strange case of sen mark pryor

THE STRANGE CASE OF SENATOR MARK PRYOR

The following is based entirely on IRS internal documents obtained through the Freedom of Information

Act [FOIA] and filed in Federal Court in Little Rock, sworn testimony and lawsuits filed in Federal

Court in Little Rock, sworn testimony filed in the White County, Arkansas Circuit Court and US

Secretary of the Senate filings.

In 2006, Senator Mark Pryor’s US Senate Financial Disclosure filings showed that he owned at least $1.3

million in interest in a finance company, a truck leasing company, a trust, and a lumber company on his US

Senate disclosure forms. Pryor’s wealthy mother-in-law, Bonnie Harvey, held the controlling interest in all

these companies. The 2006 Senate Disclosure form reports that two of these assets even paid a dividend. In

2007 these assets disappeared from his filing but yet on the same form he said he and his wife sold no stock (US

Senate Financial Disclosure- 2006, 2007: TAB A) A spokesman for Pryor said the interest had been “on paper

only” and had “become worthless.” (TAB B) The Senate Disclosure rule does require disclosure of the sale or

transfer of any asset.

How did Pryor's interest in four different business entities--which he claimed were worth at least $1.3 million in

2007, all become worthless at the same time? How did they go from paying a dividend to worthless in one

year?

Now we learn that at least one of those companies, Great Western Leasing, leased trucks to Continental Express;

a company owned by Pryor’s mother-in-law that stiffed the IRS for $2 million in payroll taxes withheld from

employee’s paychecks but never turned over to the IRS. Great Western received 100% of its revenues from

Continental Express. Pryor held approximately $500,000 in stock in Great Western alone.

We also know that the IRS agent who attempted to obtain financial information and payment from Pryor’s kin

who owned Great Western as well as Arkansas Trucking and Continental Express, three inter related companies,

was abruptly transferred and the agent who replaced him quietly closed the case without collecting a dime. (IRS

FOIA Doc-Jan 20, 2009: TAB C)

The IRS closed its case against Pryor’s relative’s right after the IRS upgraded the case to a “political”

classification. (TAB D) Now the IRS is trying to collect these $2 million taxes from a former trucking

company executive who is not wealthy and who had no ownership or interest in the company and had no control

of the company’s books when the taxes went unpaid! (TAB E) The lawsuit filed by Ralph Bradbury against the

IRS allowed Bradbury to substantial internal IRS documents through a FOIA request. The lawsuit (TAB E)

details the transfer of the IRS agent charged with collecting the taxes from Continental Express and Bonnie

Harvey and the shutdown of the case by the new IRS agent. It also documents the agreement signed by Bonnie

Harvey with the companies financial manager Brandon Frederick in which she acknowledged that she owed the

Federal payroll taxes and agreed to pay them.

Ed Harvey, Pryor’s father-in-law, is incapacitated with Alzheimer’s, Bonnie Harvey has a power of attorney to

manage his affairs, and had such power during the time the taxes went uncollected, and the company assets were

sold. According to the testimony of Marvin Jones in Circuit Court in White County, Arkansas, all of Ed

Harvey’s assets have been transferred to Bonnie Harvey. The Harvey’s have homes in Little Rock, Florida and

the Cayman Islands.

What is even more incredible is that Pryor’s mother-in-law, estimated to be worth $30 million, admitted in a

signed agreement that she owed the Federal payroll taxes and would pay them! (TAB F) We also know Marvin

Jones, acting as Bonnie Harvey’s agent, made several small payments towards the past-due payroll tax.

We also know that Bonnie Harvey sold all the assets of Great Western just 30 days before the deadline set by

the IRS (TAB G) for the submission of financial information for the company. Bonnie Harvey’s net worth is

estimated to be $30 million, according to the testimony of Jones in the Circuit Court in White County Arkansas.

We also know that a Jones testified under oath in State Court in White County (TAB H) that Bonnie Harvey was

paying "her children" up to $24,000 monthly for "house payments, kids in school, and other needs" at the exact

same time the company was skipping out on $2 million in past due taxes. We know from this same deposition

that the reference to "her children" specifically meant the Pryor household. It is clear from the spreadsheets

provided by Bonnie Harvey in the case in State Circuit Court, First Security Bank vs. the Harveys et al, Case

No. CV2009-775-1 (TAB H) that the Harveys paid the tuition costs for Senator Pryor’s children, and likely

many other of Senator Pryor’s monthly expenses. Additionally, it appears from the Jones testimony that a

“company in which a relative of Bonnie Harvey had an interest was receiving funds” diverted from rent

payments from Continental Express. (TAB H)

To date no one has asked whether Senator Pryor or his wife, Jill Harvey Pryor, were taking large sum monthly

payments from a company that owed the IRS $2 million in unpaid Federal payroll taxes. Pryor claims in both

his 2006 and 2007 US Senate Financial Disclosures filings that he and his wife had no outside income or assets.

He has also claimed he has no knowledge or interaction on the Harvey businesses, despite once listing as much

as $1.3 million in Harvey stock on his required disclosures and having used the Harvey owned bank in Preston,

Texas to provide a bridge loan to purchases a house in Little Rock.

To date no reporter has been able to get an on-the-record response from Senator Pryor regarding these matters.

When the Washington based reporter for the Arkansas Democrat Gazette attempted to ask the Senator questions,

it bought a brutal phone call from Senator Pryor to the publisher of the Democrat Gazette.

The full transcript of Marvin Jones deposition in the case of First Security Bank vs. the Harveys et al, Case No.

CV2009-775-1 can be found here. (TAB I)

RESOURCE LINKS BACKGROUND: http://www.newsmax.com/Politics/SenMarkPryor-Mired-IRS-Interference/2011/09/23/id/412137 BREITBART: (ORIGINAL LINK NOT AVAILABLE, BUT HERE’S A REPOST) http://america-whereareyou.com/2011/12/irs-targets-arkansas-businessman-in-dispute-with-sen-mark-pryors-family/ http://thedailybiz.net/archives/319 http://thedailybiz.net/archives/142 http://thedailybiz.net/archives/87 NEW DEVELOPMENTS: http://arkbiznews.blogspot.com/2012/02/story-by-david-smith-saturday-february.html http://www.arkansasbusiness.com/article.aspx?aID=130213.54928.142337&k=Harvey

TAB ‘A’

SENATE DISCLOSURE FILINGS

TAB ‘B’

THE RISE AND FALL OF ED HAVEY’S BUSINESS EMPIRE

http://findarticles.com/p/articles/mi_hb5248/is_30_27/ai_n55110583/pg_3/ THE RISE AND FALL OF ED HARVEY'S BUSINESS EMPIRE: FOUNDER OF NETWORK OF ENTERPRISES FACES LEGAL JUDGMENTS By Mark Friedman UNTIL 2008, EDWARD M. Harvey was known as an entrepreneur whose diverse and complex business portfolio had made him a millionaire many times over. But the 78-year-old Little Rock man, who once owned Gibraltar National Insurance Co.--itself the center of controversy lately--and one of the largest trucking companies in Arkansas, Continental Express Inc. of Little Rock, wasn't able to ride out the Great Recession. Judgments started piling up against Harvey and his companies. "Virtually everything that he was involved in collapsed," Marvin Jones, a financial adviser to Harvey, said in a deposition taken in April as part of a collection lawsuit against Harvey. Arkansas Business has used interviews, public documents and court records to chronicle Harvey's business rise in the timber industry in the 1970s to the point last month when two banks filed separate federal lawsuits alleging that he transferred assets to his wife, Bonnie, to avoid paying $2.5 million worth of judgments. Jones said Ed Harvey's net worth was about $100,000 in April while Bonnie Harvey's net worth had risen by between $20 million and $30 million. "The transfers from Mr. Harvey to Mrs. Harvey were made with actual intent to hinder, delay or defraud Metropolitan [National Bank] in its efforts to collect the debts owed by Mr. Harvey," the Little Rock bank said in a lawsuit filed in U.S. District Court on July 6. Harvey "made the transfers with the intent to defeat Metropolitan in its efforts to collect the balance owed on those notes." Metropolitan had received a $1.7 million judgment against Harvey on May 18 in Pulaski County Circuit Court for loans to Continental that Harvey had personally guaranteed. But Metropolitan's attempt to collect was met with Harvey's position that "he is judgment-proof because he does not have any assets," the bank complained in federal court. Nine days after Metropolitan filed its federal lawsuit, First Security Bank of Searcy filed a nearly identical one against the Harveys to collect a $756,000 judgment against Harvey and his Eaves Manufacturing of Beebe. First Security was awarded its judgment on Dec. 15 in White County Circuit Court. But it, too, turned to the U.S. District Court after being unable to collect. David Donovan, a Little Rock attorney representing the Harveys, told Arkansas Business recently that the couple did nothing wrong in transferring the assets. "They haven't done anything to try and hinder, delay or defraud anybody," he said. "They're trying to work through the legal issues right now, and I'm sure they will."

