november 5, 2007 ARKANSAS BUSINESS 15

that he and his lawyer, Gary Corum of Little rock, were duped into an unfavorable plea agreement that could have sent him to prison for up to 24 months.

• miller’s trial, originally scheduled for April 2, has been delayed three times, once because of the “unex-pected discovery” of videotapes that miller made of his conversations with co-defendants shortly after the FbI raid and which had been in his posses-sion for the subsequent five years.

The specific content of the video-tapes has not been made public; even U.S. District Judge Leon Holmes had not seen it as of the oct. 26 hearing. but the existence of the videotapes, apparently unknown even to Corum before April of this year, is one of the most unusual and procedurally prob-lematic parts of the case.

“There are not many cases I’ve had where there are actual videotapes of the people involved talking among themselves a year and a half before the charges [were filed],” Corum told Holmes during the hearing. And the judge acknowledged that the situation was also a new one for him.

but Holmes was also sympathetic to the concerns of bush and vena, who described the tapes as “self-serving hearsay.”

“The recordings were made at a time when the defendant knew of the government’s investigation and clearly are not reliable,” the prosecutors wrote in a motion asking Holmes to strictly limit the defense’s use of the tapes.

While Holmes denied the govern-ment’s motion, he assured the pros-ecutors that he would consider similar objections during the trial. And he warned Corum that nelson could not “selectively waive his right not to incriminate himself” — that is, he won’t be able to use the tapes as a sub-stitute for actual testimony that would be subject to cross-examination.

“I do not think I will create a situation in which that is a concern,” Corum responded.

The tapes can be used to dispute direct testimony of participants in the taped conversations, Holmes said.

Witnesses for the ProsecutionAll the likely witnesses, for both

prosecution and defense, will not be known until monday morning, when potential jurors are interviewed. However, pre-trial motions reveal that the government will depend to some extent on two witnesses who were instrumental in the prosecution of Casey miller: co-defendants michael Dorsey, comptroller of Freedom Financial, and melissa Horner, Dorsey’s office manager.

Dorsey pleaded guilty to conspir-acy, while Horner pleaded guilty to misprision of a felony — failure to report the crimes she witnessed while working for nelson miller. but both are additionally tainted: Horner also pleaded guilty to embezzling $153,000 from Freedom Financial, while Dorsey acknowledged in Casey miller’s trial that he was stripped of his license to practice law in Louisiana in 1991 for stealing almost $200,000 from his cli-ent trust accounts.

Sentencing for Horner and Dorsey — and for Casey miller — has been delayed pending the outcome of nelson miller’s trial.

Casey miller, a native of Yellville, and michael Dorsey first worked for nelson miller in Louisiana, one of three Southern states where he set up mortgage brokerages before entering Arkansas in 1996.

by the end of the 1990s, nelson miller’s operations in Georgia, Louisiana and mississippi had shut down, but Freedom Financial had stay-ing power in Arkansas. Its revenue from mortgage origination fees grew to $3 million in 1999, $4.57 million in 2000 and $5.52 million in 2001, according to audited financial state-ments filed with the Arkansas Securities Department. (See table above.)

Thanks to aggressive advertising that cost the company between $900,000 and $1.3 million a year, miller became what prosecutors described as “a rec-ognizable celebrity on local televi-sion.” (After miller had accepted a plea agreement, federal prosecutors argued for a stiffer sentence because his offenses “were committed through use of mass-marketing.”)

nelson miller formed Absolute Abstract & Title Co. in may 2000; tes-timony in Casey miller’s trial suggest-ed that having his own title company increased profitability and simplified the process of clearing problematic liens from loan documents. The indict-ment says the creation of Absolute Abstract allowed miller to stop doing business with a lawyer, Christopher Johnson, who had complained about “misleading and false documents” pre-pared by Casey miller.

Another nelson miller company, Jefferson Doc Prep, was registered in Louisiana, and prosecutors allege that its entire purpose was “to up-charge Freedom financial borrowers for docu-ment preparation services.”

What kind of money Absolute

Abstract and Jefferson Doc Prep gen-erated is unknown; they were not required to file the kind of public finan-cial reports that Freedom Financial had to file. However, employees who rose to management level in miller’s organization seem to have been very well compensated. Dorsey testified that Casey miller and other “team leaders” such as co-defendants David Fleming, robert byrd and nichole Jones received a $2,000-per-month “draw” plus bonuses equal to 25 per-cent of the fees their teams generated.

Jones, who pleaded guilty to fraud in march 2005, testified in Casey miller’s trial that she didn’t even remember what her salary was because most of her compensation came from bonuses that ranged from $10,000 to $30,000 a month. During the year she spent as a team leader, Jones testified that she was paid a total of $350,000. She was 25 years old at the time.

Jones was ordered to pay restitution of $146,673.

The ChargesThe indictment against nelson

miller says the government identified “at least 84 loans containing undis-closed inflated fees along with mate-rially false and misleading informa-tion and omissions.” The loans made between Jan. 1, 2000, and march 30, 2002, had a total value of more than $3.5 million.

