December 8, 2014
By Bob Coleman
Editor, Coleman Report
The judge also ordered a new trial on five other loan fraud counts.
Reports Arkansas Business —
Holmes concluded that there was not enough evidence to support the jury’s conclusion that Stacks deliberately misled the SBA about changes in his financial condition after he made his original application for a disaster loan following a tornado that struck his home and outbuildings at Damascus in June 2008.
Holmes also concluded that the government didn’t even specify the false statement that Stacks supposedly made in his loan application nor present any evidence or testimony to support that additional count.
The charges on which Holmes ordered a new trial are three counts of wire fraud associated with three loan installments received from the SBA, one count of making a false and fraudulent claim and one count of making a false statement. Holmes had dismissed another count of making a false statement during the trial that started Sept. 29, and the jury hung on three counts of money laundering.
In assessing the evidence presented during six days of testimony, Holmes pointed out strengths and weaknesses of both the prosecution’s case and the defense. For instance, he said the government tried but failed to “prove a negative” — that Mountain Pure water bottling equipment that Stacks claimed was destroyed in the tornado was not actually on the Damascus property on the day of the storm.
Holmes also said that SBA loan officer Tony Bauer’s notes on conversations with Stacks were so poor and contained so many fundamental inaccuracies that “it is hard to credit Bauer’s testimony over that of Stacks” concerning specific discussions.
But the judge also had trouble swallowing Stacks’ explanations for leading the SBA to believe that Mountain Pure’s plant at Palestine, Texas, had a contract with Wal-Mart Stores Inc. and expected $25 million in revenue in 2009.
The Wal-Mart contract only approved the plant as a supplier; it did not obligate Wal-Mart to actually buy any water. And the plant had revenue of less than $1 million in 2008, so “without orders in hand or a major new customer coming online … it was impossible to project sales of Mountain Pure TX for 2009 of $25 million.”