The assets were transferred to "get their estates planned ... and leave Mr. Harvey with sufficient assets for all of his obligations," Donovan said. First Security hoped to ask Ed Harvey about those assets in a deposition for its White County collection suit, but his lawyer instead filed an exhibit dated March 24 in which Dr. Pham Liem of Little Rock said Harvey had been diagnosed with Alzheimer's disease. Circuit Judge Thomas Hughes ruled on June 24 that Harvey must sit for the deposition, but a date hasn't been set, Donovan said. Meanwhile, Harvey is still on the board of a bank his wife now owns, Preston National Bank in Dallas. The bank's president, Douglas Hester, didn't return several calls seeking comment. 'A Real Innovator' Harvey, father-in-law of U.S. Sen. Mark Pryor, D-Ark., has never granted an interview to Arkansas Business and declined through Donovan to be interviewed for this article. If he's ever been interviewed at length, Arkansas Business couldn't find a report of it. "He was a humble man," said his friend of nearly 40 years, Charles Nash of Lockesburg. "He didn't go around blowing his horn or seeking publicity." Harvey "had almost boundless energy and a vision to see how to do things that was different than other people," Nash said. It's unclear what Harvey did immediately after he graduated from the University of Arkansas at Fayetteville in 1954 with a bachelor's degree in mechanical engineering. But on Oct. 28, 1966, Harvey filed paperwork with the Arkansas Secretary of State's Office to form Harvey Engineering & Manufacturing Corp. of Hot Springs. Nash, 75, said that he started his long association with Harvey by going to work for Harvey Engineering in 1973. They created a lumber recovery system for the timber industry, he said. "We developed a laser measuring system that enabled the computer to take a 3D picture of the board," he said. The computer initially determined how to get the most usable boards from a wood slab, Nash said. Later, the equipment was programmed to maximize profit based on the current market price of various sizes of board. The equipment was revolutionary for the timber industry in the 1970s, Nash said. "Frequently, we worked well after midnight on a project. It had to work right," he said. "And he was there and so he paid attention to every detail of the business." Harvey also designed equipment to cut curved logs, said Bobby McDowell, a friend for about 40 years who is also a director of Preston National Bank. "He was a real innovator." McDowell, who lives near Dallas, said Harvey bought from him some of the first Intel computer products ever sold. The lumber equipment, McDowell said, was "where he really made his money."

"Ed's an engineer at heart," he said. "He turned out to be a very good businessman." Business Growth Harvey first signaled his plan to expand into other industries when he announced in June 1985 that James P Jeff, who had resigned as president and chief operating officer of Worthen Bank & Trust, had been named president and COO of Harvey Industries of Little Rock, according to an article in the Arkansas Gazette. At the same time, Harvey appointed John K. Fletcher president of Harvey Engineering & Manufacturing Corp., where Fletcher had worked since 1970. "The election of these two men represents a move by the company to both strengthen our position in the wood products industry and offer the company an opportunity to explore other business areas that we may come up with in the future," Harvey said in the article, one of the few times he was quoted in a news story. In the summer of 1985, some 300 employees worked for Harvey Industries and its subsidiaries, which included Harvey Engineering & Manufacturing Corp. and Hemco Trucking, both of Hot Springs; Hemco-Beebe, Metal Fabricating Systems, Harvey Properties and Tiecor, all of Little Rock; Hemco Sales of Jacksonville, Fla.; and Continental Lumber Co. of Rapid City, S.D., the article said. By the end that year, Harvey had formed Continental Express Inc. with five trucks. The company quickly took off, then-president Ralph Bradbury told the Gazette in 1990. Revenue was approaching $20 million and Continental owned or had an interest in more than 500 tractors and 800 trailers. But Harvey was not done building companies. He formed Guardian National Insurance Co. of Little Rock in 1988 to sell property, casualty and workers' compensation insurance. The company changed its name to Gibraltar National Insurance in 1994. Gibraltar's president in 1988 was M. Kelly Wooldridge, one of several management hires with whom Harvey would have legal battles. Harvey also decided to buy a bank, and he picked the struggling Preston National Bank in Dallas, which had been formed in 1985, according to McDowell. "He had gotten frustrated with the banks in Arkansas," McDowell said. "The banks were failing down here in Texas, and he just decided to come down here and buy his own bank." Preston National Bank grew, but slowly. In 1992, the earliest financial figures available from the Federal Deposit Insurance Corp.'s website, the Dallas bank had $15.5 million in assets and $223,000 in net income. By 1995, the bank's assets had nearly doubled, to $29.6 million, and its net income was $473,000. But 15 years later, Preston National's assets are only $60.5 million--smaller, that is, than Logan County Bank at Scranton--while it earned $1.1 million in 2009. Harvey "ran that bank like a business," McDowell said. Harvey also started Travis Lumber Co. in 1988, but no financial information for that company is available. Lawsuits Not all of Harvey's business ventures were successful, and squabbles with his managers have been common.

Harvey, Bill MacPhee and Brent Leslie formed the Harvey Group in 1987 "for the purpose of acquiring, developing and selling various businesses," according to a lawsuit MacPhee filed in Pulaski County Circuit Court in 1988. Harvey eventually had separate legal battles with both MacPhee and Leslie. Harvey won a $50,000 judgment from MacPhee while his case with Leslie was dismissed for failure to prosecute. Similarly, Harvey bought part of Beech Trucking Co. of North Little Rock in 1990 and ended up in a legal fight with minority owner Arthur Beech over $1.1 million worth of missing equipment. Harvey invested "$2 million of his own money in the ultimately doomed enterprise," which closed in 1998, according to filings in the case, which was dismissed in 2003 on Harvey's motion for a summary judgment. In 2002, Diane Miller, who had been president of Continental Express since 1999, filed a lawsuit against Harvey and Continental alleging that she was paid less than her predecessor, Ralph Bradbury, because she was a woman. Miller was hired in 1985 and was promoted to executive vice president in 1986. During her tenure as president, Harvey "continually complained" about the performance of the company, according to the court filings. In 1999, Continental reported revenue of $61 million to Arkansas Business. By 2001, Continental's performance "was substantially worse than it was in 1999," the court filings say, although no financial numbers are listed in the filing. In 2002, Continental reported revenue of $82 million with 540 trucks and 700 employees to Arkansas Business, but the company's profitability is unknown. Both sides agreed to dismiss the case in June 2004. Continental Express With Miller gone, Harvey turned in November 2002 to longtime associates Kelly Wooldridge and Todd Tiefel to run Continental. By the end of 2003, Continental's revenue had grown 19.3 percent over 2002, according to the numbers provided to Arkansas Business. Wooldridge, in addition to being the president of Harvey's Gibraltar insurance company, had been on the board of Harvey's Conx Capital Corp., which was formed in 1998 in Carson City, Nev., but which maintained a Little Rock address. Conx, which was registered with the Securities & Exchange Commission, was created to originate and service loans and equipment leases to small companies, particularly regional trucking companies. But the company's only revenue came from Continental Express, according to SEC filings. Tiefel had been the chief financial officer of Harvey Inc. since 1996 and served with Wooldridge on the board of Conx. Conx terminated its registration with the SEC in May 2005. (The company peaked in 2001 with revenue of $4.7 million and net income of $890,000. By 2004, revenue had fallen to $1.9 million and net income to $77,800.)