However, the specific charges against miller contemplate only 15 loans, 10 funded by First Union bank of Charlotte, n.C., two by Union Planters bank of Hattiesburg, miss., and one each by Provident bank of Cincinnati, ohio, new Century bank of Irvine, Calif., and Saxon bank of Fort Worth, Texas.

Among the loans, identified by the last name of the borrowers, are the three from First Union (since acquired by Wachovia Corp.) for which Casey miller was convicted. His lawyer, Chuck banks of Little rock, has pointed out to the court that, as of last December, none of those loans was in default.

“In fact, First Union has collected $15,464 in interest payments on the madison loan and $5,849.77 in inter-est payments on the mcCree loan as well as an unknown amount in interest payment on the martin loan,” banks wrote in a sentencing memorandum. “Casey miller’s acts of wire fraud have caused First Union to incur profits as well as no actual monetary loss.” n

Miller: Long-Delayed Trial Starts monday(continued from Page 1)

Financial statements as of Dec. 31, 1999-2001 Net Revenue Profit Officer’s Advertising Or (Loss) Salary (Percent of Revenue)2001 $5,521,650 $56,430 $328,819 $945,330 (17%)2000 $4,565,058 ($131,585) $478,000 $1,311,941 (28.6%)1999 $3,077,285 $150,697 $244,850 $917,800 (29.4%)

Source: Audited financial statements filed with the Arkansas Securities Department by Freedom Financial Services Inc.

Freedom Financial Services Inc.Nelson Miller Timeline

1996July: Nelson Miller, founder of mortgage brokerages in Georgia, Louisiana and Mississippi, opens Freedom Financial Services Inc. in Little Rock. A Fort Smith office opens in 1998, and the company’s annual revenue from origination fees grows to $5.52 million in 2001.

2000May: Nelson Miller incorporates Absolute Abstract & Title Co. of Little Rock.

2002March: FBI agents exercise a search warrant on Freedom Financial’s headquarters at 301 N. Shackleford Road in Little Rock.

April: Miller sells Fort Smith office to Royce C. McNeal Jr. and Brent McNeal of Southern Mortgage Co. of Alexandria, La. He receives a used-car dealer’s license from the Arkansas State Police and opens a short-lived car lot in Bryant.

September: Nelson Miller incorporates a used-car business in Baton Rouge, La.

2004December: More than two-and-a-half years after the FBI raid, Nelson Miller and three Freedom Financial employees, comp-troller Michael Dorsey and “team leaders” Bertram Case “Casey” Miller and Katrina Bowen Soukkaseum, are indicted by a federal grand jury in Little Rock on 15 counts of wire fraud and one count of conspiracy.

2005March: Former Freedom Financial team leaders Nichole V. Jones and David Fleming each plead guilty to one count of fraud. Former office manager Arlene Ladd pleads guilty to failing to report a felony.

April: Former Freedom Financial team leader Robert Byrd pleads guilty to fraud.

May: Katrina Soukkaseum pleads guilty to conspiracy.

December: Melissa Horner, who managed Freedom Financial’s comptroller’s office, indicted on 15 counts of wire fraud and one count of conspiracy.

2006July: Melissa Horner pleads guilty to failing to report a felony and to embezzling $153,000 from Freedom Financial. Michael Dorsey pleads guilty to conspiracy.

August: Nelson Miller pleads guilty to two misdemeanor counts of making false statements and, as sole owner of Freedom Financial, to one count of felony bank fraud by the corporation. Casey Miller is convicted of one count of conspiracy and three counts of wire fraud by a federal jury in Little Rock. He is acquitted on three other counts presented to the jury.

2007January: Nelson Miller and his attorney, Gary Corum, tell U.S. District Judge Leon Holmes that federal prosecutors John Bush and George Vena duped them into a plea agreement. Holmes gives Miller time to consult another lawyer before deciding how to proceed.

March: Nelson Miller opts to withdraw his guilty pleas and to face a jury trial on the original 16 felony counts. Trial is set for April 2, then postponed to May 7. Sentencing of Casey Miller, Horner and Dorsey is postponed pending the outcome of Nelson Miller’s case.

April: Corum asks for and receives a postponement in Miller’s trial after the “unexpected discovery” of 40 to 50 hours of videotapes of office conversations between Miller and various co-defendants. The trial is rescheduled for Aug. 6 and later delayed until Nov. 5 because of an indisposed witness.

May: Nelson Miller resigns from his job as a “quality control person” and head of the advertising team of the McNeals’ Southern Mortgage Co. Royce McNeal tells the Arkansas Securities Department in June that he was “unaware of the severity of [Miller’s] trouble until just recently.”

Oct. 26: Judge Holmes clarifies that the single felony charge against Freedom Financial Services, which had been part of Miller’s aborted plea agreement, was dismissed when the plea was withdrawn.

Nov. 5: Jury selection scheduled to begin at 9 a.m.

