawyer has told the court that his client and his client's companies bear no responsibility.
"Mike Tankersley admits that he has been involved in the development of various properties some of which have led to litigation, some of which was the fault of the banks and some of which is the fault of [Hampton]... but none of which is the fault of the defendants," Lewis wrote in court filings.
Arkansas Business recently reviewed hundreds of pages of documents that involve trips to U.S. Bankruptcy Court by Hampton and a disbarment trial for Hampton's first attorney in the case. The documents provide a look into the collapse of a business relationship and condo project.
Evelin Hampton and her Hampton Trust owned 5 acres on the western shore of Lake Hamilton in Garland County. In December 2004, Hampton and her husband, Don, decided to develop about 3 acres into home sites.
"Primarily the person we dealt with was Michael Tankersley," Hampton said in a Feb. 17, 2014, deposition that was taken in connection with the disbarment proceeding against her former attorney, John "Sky" Tapp of Hot Springs.
Hampton sold the land to BBDT Properties LLC, in which Tankersley had a 25 percent ownership interest, for $1.5 million. BBDT planned to develop the project, Vizcaya at the Lake, with about 20 garden homes and condominiums.
Evelin Hampton said in the deposition that she and Tankersley created a limited liability company to be co-man-agers of Vizcaya.
As that project was being developed, Hampton's husband was in a motorcycle accident in June 2005 and died the next month.
In early 2006, Tankersley asked Hampton to invest in a second development: the Lake Pointe Condominiums, which would be several four-plex condos beside Lake Hamilton on the west side of Highway 7 South, according to Hampton's third amended complaint, which was filed on Oct. 12.
Lewis disagreed with Hampton's version. He said that Hampton was the one who approached Tankersley about investing in the project, which at that time was already underway.
Hampton said Tankersley told her that she would receive half of the profits from the sale of the condos if she invested $200,000 in his SJT Properties. She agreed and gave him the money in April 2006.
That agreement never made it into writing, Lewis said.
After that investment, Tankersley said he needed another $140,000 for road and infrastructure improvements to the property. "I loaned him the money of $140,000 which was supposed to have been paid back in two to three weeks," Hampton said in her deposition. But it wasn't.
(Lewis also disputes the amount and said it was just $40,000.)
Making matters worse for Hampton, she agreed to Tankersley's request to use her condo, which was located at the Vizcaya project, as collateral for a line of credit to be used to help finance the Lake Pointe condo project.
Tankersley took out a $1.24 million loan thanks to Hampton's collateral, she said in her deposition.
Court records show other loans tied to the condo project amount to $2.2 million, bringing the total to $3.44 million.
Hampton said in her deposition that she thought she wasn't being paid properly for the homes that were being sold at the first project, Vizcaya at the Lake. The first phase of the project was developed into 13 homes, but ended before phase two began, according to court filings.
BBDT and Tankersley were making payments for the land instead of giving her the full amount she was owed, she said.
"So they started saying, ... "We've got to pay this land payment.' Well, that was their responsibility, not my responsibility," Hampton said. "So this is when Tankersley and I had a big disagreement."
She said she filed the lis pendens on property at the Vizcaya project in September 2007 "to stop him from destroying the complete piece of property."
She also filed in 2007 a lawsuit against Tankersley, BBDT Properties and SJT Properties. She alleged that Tankersley "has completely taken over the day-to-day operations of the businesses, is squandering assets as if it was his own to do with as he pleases, has failed to protect and preserve the assets of the entities and generally acted oppressively," according to the lawsuit. She wanted Tankersley out of the projects.
The dispute over the Vizcaya project ended when BBDT and Tapp worked out an arrangement calling for the lis pendens to be lifted, "and they would go ahead and sell the condos," Lewis said. Those issues were settled in April 2012.
Meanwhile, Hampton continued to have problems with Tankersley at the Lake Pointe project.
In her deposition she accused him of "taking all the monies he could and getting rid of the property as soon as he could to pocket the money and continue another project that he had started."
So she had Tapp, then her attorney, file a lis pendens on the Lake Pointe project in October 2008. On the same day, Tapp also filed a lis pendens on behalf of Ricky Hood of Garland County in connection with the project.
Hood had made an arrangement with SJT to receive a 2,700-SF condo at the project when the work was completed, Lewis said. But Hood apparently thought that SJT wouldn't deliver on the promise and had Tapp file a lis pendens for him, according to SJT's lawsuit against Hood. SJT said in court filings that the move was illegal and resulted in actual damages of more than $4.5 million.
Hood, in court filings, denied the allegations of wrongdoing and asked that the case be dismissed. The lawsuit is part of Hampton's case and is pending.
Hampton said in her deposition that she agreed with the move to file the lis pendens. Otherwise, she said, "there wouldn't have been anything left out there."
She said that she knew what she was doing by filing the notices.
"I didn't want them to sell because he was selling them for less than market value," Hampton said.
Lewis, Tankersley's attorney, said the condo project at Lake Pointe was making progress and several buildings had been built and condos had a value of $350,000 to $400,000.
Tankersley was using the proceeds from the sales to pay down the bank loans tied to the project.
"So there hadn't been any profits because the land costs haven't been paid; the building hadn't been paid," Lewis said.
Lewis said that Hampton would have received 50 percent of the net profits from the sale of the condos--"which there never were any because the project got shut down" as a result of her filing the lis pendens.
Lewis said Tapp "could have done nothing worse for his clients' interest than file those lis pendens because it made performance impossible."
The Supreme Court Committee on Professional Conduct is seeking to disbar Tapp, who is the subject of several complaints in addition to those by Tankersley and SJT Properties. He's been on interim suspension from practicing law since September 2013. The Arkansas Supreme Court will issue a ruling on Tapp at a later date.
Lewis said SIT's previous attorney tried to get the lis pendens dismissed, but there was never a ruling in the case.
Lewis blamed part of the delay on Hampton's filing for Chapter 13 bankruptcy reorganization in February 2009. But that case was dismissed a few months later for failure to file schedules in a timely manner. She refiled for Chapter 13 in November 2011, where she listed $1.54 million in assets and $868,500 in debt. She said she was trying to prevent the fore-closure of her condo but failed. Her request to dismiss the case in April 2012 was granted
While Hampton's bankruptcy was proceeding, Tankersley continued to make payments on the loans tied to the Lake Pointe project, Lewis said.
"He paid ... a lot of money during the pending of this thing and after a while he exhausted his 401(k)s," Lewis said. "So he finally told the banks, 'I can't do this anymore. You'll have to foreclose.'"
Hot Springs Bank & Trust, which is now part of Relyance Bank of Pine Bluff, filed its fore-closure lawsuit in 2010.
SJT listed debts of $1.6 million owed to the bank in its recent bankruptcy proceeding. SJT also owed $860,000 to Summit Bank of Hot Springs, which is now part of Bank of the Ozarks. SJT showed making no income since at least 2013.
"Had [Hampton] stayed until the end, she would have been a wealthy woman and Ricky [Hood] would have got his condo," Lewis said. "But unfortunately Sky Tapp on their behalf filed these lis pendens"
By Mark Friedman MFriedman@ABPG.com
[PHOTO BY DANIEL MOODY]
Caption: In 2010, Hot Springs Bank & Trust foreclosed on this condo building at 156 Villa Point Blvd., units 3B, 3C, 3D, in Hot Springs, as a result of SJT Properties LLC defaulting on a $1.1 million loan.
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|Title Annotation:||SPOTLIGHT: Accounting|
|Date:||Nov 30, 2015|
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