While running Continental, President Wooldridge and CFO Tiefel schemed to take more than $1 million from the company, according to charges brought by the U.S. Attorney's Office in Little Rock. Tiefel pleaded guilty in January 2008 to aiding and abetting mail fraud and was sentenced to 16 months in prison and ordered to pay $558,000 restitution. Tiefel is scheduled to be released from federal prison this week. In January 2009, a U.S. District Court jury in Little Rock found Wooldridge guilty of mail fraud conspiracy. Wooldridge was sentenced to 22 months in prison and ordered to pay $1 million in restitution. His expected release date is in August 2011. "The embezzlement problem caused a great deal of stress with that company," Donovan, the Harveys' attorney, told Arkansas Business. For Sale In October 2008, Continental failed to pay monthly rent of $15,000 to Fleet Equipment Leasing LLC of Memphis, according to Fleet's lawsuit filed in Pulaski County Circuit Court. At the same time, Gibraltar National Insurance "was on the verge of receivership," Amanda Rose, associate counsel for the Arkansas Insurance Department, told Arkansas Business earlier this summer. In 2008, Gibraltar reported a loss of $2.7 million on $3 million in premium. The previous year, it had net income of $424,000 on $2.2 million in premium. The Insurance Department discovered Harvey "had some questionable business transactions," Rose said in June. "He had reported several items, like his skybox in Fayetteville at the football stadium, as assets of the company, and, of course, those are not admitted. Once all that was discovered, the company was technically insolvent." The company was sold in January 2009 to insurance agent Steve Standridge of Mount Ida, who last month surrendered his insurance license after the Insurance Department accused him of 72 counts of wrongdoing. Harvey ended up with $2 million for Gibraltar, which was officially declared insolvent when the AID took it into receivership in March. Attorney Allan "Dick" Home of Little Rock, who represented Harvey in the transaction, previously told Arkansas Business that Gibraltar was solvent at the time of the sale. "Ed Harvey, in case you don't know, has got all kinds of money," Home said in late June. Harvey's attorney Donovan said Harvey's Travis Lumber of Mansfield also was suffering financially in 2008 because of the downturn in the economy. At the end of 2008, Harvey sold Continental Express to the Celadon Group Inc. of Indianapolis for $24.1 million. But Celadon only bought Continentals assets, not liabilities like the loan from Metropolitan National Bank. Continental generated $92 million in revenue in 2007, according to information from Celadon. Travis Lumber was sold in 2009 for an undisclosed price.

"He was trying to sell off those businesses to meet financial obligations," Donovan said. "He was working hard to take care of the financial obligations he had." Donovan said Harvey's companies were victims of the economy. Asset Shift In the middle of 2008, the Harveys hired Marvin Jones, the financial adviser, to evaluate their portfolio of companies. At the time, they were "having financial difficulties," Jones said in his April deposition in First Security Bank's collection suit. In mid-2008, "it was feasible that he could take a $15 [million] to $17 million personal hit" just on Continental's loans he had personally guaranteed, Jones said. Jones also said that, as of 2008, Harvey had personally guaranteed between $50 million and $60 million in outstanding loans. Jones told Ed and Bonnie Harvey that they needed to protect his assets. By the end of 2008, Harvey had transferred his assets--including his Little Rock home, property in Florida, Harvey Manufacturing Corp. and 99 percent of the stock of Preston National Bank--to his wife. Preston National's book value is about $8 million. Ed Harvey's monthly income is now limited to the approximate $1,000 he collects from Social Security while his wife's monthly income is between $75,000 and $80,000, Jones said. Both First Security Bank and Metropolitan National Bank have asked in their lawsuits that the transfer of assets to Bonnie Harvey be voided or that she be made responsible for the defaulted loans. The banks also want a receiver appointed to care for the assets. "Unless a receiver is appointed to take charge of the fraudulently transferred assets, it is likely that Mr. and Mrs. Harvey will again try to conceal them through further transfers to keep them beyond the reach of Mr. Harvey's creditors, including Metropolitan," the MNB lawsuit said. Donovan said Bonnie Harvey became involved in her husband's businesses because of his health issues. "She has learned a lot about what businesses there were and how she needs to deal with it," he said. "Mrs. Harvey is a very strong person and is determined to fight through these difficulties, and I'm sure she will." RELATED ARTICLE: Harveys Business Declines Affect Pryor's Finances THE CRUMBLING BUSINESS empire of Edward M. Harvey affected the finances of his stepdaughter, who is married to U.S. Sen. Mark Pryor, D-Ark. As a member of the Senate since 2003, Pryor has to file annual financial disclosure reports.

In 2006, Pryor reported that he and his wife, Jill, owned publicly traded assets worth between $631,005 and $1,365 million. The filings list only a range of value, not the exact amount. The filings don't require the Pryors to list the value of their property. Those assets were all held by Jill Pryor and included Conx Capital Corp. of Carson City, Nev.; Continental Lumber Co. of Little Rock; EMH & BPH South Dakota Trust; Great Western Leasing of Carson City, Nev.; and Pioneer Bank & Trust. The next year, the value of Mark Pryor's publicly traded assets plummeted to less than $45,000, according to the report. Pryor spokesman Michael Teague told the Arkansas Democrat-Gazette that the asset losses were tied to internal company problems and the poor economy. "These companies basically don't exist anymore," Teague said in the 2008 article. "It was all on paper." The value of the Pryors' publicly traded assets didn't rise above $16,000 in 2008 or 2009. Pryor, through his office, declined to comment on Ed Harvey. http://findarticles.com/p/articles/mi_hb5248/is_30_27/ai_n55110583/pg_3/

TAB ‘C’

ABRUPTLY TRANSFERRED FOIA DOC – JAN 20, 2009

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EXHIBIT A .

DianneThorne

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TAB ‘D’

UPGRADED THE CASE WITHIN THE IRS

What follows are documents related to the upgrading of the Harvey case tothe highest possible collection level within the IRS, Grade 12. The firstpages are taken directly from the IRS Collection Managers Handbook andoutline reasons a case might move to Grade 12 status.

Next are pages from the internal IRS transcript of the Harvey matter, asfiled as evidence in federal court. These show the workflow of the case; wesee an upgrade of case importance, transfer to a new agent, and thenclosure of case. Again, despite having initially been a high prioritycollection matter being aggressively pursued, then subsequently markedeven more high priority, the case was closed without COllecting.

MANUALTRANSMIITAL

l)epartmenl

vi theTreasury

114.1 CH.4

FEBRUARY 23, 2000

PURPOSE

Thifi transmits a reVil>ed cnapter 4. ColtoctJon Managers. for IRM 114.1 CornlJliance ant:! Customer ~rviceManager"s Hartdbook.

BACKGROUNDSection 3466 01 the RestructUring and Aefonn Act of 1900 applied oortain provisIons of the Fair Debt

COlleCtion PractICes Act to the Internal Revenue Service. These prOVisionS are reflecloo in section 6304 ollheInternal rtevenue COde.

NATURE OF MATERIAL

Text is added to the handbook to prOVk1e managers direction on reporting alleged violations 01 the Fair DeblCollection Practires Act

Harry T. ManakaNational DirectorGOIlectm fleltl Oper3Uorn;

114.1 CH.4 (02-23-2000)

Distribution: IRM 114.1 CH.4

fA Manual cat. No. 27783$

DianneThorne

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DianneThorne

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114.1 Compliance and Customer Service Manager's Handbook

Exhibit 114.1.4-1 tcont.1) (05-28-1999)ReVenue Officer Case Assignment Guide

Gr@ 11: Corporate officers; representatives from medium firms; creditors from large mancialirnrtitutions, U.S. Attorney inVOlved.Factor 4 SUpervisory ControlsGrode 12: little or no cuntrol on GS-12 assignments; guKJanoe only on unusual1y complex casesGrade 1t: Utile or no control on G8--11 asslQnmeots: guidance usually only when the revenue offIcer asks'Of it or ooforcemenl may be publiciZed.Factor 5 Enforcement ActionsGrade 12: Ov~r M employees; affects the economy of large communitIeS: intense me(!i<l scrutiny.Gr<ldp 11: 10-30 employees; SOllie economic effect; some media scruliny.

114.1.4.7.3 02-23-2000 IR Manual

DianneThorne

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Collection Managers Chapter 4

Exhibit 114.1.4-1 (05-28-1999)Revenue OfftMr case Assignment Guide

page 39

The !ormula IDRS U006 to aSSign case wades is I'hown in the fM'S! table below. TOO second table stlowscnteria you can usc to grnde cases manually, aller tney have Deen a8signed to revenue Officers.lDRS sums the AWMS scores for all TDAs on the taxpayer ptus tM ffil entity score, and assigns a gradeaccordingly.You can add additional wor1< assignments to the IDR8 sum to deterrnill6 the correct grade lor me caSA.AelurilS Compltancc Program (ncP) leclds aro usually G3-9 work. Other Investlgalions (01) and Offers inCompromise (Ole) generally have !lIe ~me grade as the Underlying accounts. Ols for routineaSSI!1nments. suer! as serving a Notice ot Levy or summons, are GS-9 work. Higher graded OIl' are:

GS--12: Investigations for Departfl18llt of Justice; compucated decaoonts andinsolvencies: aU other cases meellng grado 12 criteria in me aPM Glasslficationstandards fOr revenue officers.

!3S-11: Investigations for U.S. Attorney and RegIOnal COunsel; investigalions reqUiringspecial handling; investigations on dece<.!Mls. tnsoIvencies, potentially dangeroustaxpayers: all other cases meeting grade 11 criteria ill the OPM ctasSllicalion standards.