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Vol. 24, No. 39 • October 1-7, 2007 • 1 Dollar

AWP Prompts Mixed Response

Before ArkAnsAs’ “Any

willing provider” law went

into effect in 2005, Arkansas

Blue Cross & Blue shield warned

that health care costs would rise 10

to 12 percent.ABCBs spokeswoman Max

Heuer said last week that costs

have, indeed, risen since it imple-

mented AWP, officially known as

the Patient Protection Act of 1995,

two years ago today.

“We’ve seen 2 percent from

the first full year of AWP, and we

expect 5 to 6 percent for additional

costs over the next two years,”

Heuer said. Heuer said those

increases are on top of the premium

increases that would have occurred

without AWP.others in the health insurance

industry, however, said they haven’t

seen premium increases as a result

of AWP.Mike stock, Ceo and president

of competitor QualChoice/QCA of

Little rock, said that his company’s

rates haven’t risen because of AWP.

“I don’t think that any willing

provider lowered the rates or raised

LR Condos Head West Into High-End Housing Territory

LIttLe roCk’s CondoMInIuM

market is taking a westward turn after

downtown projects have dominated the

action.two projects in Chenal Valley are in

motion, with Chenal Woods and Vallon

Circle, while Parkland Heights is preparing

to open phase one of its 102-unit project at

the ranch. All three are gated projects fea-

turing luxury-style amenities.

driving the projects is a dearth of condo

developments in west Little rock and the

success of downtown condo sales.

Investors in Chenal Woods recently kicked

off marketing efforts for their 72-unit devel-

opment, and site work on the 4.68-acre

parcel near the northwest corner of Chenal

Parkway and rahling road is expected to

start by year’s end.

Completion of the estimated $13 million

development is expected by december 2008.

finish-out costs for the condos will push the

overall tally to an estimated $17 million.

the property borders the no. 6 fair-

way and green at Chenal Country Club’s

founders Course and is the only piece of

deltic timber’s master plan for Chenal

Valley zoned for condominium development

with golf course exposure.

“that’s what was appealing to me,” said

Henry Jordan Jr., a Chenal Woods investor.

“That caught my eye.”

other investors in the project include

Jordan’s father, Henry Jordan sr., Willis

smith and Bek kaiser. smith and kaiser have

teamed up on a string of local real estate

investments over the years.

the Jordans, of first delta development

Group, made their first Little rock deal with

the redevelopment of riverview Apartments

into the Cliffs condominiums. At last count,

16 of the 73 units remain unsold since the

2.5-acre development at 810 north st. was

acquired two years ago for $5 million.

the Chenal Woods deal got rolling when

Jerry Webster, president of Little rock’s

Webster Corp., brought the location to the

Jordans nearly a year ago.

By George Waldon

george@abpg.com

two Projects Make

Chenal Valley Home;

the ranch Gets one

Michael PirNique

By Mark Friedman

mfriedman@abpg.com

Condos (Continued on Page 18)

Fortress dillard’s:

A Thorn in the side

of Investors, Analysts

HoW seCretIVe Is dILLArd’s InC.?

Here’s a hint:spokeswoman Julie Bull says it would prob-

ably violate securities & exchange Commission regula-

tions for Ceo William dillard II to grant an exclusive

interview.scores of Ceos from publicly traded companies

grant interviews or otherwise make public statements

every day of the year. But a public statement out of

dillard’s is so rare — and dillard’s is under such pres-

sure from disgruntled institutional investors — that any-

thing dillard might say in an interview would probably

constitute a “material event” that would trigger seC

reporting requirements.

It’s probably unrealistic to think that dillard would

sit down and answer questions from Arkansas Business

when he won’t even return a call from someone who

has invested some $90 million in his company. And

that’s the point: dillard’s Inc., which provided dillard

family members with salaries and dividends in excess of

$16 million last year, has rarely been responsive — not

to the press, not to stock analysts, not to investors. And

because the company’s bylaws give holders of Class B

shares — that is, the dillard family — the right to elect

eight of 12 directors, there’s not a darn thing anyone

can do about it.

except sell off dillard’s stock, of course. And that’s

By Gwen Moritz

gmoritz@abpg.com

dILLARd’s (Continued on Page 15)Southwest Regional Medical Center CEO Nancy Fodi said

the enforcement of “any willing provider” has “really helped

our hospital both with patient flows and financially.”

AWP (Continued on Page 24)

InsuranceInsurance

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TAYLORTALKMiddleweight champion Jermain Taylor will fi ght for the fi nal time at the 160-pound class, defending his title belts against Kelly Pavlik in Atlantic City Sept. 29. PAGE 4

INSIDE AND ON THE WEB

High schooland recruitingcoverage.PAGE 17

PGA ROYALTYIn his breakout season on the PGA Tour, 38-year-old Ken Duke has won more than $1.4 million and fl irted with the

top 30, which could be signifi cant in coming weeks.

PAGE 20

Hogs’ junior QB hasnothing in the way in directing a potentially potent Arkansas offense.PAGE 14

CASEY AT THE HELM

The MANfor the HOGSDarren McFadden brings muscle to Arkansas’ powerful backfi eld

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