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NLR land development loans draw questions Sunday, Jun 29, 2008 By Jeremy Peppas Stephens Media NORTH LITTLE ROCK - If Mitchell Massey had mowed his grass, he might not have caught anyone's attention. But the 38-year-old Northwest Arkansas land developer and businessman didn't keep the grass cut on his 26 pieces of property inside North Little Rock. Now the city is mulling criminal charges against him as part of its new Nuisance Abatement and Property Maintenance Code adopted last year. That's just the beginning of Massey's legal troubles. On June 19, a group of investors filed suit in federal court at Fayetteville seeking $2.7 million from Massey and others in a Florida real estate project that the suit alleges is "no more than smoke and mirrors." A $14 million loan to buy the land is in default. James Renner, Arthur Starr, Scott Smith, S. Bradley Daniels, David Mix and Terry Harper, all of Fayetteville, are among 10 individuals and four limited liability corporations listed as plaintiffs in the case. Massey has said the development is in the coastal town of Eastpoint, Fla., but no such official city exists. The property actually is in an unincorporated area of the Sunshine State. Massey's property in North Little Rock and around Pulaski County is incorporated into a venture called Little Rock Homes LLC, one of 49 companies that list Massey as the incorporator/organizer, according to the secretary of state's office. Twenty-five of the firms are in good standing with the state, while 24 have been dissolved. In 2004, Arkansas Business named Massey to its "40 Under 40" list of young movers and shakers. At the time, Massey listed his primary company as Massey Holdings LLC. The company does not appear to be in business anymore. The Fayetteville Chamber of Commerce listed a telephone number for Massey Holdings, but a phone company recording said the number had been changed. The new number turned out to be for Hsi Inc. Representatives answering the phone for Hsi said Massey's office was no longer there and they did not know how to contact him. Massey has an unlisted home number in Fayetteville. Calls to the number went to an answering machine and messages left seeking comment were not returned. Blair Brady, a Fayetteville lawyer who has represented Massey, said Massey is not associated with Little Rock Homes anymore and has not been for months. But all the associated paperwork with Little Rock Homes posted by the Pulaski County clerk and the secretary of state's office still lists Massey. "I've always been somewhat of an entrepreneur," Massey said in the Arkansas Business article from 2004. Between 2006 and 2007, Little Rock Homes LLC bought 180 pieces of property from Richard and Dawn Blanchard, a Minnesota couple, according to information on the Pulaski County clerk's Web site. The Blanchards had purchased the tax-delinquent property in the county and it included lots in North Little Rock, Little Rock and the county. Massey and Scott McLain, listed on the loan paperwork as the "managing member" of Little Rock Homes, acquired the property from the Blanchards, subdivided it and obtained commercial loans to develop the property. Two loans acquired by Little Rock Homes were from U.S. Bank for a combined $620,750. National Bank of Arkansas provided another loan of $110,000. The property was used as collateral for all of the loans and on paper the loans appear to be backed, but that assumes the property can be developed. That may not be the case. For example, a county assessment valued a parcel at 1201 W. 37th St. in the Levy section of North Little Rock at $9,000. It and 62 other pieces of property, all of a similar size and value, according to the Pulaski County Assessor's Office, are being used to back a $380,750 loan from U.S. Bank. The property is zoned correctly for development, said Shawn Spencer of North Little Rock's Community Planning office. "Looking at the map, and not looking at the property, it looks like the lot is big enough to build a long, skinny house. So you could build there, assuming it isn't in the flood plain, but would you build there? Well, if you had $1 million to get the land right, maybe. But it can't be in the flood plain." Ed Chapman of the planning office said the property is, in fact, in the flood plain "and (construction) would not happen." For that particular parcel, the loan apparently was not used for its intended purpose of development since the land cannot be developed. State Bank Commissioner Candace Franks outlined what a bank might do in such a case. "They would file a suspicious activity report," she said. "The bank would turn that in to the U.S. attorney's office and when (federal prosecutors) receive it, they would review it to make a determination to pursue the investigation through the FBI and then prosecute it." NBA President Mike Mathes declined comment on the loans his bank made. Numerous calls to U.S. Bank's corporate office in Minneapolis were not immediately returned. Jane Duke, U.S. Attorney for the Eastern District of Arkansas, said she could not confirm or deny her office has any ongoing investigation involving Massey. |