IORS~a for Grading TOAs and TOI&g.n)(j~LL~: Total RWMS score lor anllly :; 30,001 or higher

Grade 11: Total AWMS scor~ for entity =8,001 to 30.000

- Potentially Oangerous Taxpayers (unless mey meet GS-12 criteria)

- TDAs ror Forms 1041. 730. 106, 709 (unless they mee1 GS-12criteria)

Grade 9: Total RWUS score lor entity =0 - 8.000

Manual Criteria fOr Grading TOAs and TOls

use the following critmia IOf r~(1Ing cases after assignment to revenue officers. You willnot normally mange the graoo ()! a case unless it meets at least four of the factors at thehigher level. ThO 1actors are:

FCH:tor 1 Gr066 Income of Entity

G~ 12: over $185.000

~.1t: Sl20,OOO to SIB5.000

Factor 2 Complexity of case

.Gri;l(1e 12: complex financial rocoro~; f;ubterfugos such as Interlocking directorates, foreignsubsidiaries, Irusts, dummy corporations. need for nominelt liens, foreclosure SUits.jeopamy assessments: more than 30 empjO~(7s: speCialized or very valuable assets.

Grade 1j: Difficult 10 trace Income Of assets; dittlcult to determine rights of compeliugcr '

Personal Contacts

g,radtl?: Representatives from lar!Jfl and prominenl tirmti; (.'fOOllors from Ute larg~r

financial inslltutl0l16: pohtlcalligurea: CQIJlsel and Appeals involved.

fR Manual 02-23-2000 114.1:4.7.3

DianneThorne

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EXHIBIT A

DianneThorne

Highlight

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EXHIBIT A

Page:108


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EXHIBIT A

TAB ‘E’

LAWSUIT

CASE #: 4:11-CV-810-DPM

RALPH BRADBURY – PLAINTIFF V.

UNITED STATES OF AMERICA – DEFENDANT V.

RALPH BRADBURY & RICK ACKLIN – COUNTER DEFENDANTS

1

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF ARKANSAS

WESTERN DIVISION

RALPH BRADBURY PLAINTIFF v. Case No. 4:11-CV-810 - DPM UNITED STATES OF AMERICA DEFENDANT V. RALPH BRADBURY AND RICK ACKLIN COUNTER DEFENDANTS

SEPARATE ANSWER OF COUNTER DEFENDANT RALPH BRADBURY

COMES NOW separate Counter Defendant, Ralph Bradbury (“Bradbury”) and for his

Answer (“Answer”) to the Counterclaim (“Counterclaim”) of the Defendant, United States of

America (“Defendant”), alleges and states as follows:

1. Bradbury admits the existence of the legal authorities recited in paragraph 1 of the

Counterclaim. Otherwise, Bradbury lacks sufficient knowledge to admit or deny the material

allegations of paragraph 1 of the Counterclaim and therefore denies same.

2. Bradbury lacks sufficient knowledge to admit or deny the material allegations of

paragraph 2 of the Counterclaim and therefore denies same.

3. Bradbury does not contest the jurisdiction of this Court.

4. Bradbury admits that Arkansas Trucking and Continental Express are within the

jurisdiction of the Court. Otherwise, Bradbury denies the material allegations of paragraph 4 of

the Counterclaim.

5. Bradbury admits the material allegations of paragraph 5 of the Counterclaim.


Case 4:11-cv-00810-DPM Document 16 Filed 02/08/12 Page 1 of 14

2


7. Bradbury denies the material allegations of paragraph 7 of the Counterclaim.



9. Bradbury incorporates by reference the allegations of paragraphs 1-8 of the Answer.



12. Bradbury admits that he received a notice of assessment and demand for payment

from the IRS. Bradbury denies the notice and demand were “proper.” Bradbury denies the

material allegations of paragraph 12 of the Counterclaim.


14. Bradbury incorporates by reference the allegations of paragraphs 1-13 of the

Answer.



17. Bradbury admits that he received a notice of assessment and demand for payment

from the IRS. Bradbury denies the notice and demand were “proper.” Bradbury denies the

material allegations of paragraph 17 of the Counterclaim.


19. Bradbury incorporates by reference the allegations of paragraphs 1-18 of the

Answer.




3







24. Bradbury denies both generally and specifically all material allegations of the

Counterclaim not specifically admitted herein.

25. Bradbury reserves the right to plead further in this action in accordance with the

Federal Rules of Civil Procedure upon subsequent discovery in this case.

AFFIRMATIVE DEFENSES

26. On previous appeal, the Defendant has abated assessments against Bradbury for the

4th Quarter of year 2008 and the 1st Quarter of 2009 due to his lack of control of Arkansas

Trucking. That same lack of control of Arkansas Trucking by Bradbury is applicable to the 3rd

quarter of year 2008 for which the Defendant now seeks judgment. At the times in question,

Bradbury was not an owner, director or officer of Arkansas Trucking. Bradbury did not

determine the financial policy of Arkansas Trucking. At the times in question, he did not open

and close bank accounts or direct or authorize the payment of company bills; nor did he

authorize or make federal tax deposits or prepare, review, sign or transmit payroll tax returns.

Bradbury has not acted willfully on failing to collect or pay over withheld taxes. Bradbury has

not intentionally disregarded the law and has not acted in plain indifference to legal requirements

to collect and pay taxes.

27. Subsequent to the appeals process, and not before, Bradbury became eligible to file


4

a Freedom of Information Request (“FOI”) with the Internal Revenue Service. Bradbury filed

and then received redacted FOI information that was highly relevant to his appeal but which was

not available to him during his appeals process. As a part of the redacted FOI information,

Bradbury received the ICS History Transcript (“Transcript”). A copy of portions of the redacted

Transcript are attached hereto as Exhibit A and incorporated by reference. A copy of portions of

the redacted FOI documents are attached hereto as Exhibit B and incorporated by reference. The

Transcript reflects that Arkansas Trucking made a credit card payment in the amount of

$189,158.56 on March 31, 2008. (Transcript page 86). On June 11, 2008, the Transcript states

that all Arkansas Trucking credit card transfers were completed. On July 18, 2008, Arkansas

Trucking made a $26,000.00 tax payment. (Transcript page 87). On July 18, 2008, an entry was

made in the Transcript that the tax deposits were brought into compliance. The Transcript

records that the case was closed. (Transcript page 87). At the times in question, Bradbury had

collected and paid all taxes for Arkansas Trucking to the extent that he had control and ability to

do so.

28. The Transcript reveals no further action until September 20 and 25, 2008, at which

time it was noted that Arkansas Trucking was not in compliance. (Transcript page 88).

Bradbury had no control over Arkansas Trucking leading up to this event. Control over Arkansas

Trucking up to this point and beyond was in the ownership of Arkansas Trucking, that being

Edward M. and Bonnie Harvey and their designated agent, Marvin Jones. By prior deposition

testimony of Marvin Jones on April 28, 2010, in the case of First Security Bank v. Eaves, et al.,

in White County Circuit Case No. CV2009-775-1, previously provided to the Defendant with

Form 843, Marvin Jones stated that he entered Continental Express and Arkansas Trucking as

early as June 2008.


5

29. The Transcript states that on October 2, 2008, the Revenue Officer, James G. Davies,

had a conference with Mr. James Dodd, the CFO of the Arkansas Trucking. At this conference,

Mr. Dodd related to Mr. Davies that the taxpayer Harvey was working on a loan to pay all taxes.

At this conference, Mr. Dodd presented receipts for two payments made on September 12, 2008,

in the amount of $50,000.00 and September 15, 2008, in the amount of $95,792.89, which had

not been credited to the account. Mr. Davies issued a deadline of November 5, 2008, to Mr.

Dodd for the Arkansas Trucking to become current on tax deposits. The Revenue Officer also

instructed Mr. Dodd to provide information on the referenced loan to be obtained by Harvey. He

also requested information on the Arkansas Trucking IRA and 401K Plan along with information

on another Harvey owned and controlled business, Gibraltar National Insurance Company,

which managed the IRA and 401K programs. Upon information and belief, Gibraltar, under the

control of Harvey and not Bradbury, caused bulk transfers of funds from Arkansas Trucking to

Gibraltar, which then at its discretion allocated funds between insurance premiums, and

contributions of withheld funds to the IRA and 401K plans. The Revenue Officer also requested

other detailed Arkansas Trucking information relating to its assets, such as a listing of all

accounts payable with names, addresses and phone numbers. Mr. Davies also issued instructions

that Harvey, as the owner of Arkansas Trucking, was to call him by October 30, 2008, to set up

an appointment to provide a Form 4180 interview and Forms 433 – A/B, which forms are

designed for the disclosure, under oath, of income, expenses, assets and liabilities for both the

company and its owner. The Revenue Officer also referenced another Harvey owned company,

Continental Express, and noted that it had no employees but leased employees from Arkansas

Trucking. The Revenue Officer did not deal with Bradbury at this time. (Transcript pages 89,

90).


6

30. The Transcript does not record that Harvey, the owner, ever complied with these

instructions. There is no Form 4180 interview in the Transcript for Harvey and no reason for its

absence is documented. (Transcript page 77). Upon information and belief, it is alleged that the

owner did not in fact comply with the instruction of the Revenue Officer, Mr. Davies. Instead,

without the control of Bradbury, the Harvey’s and Marvin Jones, in the exercise of their financial

discretion and control, sold Continental Express. Closing of the sale was on December 4, 2008,

just under thirty (30) days from the November 5, 2008, deadline previously issued by Mr.

Davies. On information and belief, this failure to comply with the Revenue Officer’s instructions

and the sale of Continental Express was done by Harvey to avoid the Form 4180 interview and

the necessity of completion of the Forms 433 A and B under oath.

31. Between the dates of October 3, 2008, and January 20, 2009, the Transcript reflects

there was no action on the case. Then on January 20, 2009, the case was reassigned from Mr.

Davies to Revenue Officer Mr. Bobby Blackman. (Transcript page 91). On January 22, 2009,

Mr. Blackman reviewed the history of the file which listed the owner of Arkansas Trucking as

Edward Harvey, the CFO as James Dodd, and listed two other Harvey related and controlled

corporations of Gibraltar National Insurance and Continental Express as related to the

transactions. (Transcript page 92). On February 12, 2009, Mr. Blackman went to the offices of

Arkansas Trucking, only to find the offices were vacant. A janitor in the building informed Mr.

Blackman that the company had been sold. (Transcript page 93).

32. The Transcript then records that on March 10, 2009. the aforementioned Marvin

Jones, as agent of the Harvey’s, went to the office of Mr. Blackman. Marvin Jones stated that he

represented the family of the largest shareholder of Arkansas Trucking. The Transcript states that

Arkansas Trucking furnished employees to Continental Express, which also leased vehicles from


7

Great Western Leasing. Upon information and belief, this was also another Harvey owned and

controlled company. At that time, he delivered a check in the amount of $100,000.00, marked

trust fund only. Mr. Jones advised Mr. Blackman that Arkansas Trucking and related companies

had been sold to Celadon Trucking on 12/4/08. He further advised that he was liquidating the

remaining assets of the company and specifically stated these assets included a Certificate of

Deposit with AIG, accounts receivable with Textron and judgments against two former officers

convicted of embezzlement. Jones stated that he needed 90 days to get all of the funds and that

the account would be paid in full. Apparently induced by and in reliance on these representations

from Mr. Jones, the Revenue Officer agreed to hold collection activities for 90 days. Jones

further stated that he was talking to an attorney at the Friday Law Firm regarding an abatement

of the tax since two former officers of the company were convicted of fraud and took corporate

funds. The Defendant’s plan of action by its Revenue Officer was to monitor the case for 90 days

to June 9, 2009. (Transcript page 95). The Transcript records no action by Marvin Jones or the

Harvey’s with the Revenue Officer during this 90-day period. However, as shown in other

sections of the Transcript and FOI as cited below. they were busy with the liquidation and

transfer of assets but the trust fund was not paid.

33. On September 25, 2009. and in response to a letter Mr. Blackman sent to Bradbury

regarding the trust fund, Mr. Blackman received a phone call from Bradbury wanting to talk

about the trust fund on Arkansas Trucking. Mr. Bradbury was never interviewed. There is no

Form 4180 interview for Bradbury in the Transcript and no reason for its absence is documented.

(Transcript page 77). On that same day, Mr. Blackman received a phone call from Counter

Defendant Rick Acklin declining an interview, but stating that he thought the payroll taxes had

been paid. (Transcript page 106).


8

34. Guess what? The assets previously detailed by Marvin Jones to Mr. Blackman on

March 10, 2009, including the Certificate of Deposit and Textron accounts receivable were

indeed liquidated; but the payroll tax account was not paid by Mr. Jones or the Harvey’s’. How

do we know? Because on October 1, 2009, the Transcript tells us that Marvin Jones called Mr.

Blackman and this time told him that he was working on getting funds from former managers of

the company (Woolridge and Tiefel). Jones stated that the business was sold to a company in

Canada called “Seldon” for 24 million but it owed 28 million on equipment and the money went

to pay it off. He stated that Price Gardner is the attorney working on case. Jones wanted a payoff

on the trust fund. The Revenue Officer explained that he needed a power of attorney.

(Transcript page 107).

35. On October 5, 2009, Mr. Blackman received a Form 2848 power of attorney from

Randy Coleman for Bradbury. (Transcript page 107). Not mentioned in the Transcript is the

fact that the Form 2848 was transmitted by a letter from Randy Coleman dated September 29,

2009, offering that Mr. Bradbury would visit with the Revenue Officer on the trust fund claims

and requested a convenient time. Mr. Bradbury was never interviewed. Had that occurred, it is

likely that the misinformation then being conveyed by Marvin Jones could have been addressed

and corrected. There is no Form 4180 interview for Bradbury in the Transcript and no reason for

its absence is documented. (Transcript page 77).

36. Subsequently, on October 20, 2009, Mr. Blackman received a letter from Marvin

Jones stating that Continental Express was sold to Celadon and Daimler was owed $28 million

and that Daimler accepted $24.1 million. Collateral was truck and trailers. In the letter, Jones

stated that he was suing 2 convicted embezzlers, Todd Tiefel and Kelly Woolridge, in civil

actions. (Transcript page 108).


9

37. Later on October 20, 2009, Mr. Blackman received a fax from Marvin Jones. The fax

was a power of attorney that Marvin Jones had for Edward M. Harvey. The Transcript describes

it a durable power of attorney. On January 11, 2010, the Transcript records no further substantive

action or investigation by the Defendant other than a consultation and to complete trust fund and

close the case as defunct and no assets. (Transcript page 108). This action was again confirmed

in several subsequent entries in the Transcript.

38. On May 18, 2010, Randy Coleman, attorney for Bradbury, again contacted Mr.

Blackman with a Form 2848. (Transcript page 109)

39. On May 18, 2010, Mr. Blackman received a letter from Marvin Jones requesting

account information on Arkansas Trucking. Mr. Blackman mailed that information to him. Mr.

Blackman also received a letter from Marvin Jones telling him that concerning the sale of the

trucking company that no creditors were paid anything since the company had a negative book

value. The account information previously mailed to Marvin Jones at 16609 Cantrell Road #12,

Little Rock, AR 72223, could not be delivered and was returned to Mr. Blackman. Again the

transcript records that the taxpayer was out of business and had no assets. The decision was

again to close the case. (Transcript page 110).

40. One of the final entries in the History Information of the Transcript on October 22,

2010, without further amplification, is “Fraud potential has been considered.” (Transcript page

111).

41. During the time periods recited above and because the Transcript is silent, apparently

there had been no record of disclosure by Mr. Jones to Mr. Blackman of other company assets

then existing from which the trust fund could have been paid.

a. For example, one such asset was the Continental Express truck terminal property


10

and the rent being paid by Celadon on that property to Continental Express in the amount

of $20,650.00 per month. Upon information and belief, a part of the Celadon rent was

diverted to an entity named Sentell Enterprises or an entity by similar name, in which a

relative of Bonnie Harvey had an interest. Upon information and belief, the rent funds

were not applied to payment of the trust fund.

b. In the Transcript, there is no record of disclosure by Mr. Jones to Mr. Blackman

that he and the Harvey’s were able to settle the above referenced residual $1.3 million

dollar Daimler debt for an amount of $600,000.00, which ostensibly freed up

approximately $700,000.00 for tax payments. (FOI page 148). Upon information and

belief, these funds were not applied to payment of the trust fund by Marvin Jones or

Harvey.

c. In the Transcript, there is no record of disclosure by Marvin Jones to Mr.

Blackman of the disposition of the funds from the liquidation of the $1,000,000.00

Certificate of Deposit with AIG. (FOI page 56, 121 and 122). Upon information and

belief, these funds were not applied to payment of the trust fund by Marvin Jones or

Harvey.

d. In the Transcript, there is no record of disclosure by Marvin Jones to Mr.

Blackman that the liquidation of Textron receivables yielded positive net funds to

Continental Express and Arkansas Trucking. Upon information and belief and from the

sworn deposition testimony of Marvin Jones in other cases, the net received from the

liquidation of the receivables was approximately $700,000.00 to $800,000.00. (FOI

pages 121, 122, 127, 133 and 135). Upon information and belief, these funds were not

applied to payment of the trust fund by Marvin Jones or Harvey.


11

e. In the Transcript, there is no record of disclosure by Marvin Jones to Mr.

Blackman that on December 10, 2008, he and Bonnie Harvey actually contracted with

Mr. Brandon Frederick, the finance manager, agreeing that all cash distributions of

Continental Express, Arkansas Trucking and Northstar Transportation, another Harvey

company, would be first for payroll and then IRS trust fund deductions and that there

would be no pay out to other obligations until trust fund liabilities were paid in full. (FOI

page 36). From the record in the Transcript, we know that the covenants of this contract

undertaken by Bonnie Harvey and Marvin Jones to Mr. Frederick failed since the trust

fund was not paid by them.

f. In the Transcript, there is no record of disclosure by Mr. Jones to Mr. Blackman

of other assets of the Harvey ownership available to pay the trust fund, such as their sale

of Travis Lumber Company. (FOI page 148). There is likewise no disclosure by Mr.

Jones to Mr. Blackman of transfers of other assets by the Harvey’s in which effort Mr.

Jones was assisting them as early as June 2008, as Mr. Jones has confirmed under oath in

intervening depositions to other parties. In other civil suits, it is the claim of other parties

that such transfers were to avoid creditors.

g. It can only be presumed that had Mr. Blackman been aware of the totality of these

circumstances, he would have selected a different course of action. The Transcript does

not record further efforts by any Revenue Officer to investigate the accuracy of

statements of Marvin Jones regarding assets and funds available to Continental Express

and Arkansas Trucking or to identify the Continental Express/Arkansas Trucking

ownership or their agent Marvin Jones as responsible persons. There is no Form 4180

interview in the Transcript for Marvin Jones or the Harvey’s and no reason for such


12

absence is documented. Mr. Bradbury was never interviewed. There is no Form 4180

interview for Bradbury in the Transcript and no reason for its absence is documented.

(FOI page 77). Had that occurred, it is likely that the misinformation then being

conveyed by Marvin Jones, as agent of the Harvey’s, could have been timely addressed

and corrected. Had that interview occurred, it is highly likely that funds on which the

Defendant arguably had a constructive trust could have been preserved for the payment

of the trust fund. (See FOI pages 56, 121, 122, 127, 133, 135, and 148). Instead,

assessments were proposed by the Defendant against Bradbury, Acklin and Pete

Campbell, and were based primarily upon a bank signature card for an Arkansas

Trucking account dating back to December 2005, without regard to bank account

signature cards for Continental Express which included Marvin Jones, among others, as a

signatory; and a bank statement for Arkansas Trucking from January 31, 2008. Neither

of these time periods are in issue. (FOI pages 197 and 199).

42. Based on the foregoing, the claims of the Defendant against Mr. Bradbury are barred

by payment, accord and satisfaction, waiver and estopple, the Defendant’s contributory

negligence, and the failure to follow its own audit process/collections procedures, regulations

and manuals. Defendant’s Counterclaim should be dismissed for failure to state a claim upon

which relief can be granted pursuant to Rule 12 (b)(6) of the Federal Rules of Civil Procedure

and failure to join parties under Rule 12(b)(7) of the Federal Rules of Civil Procedure. Bradbury

pleads all other affirmative defenses available to him under Rule 8(c) of the Federal Rules of

Civil Procedure.

43. Bradbury has had no access to the books and payroll records of Arkansas Trucking

by which to calculate and determine the amount of any tax for which the Defendant now seeks


13

judgment against him. In the audit phase of this case, Bradbury has previously advised the

Defendant of such circumstances and that he had no ability to calculate the amount of the

assessment and the tax now claimed by the Defendant. The FOI contains no such payroll records.

Strict proof should be required of the Defendant.

WHEREFORE, the Plaintiff, Ralph Bradbury, prays that the Counterclaim of the

Defendant be dismissed and that it take nothing thereby, for all attorneys fees and cost herein

expended and for all other proper relief.

Respectfully submitted, Attorneys For Plaintiffs Jack Nelson Jones & Bryant, P.A. 2800 Cantrell Road, Suite 500 Little Rock, AR 72202 Ph: (501) 375-1122 Fax: (501) 375-1027 Charles A. Banks, Ark. Bar No. 73004 Banks Law Firm, PLLC 100 Morgan Keegan Drive, Suite 100 Little Rock AR 72202 By: /s/Randy Coleman Randy Coleman, Ark. Bar No. 70018


14

CERTIFICATE OF SERVICE

I, Randy Coleman, attorney for Plaintiff Ralph Bradbury, certify I electronically filed the foregoing with the Clerk of the court using the ECF system which sent notification of such filing to the following: Christopher R. Thayer United States Attorney Erin Healy Gallagher U. S. Department of Justice, Tax Division P. O. Box 7238 Washington, D. C. 2004 /s/Randy Coleman Randy Coleman


TAB ‘F’

AGREEMENT

What follows is an internal memo between Pryor's mother in law ~nd herfinancial advisor outlining a plan to pay owed taxes. This was filed as anexhibit in Federal Court. Note the letter explains no obligations are to bepaid until the IRS issues are resolved. In the letter Harvey acknowledgestax debt and with her financial advisor, Jones, lays out a plan (ultimatelyignored) for repayment of taxes owed ~

Page:36

Case 4:11-cv-0081 O-DPM Document 16-2 Filed 02/08/12 Page 1 of 9 .

DeceInIHr to, 2CIOll

BI'8IldOn hederick

Te~AR 71854

~ Re: Employment Acfeement

Wi, BoclRie Harvey and Marvin Jones, repTeaentil1l" HaIve'fc:.ompanie$herebv enter Into thJs:employrrtal'lt ...-ment wrttt Pnndon Frederfdt for the period besfnnlr18 on December 18. 2008 ;md

continUlllc until February 15, 1009. DurinS this t1me 8nlt1d6n wit owrsee die c:otledkl" of IRY and aNOut5tBnclfl\grecef\labtes befonIinito ~TransportetfOnSoIutfonaand COlttlnent'"~ Inc.

Further.~wI1f il$5l$t In dbtributlons for~ IavmIand ttust fund obUptiORl on behalfoft::onmenb1l &press,~HOI'thJterT~~ SOlutIons, end ArI<AInsacTrudtn&~GG 81'1ndonIs not a5Ieneron the alfAUM and wfR take dIrecUan for distrbItfoN ff'Om Marvfn JorJ6. Utlder thisqteement we consmlt to the fOUJJwll'II1IlnnSft conditions: .

1. Brandon Pmfertdc wilt be paid at a ,ete of$85.000.00 annuatty rot the JI)Odfied peffod as anemplO¥"ora"othernwtua....asree" upOO autside CMfreetit1l entity. ltt1I filuat8s~ • cro-spay 01'$14,166.17~

2. All c.tih tRstrlbudans made byeomtnenral~NonhstarTrans~antS Ar'kanAcT~ setvke$ durfna tNs time periodwII be focemplovee pavIQ/I first 8fId then the IRS trustfund deductfons.

3. No monev will be paid out toWanI any otherobl1pt1on5of the c:onapanJes~ untl all payrolland trust fund IiabIIdes iIR JNIicJ tn full uftleSs directed bVourattomey Price 6iN'dner.

EXHIBIT B

n • _

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TAB ‘G’

BONNIE HAVEY SELLS ASSETS

Case 4:11-cv-0081 O-DPM Document 16 Filed 02/08112 Page 1 of 14

UNITED STATES DISTRICT COURTFOR THE EASTER.~DISTRICT OF ARKANSAS

'VESTER'\" DIVISION

RALPH BRADBURY PLAINTIFF

Y. Case No. 4:11-CV-810 - DPM

UNITED STATES OF AMERICA DEFENDANT

v.

R.;\LPH BR.IDBURY A::"'D RICK ACKLIN COUNTER DEFENDANTS

SEPARATE ANSWER OF COUNTER DEFENDANT RALPH BRADBURY

CO}..fES NOW separate Counter Defendant Ralph Bradbmy ("Bradbury") and for his

Answer ("Answer"") to the COlUlterclaim ("Counterclaim") of the Defendant United States of

Ame11ca ("'Defendant"). alleges and states as follows:

1. Bradbmy admits the existence of the legal authorities recited in paragraph 1 of the

Counterclaim. Othelwise. Bradbmy lacks snt1kient knowledge to admit or deny the matetial

allegations of paragraph 1 of the Counterclaim and therefore denies same.

2. Bl'adbmy lacks sufficient knowledge to admit or deny the material allegations of


3. Bradbmy does not contest the jmisdiction of this Conn.

4. Bradbmy admits that Arkansas Tmcking and Continental Express are within the

jmisdiction of the Comt, Otherwise. Bradbmy denies the material allegations of paragraph 4 of

the Counterclaim.

5. Bradbmy admits the material allegations ofparagraph 5 of the COlUlterclaim.

6. Bradbmy lacks sufficient knowledge to admit or deny the matetial allegations of

1

Case 4:11-cv-0081 O-DPM Document 16 Filed 02/08/12 Page 5 of 14

29. The Transcript states that on October 2.2008. the Revenue Otllcer. James G. Davies.

had a conference with rv1r. James Dodd. the CFO of the A.rkansas Tmcking. At this conference.

Mr. Dodd related to Mr. Davies that the taxpayer Harvey was working on a loan to pay all taxes.

At this conference. 1v1r. Dodd presented receipts for two payments made on September 12. 2008.

in the amotmt of $50.000.00 and September 15. 2008. in the amount of $95.792.89. which had

not been credited to the account. Mr. Davies issued a deadline of November 5. 2008. to 1\1r.

Dodd for the Arkansas Tmcking to become current on tax deposits. The Revenue Officer also

instructed Mr. Dodd to provide infonllation on the referenced loan to be obtained by Harvey. He

also requested infonnation on the Arkansas Tmcking IRA and 401K Plan along with infonnation

on another Harvey owned and controlled business. Gibraltar National Insurance Company.

which managed the IRA and 401K programs. Upon infolmation and belief Gibraltar. under the

control of Harvey and not Bradbury. caused bulk transfers of funds fi:om Arkansas Tmcking to

Gibraltar. which then at its discretion allocated funds between insurance premiums. and

contributions of withheld funds to the IRA and 401 K plans. The Revenue Officer also requested

other detailed Arkansas Tmcking infonnation relating to its assets. such as a listing of all

accounts payable with names. addresses and phone numbers. Mr. Davies also issued instmctions

that Harvey. as the owner of Arkansas Tmcking. was to call him by October 30.2008. to set up

an appointment to provide a Form 4180 interview and FOlms 433 - A/B. which fOlms are

designed for the disclosure. under oath. of income. expenses. assets and liabilities for both the

company and its owner. The Revenue Officer also referenced another Harvey owned company.

Continental Express. and noted that it had no employees but leased employees from Arkansas

Tmcking. The Revenue Officer did not deal with Bradbmy at this time. (Transfl'ipt pages 89,

90).

5

Case 4:11-cv-0081 O-DPM Document 16 Filed 02/08112 Page 6 of 14

30. The Transcript does not record that Harvey. the owner. ever complied with these

instmctions. There is no Form 4180 interview in the Transcript for Harvey and no reason for its

absence is documented. (TmllS(Tipt page 77). Upon information and belief. it is alleged that the

owner did not in fact comply with the instmction of the Revenue Officer, Mr. Davies. Instead.

without the control of Bradbmy. the Harvey's and Marvin Jones. in the exercise of their financial

discretion and control. sold Continental Express. Closing of the sale was on December 4. 2008.

just under thiIty (30) days from the November 5. 2008. deadline previously issued by Mr.

Davies. On information and belief. tins failure to comply with the Revenue Officer's instructions

and the sale of Continental Express was done by Harvey to avoid the Fonn 4180 interview and

the necessity of completion of the Fanus 433 A and B lUlder oath.

31. Between the dates of October 3. 2008. and Janumy 20, 2009. the Transcript reflects

there was no action on the case. Then on January 20. 2009. the case was reassigned from Mr.

Davies to Revenue Officer Mr. Bobby Blackman. (Tmllsnipt page 91). On January 22. 2009.

Mr. Blackman reviewed the histOly of the file which listed the owner of Arkansas Trucking as

Edward Harvey, the CFO as James Dodd. and listed two other Harvey related and controlled

corporations of Gibraltar National Insurance and Continental Express as related to the

transactions. (Tl'allSrript page 92). On Febmary 12. 2009. Mr. Blackman went to the offices of

Arkansas Trucking. only to find the offices were vacant. A janitor in the building infonned Mr.

Blackman that the company had been sold. (TnllS(Tipt page 93).

32. The Transcript then records that on March 10. 2009. the aforementioned Malvin

Jones. as agent of the Harvey·s. went to the office of Mr. Blackman. A'larvin Jones stated that he

represented the family of the largest shareholder of Arkansas Tmcking. The Transcript states that

A.rkansas Trucking fumished employees to Continental Express. which also leased vehicles from

6

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TAB ‘H’

JILL HARVEY – PRYOR SENATOR PRYOR’S WIFE

The following pages are from a sworn deposition of Marvin Jones, thepower-of-attorney equipped financial advisor to Senator Pryor's in-laws.

The deposition was a part of First Security Bank vs the Harveys et ai, CaseNo. CV2009-775-1, and filed in White County, AR Circuit Court.

In this deposition, Jones indicates Bonnie Harvey provides monthlyassistance to her "kids that struggle" in the amount of $5,000 to $24,000 amonth. Jones admits that this money is for house payments, schoolexpenses, and other needs. Using the figures from Jones' swornstatement, at a bare minimum this amounts to about $80,000 a year,and these payments have occurred for years.

Later in this deposition, we specifically see that Jones was referring to thePryor household when he mentioned "kids that struggle." A monthlyexpense sheet for Ed Harvey from a previous year lists the Pryors andtuition as a line item expense. Remember, that Jones indicated this Harveyassistance was not just for schooling, but also for house payments andother needs, and was up to $24,000 monthly. Documents seem to indicatethat the Harveys, now shielded from IRS scrutiny, make the house paymentthat keeps the roof over Senator Pryor's head.

Additionally, the idea of diverted monies to a Harvey relative, this timedirectly from the companies, is raised in a filing in Federal Court, EaternDistrict of Arkansas, in the case of Bradbury vs USA Case No. 4:11CV-810- DPM.

See following pages...

L

1

'k

10

'1'1_,_. _1.

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,'}\\J,F;~::; }\1l~~.\lUFAC'!:\UlUNC, LLC <J.': k/;)L'.I\\lJ';~::'lN:JOFl\cr!'lJTo\JI':JC; .J. 'k

Pl,\~JLETTE, 'LNe:. i;~L1jLZ'~r{') ~'l. ,,,Im,r<VEY; :~;\I~'JEY I'1l\NlH·')\el'UrUNG '/'COr;'FOj:~;'\;I'TC'i>J i'J/;''/.::1, HAI\VEY t-:!T;'G. J.

C'()NP()l~~~'J'lGN; ;·Ii.\RVl:;;Y c;:;;:(mp I,

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::U':i\L E$'1'A'1'£ I10P''l'G;V33'; j,"ll,Gf) ANDK.E~::m<..D:~,.D IN 'I'HC ())"FJCTAL, :,!{ECOHDS CF lfJlITTE COUNTY 1 *j\RKANS/\;:; f.t\! !"l(mf!'C~i\GI': F<.ECORD ,\LK':'UK )C:)f:., !~'1\ i:1i\GS 2.e)6>:k DEFENDZ\.N'.,','-;

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36

1 eighty to 120 I approximately?

2

3

4

A.

Q.

A.

No, I don't. I'm not involved in that.

All right. ~fuat else?

Life insurance policies and I don't know the amount of

5 that.

6 Q. Okay. tt'1hat else? Ace the life insur:ance policies on

7 her life or his?

8

9

10

11

12

13

14

p.••

Q.

A.

Q.

A.

Q.

A.

I'm not sure. I think both, quite honestly.

All right. Do you :~lOW what the value of those are?

No.

Are they term life or whole life?

I don't know.

Okay. Go ahead.

General living expenses. I know she helps with the

15 family.

16 Q. Tell me what thfit consists of when you say "helps \vith

17 the family." 'Vl1hat: does she do?

18

19

A.

Q.

I t"1l.ink there are some kids that struggle.

How much is ,she paying them a month or for their

20 benefit, I guess?

21 A. It is variable but it can go an~lhere from -- I've seen

22 checks for 24,000 to 5,000 a month.

23 Q. Do you know \.!hat that's for as far as _.- you say help.

24 Is it paying bills for them?

25 Helping them with house payments, helping kids in

Bushman Court Reporting501.372.5115

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school, help them with other needs.

Q. Anything else that you can think of that makes up the

37

3 eighty to 120?

5

6

7

A.

Q.

A.

Q.

I know they have quite a few medical bills.

Do they have Medicare?

Yes.

Do they have any supplemental insurancB{ health

8 insurance?

9

10

A.

Q.

I think they just got some.

Okay. How much are their medical bills over and above

11 'itlhat Medicare or the supplemental doesn I t pay?

12 A. r. 'In not sur,e. I'm just nO\~.;r actually just no\'v getting

13 into that.

14

15

16

18

19

20

21

22

23

24

Q.

A.

Q.

A.

Q.

A.

Q.

A.

Q.

A.

Anything else?

Nothing that I can recall that comes to mind right nO'/li '.

So they -- you said -- is that line of credit secure?

Yes.

~tatfs it secured by?

~rheir personal residence.

Personal residence where?

Ten River Mountain Road.

vlliy are they 'rexas residents, just out of curiosity?

I don't know.

All right. So you said since you've been involved,

25 sOIuewhere around June or July of 2008 ( Mr. and Ms. Harvey

Bushman Cour.t Reporting501.372.5115

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Edwllrd M. H~r\'ey

[ocome Slat"ll.lCntFor the Six Mor..lhs Ending 1une 30,2008

CUlTent Month Year to DateRevenucsMiscelJanc<lUs Income :$ 181.38 0.00 $ 181.38 0.00Interest Income 92,231,98 0.00 92,237.98 0.00Gain/Loss on Sale ofAsset 14,483.28 000 14,483.28 0,00Gain! Loss on fnvestment 303,283.30 0.00 303,283.30 0.00Dividend-Blink OfAmeric<l 13:>.12 0.00 133.12 O.O()UnreaUzcd income f/ lnvstmls (3_~1,14/).lQ) 0.00 (367,14().lQl 0.00

To!a! Rev::nues 43,118.96 0.00 43,178.96 0.00

Cost ofSales

Total ('A).~t of&11es 0.00 0.00 0.00 0.00

Gr(l~ Pl'Ofit 43,178.96 0.00 4J.L 78.96 0.00

ExpeowsSubscriptions 85.00 0.00 85.00 0.00Gifts 5,700.00 0,00 5,700.00 0.00Alimony 25,000.00 0.00 25,000.00 0.00

~Bonnie's Account ( J 75.000.00 0.00 75,000.00 0.00l'ol1er & Adams Tuition f rJt) r 2,562.5"0 - 0.00 2,562.50 0.00Persollal Expense 57,734.61 0.00 51,734.67 0.00Ca:;h Withdrawal 2,gOO.OO 0.00 2,000,00 0.00Lt'gal 1,7!0.33 0.00 1,710,33 0.00Telephone 1,2l7.77 0.00 1,211.77 0.00Utilities· til 0 River Mt. Rd. 16,753.% 0.00 f6.753.96 0.00Utilities" I"t. Lauderdale 60.10 0.00 60.10 0.00Interest Expell8c 87,614.22 0.00 87,614.82 0.00Auto Lice/ll1cS 7,50 0.00 7.50 0.00Interest Expense-LOC 9,586.39 0.00 9,586.39 0.00Utilit.ws-# 6 River Mounlllni 2,821.74 0.00 2,621.74 0.(10Household Expense-fJ6 River Mtn 2,891.00 . 0.00 2,891.00 0.00UtiIltie3-12 River Mtn 1,166.61 0.00 1,166.6l G.OOHousllhc1d Exp-12 River MIll .55'1.09. 0.00 557.09 G.OOHQu~ho!d Ex:p -LR 81,787.30 0.00 81,787.3lJ 0.00Household Exp.. Ft. :3,300.00 0.00 3,300.00 0.00Bank Charges 60.00 0,00 60.00 0.00Penalty nnd Interest IS8:l~ 0.00 188.36 O.CO

Tobl Expenses 377,80S.l t i 0.00 317.805.14 0.00

Net Income j~- 33;M26.18) 0.00.($ 334,626.18) 0.00

7/9/2009 td 3~Ul PM rOt· Management )lUl'pMCS Only Page:)

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UNITED STATES DISTRICT COURTFOR THE EASTER~DISTRICT OF ARKANSAS

WESTER~DIVISIO~

R4.LPH BRADBlTRY PLAINTIFF

Y. Cast' 1\'0. 4: 11-CV-810 - DPM

UNITED STATES OF AMERICA DEFENDANT

V.

R4.LPH BRADBURY AND RICK ACKLIl\' cor.!'TER DEFEl\'DA1'\TS

SEPARATE ANSWER OF COUNTER DEFENDANT R4.LPH BRWBURY

COMES NOW separate Counter Defendant. Ralph Bradbury ("'Bradbury") and for his

Answer (""Answer") to the COlUlterclaim ("'Counterclaim") of the Defendant. United States of

America ("Defendant"). alleges and states as follows:

1. Bradbmy admits the existence of the legal authorities recited in paragraph I of the

Counterclaim. Othelwise. Bradbmy lacks sufficient knowledge to admit or deny the matetial

allegations ofparagraph 1 of the Counterclaim and therefore denies same.

2. Bradbmy lacks sufficient knowledge to admit or deny the matetial allegations of


3. Bradbmy does not contest the jurisdiction ofthis Com1.

4. Bradbmy admits that Arkansas Tmcking and Continental Express are within the

jurisdiction of the Com1. Otherwise. Bradbmy denies the material allegations of paragraph 4 of

the Counterclaim.

5. Bradbmy admits the material allegations of paragraph 5 of the COlUlterclaim.

6. Bradbmy lacks sufficient knowledge to admit or deny the material allegations of

I


37. Later on October 20.2009. ?vIr. Blackman received a fax iI-om lvIarvin Jones. The fax

was a power of attomey that Malvin Jones had for Edward M. Halvey. TIle Transcript describes

it a durable power of attomey. On January 11. 2010. the Transcl1pt records no flllther substantive

action or investigation by the Defendant other than a consultation and to complete tmst fund and

close the case as defimct and no assets. (Transcript pagt' 108). This action was again confirmed

in several subsequent entries in the Transcript.

38. On May 18. 2010. Randy Coleman. attomey for Bradbury. again contacted Mr.

Blackman with a Form 2848. (Transrript page 109)

39. On May 18. 2010. Mr. Blackman received a letter from Marvin Jones requesting

account information on Arkansas Tmcking. Mr. Blackman mailed that information to him. Mr.

Blackman also received a letter from Malvin Jones telling him that conceming the sale of the

tmcking company that no creditors were paid anything since the company had a negative book

value. The account inf()lmation previously mailed to Marvin Jones at 16609 Cantrell Road #12.

Little Rock, AR 72223, could not be delivered and was renImed to Mr. Blackman. Again the

tranScl1pt records that the taxpayer was out of business and had no assets. The decision was

again to close the case. (Tnnsnipt page 110).

40. One of the final entries in the HistOlY Infollllation of the Transcript on October 22.

2010. without further amplification. is "Fraud potential has been considered.'" (Traosnipt page

111).

41. Dming the time pel10ds recited above and because the Transcript is silent. apparently

there had been no record of disclosure by Mr. Jones to Mr. Blackman of other company assets

then existing fi:OIll which the tmst fund could have been paid.

For example. one such asset was the Continental Express tmck terminal property

9

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and the rent being paid by Celadon on that property to Continental Express in the amount

of $20,650.00 per month. Upon infoll11ation and belief. a pan of the Celadon rent was

dive11ed to an entity named Sentell Enterprises or an entity by similar name. in which a

relative of Bonnie Harvey had an interest. Upon infoll11ation and belief. the rent funds

were not applied to payment of the t111St fimd.

b. In the TransclipL there is no record of disclosure by Mr. Jones to !'vir. Blackman

that he and the Harvey's were able to settle the above referenced residual $1.3 million

dollar Daimler debt for an amount of $600,000.00, which ostensibly freed up

approximately $700.000.00 for tax payments. (FOI page 148). Upon infonnation and

belief. these fimds were not applied to payment of the t111st fund by Marvin Jones or

Harvey.

c. In the Transcript. there is no record of disclosure by Malvin Jones to Mr.

Blackman of the disposition of the thuds from the liquidation of the $1.000.000.00

Certificate of Deposit with AIG. (FOI pagt> 56, 121 and 122). Upon infoll11ation and

belief these fimds were not applied to payment of the trust fund by Malvin Jones or

Harvey.

d. In the Transcript. there is uo record of disclosme by Malvin Jones to Mr.

Blackman that the liquidation of Textron receivables yielded positive net funds to

Continental Express and Arkansas T11.lcking. Upon infoll11ation and belief and from the

swom deposition testimony of Marvin Jones in other cases, the net received from the

liquidation of the receivables was approximately $700,000.00 to $800.000.00. (FOI

pages 121, 122, 127, 133 and 135). Upon illfonnatioll and belief. these fimds were not

applied to payment of the tmst fimd by Marvin Jones or HaIvey.

10

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TAB ‘I’

DEPOSITION OF MARVIN JONES

CASE No. CV2009-775-1 FIRST SECURITY BANK vs. THE HARVEYS et al