Leader Blues

Wednesday, December 12, 2007

TOP STORY >>Accountant accused on retirement fund losses

Leader senior staff writer

Even as a letter in the Heber Springs Sun-Times praised Jacksonville accountant and city finance auditor Mack McAlister for his Thanksgiving generosity, the widow of a Jacksonville dentist filed a lawsuit seeking to recover more than $600,000 that McAlister allegedly bilked from the dental practice’s pension and retirement funds.

McAlister said Tuesday that he would be exonerated, that any losses resulted from the unsuccessful business ventures he and his friend Dr. Donald Griggs undertook.

The suit was filed Nov. 21 in Pulaski County Circuit Court on behalf of Patrice Griggs, widow of Donald Griggs and executor of his estate and the pension funds for the practice.

Named as defendants are McAlister, sued individually, and in his capacity as a principal in McAlister and Associates, PA; Pryor Mountain Quarry of Quitman and Lake Area Fish House of Heber Springs.

The suit alleges fraud, breech of fiduciary trust, breech of contract, conversion of funds, unjust enrichment and civil conspiracy.

Not specifically alleged or actionable, but implied, is breech of friendship.

Donald Griggs, who died in June 2006, and McAlister had been good friends for 29 years, McAlister said Tuesday.

In a handwritten letter in February 2005 inquiring where his money, interest and documentation were—an exhibit in the 46-page document—Dr. Griggs wrote to McAlister: “Mack, I consider you one of my best friends and I would do anything for you and I think you know it. Also, I always felt I could count on you, but Buddy, I’m beginning to wonder.”

“I only got involved in this because of you,” Griggs wrote of the $225,000 he had invested in Pryor Mountain Quarry, Inc.
“We were close friends for 29 years,” McAlister said, “involved in business transactions. Some were not as successful as we anticipated.”

Between February 2001 and January 2003, McAlister allegedly directed—with permission–$225,000 from the Griggs’ plans to Pryor Mountain Quarry, of which McAlister is president. The registered agent for the quarry is listed as Keith Moser, currently serving 188 months for widespread fraud.

Although McAlister allegedly promised to repay “loans,” pay 10 percent interest and convey 20 percent ownership in the quarry—and drew up papers to reflect that, no papers were ever executed or filed, according to the suit.

Barry Jewell, the lawyer who drew up the papers, was the lawyer for both parties, and was a former, although unindicted, law partner of Moser.

Plaintiffs allege that in May 2005, a month after Griggs wrote his (unacknowledged) letter de-manding his money back from McAlister, he nonetheless invested another $100,000 of pension plan money by cashier’s check, delivered to McAlister, this time payable to the Lake Area Fish House.

On Feb. 15, 2006, a second $100,000 from the plan was made payable to the Lake Area Fish House, also delivered to McAlister, according to the complaint.

McAlister originally represented the $200,000 as a loan to be repaid under the same terms as the Pryor Mountain Quarry, according to the suit. Again, no stock certificates or evidence of an equity investment were prepared or submitted by McAlister or the Lake Area Fish House.

Following the death of her husband, Mrs. Griggs inquired about that loan.

In September, Patrice Griggs received stock certificates for 75 shares, represented as 20 percent of fish house ownership, she said.

She said that in a meeting with McAlister, she was told the loan would not be repaid, and plaintiffs “would not receive profits, dividends or disbursements from the investment in the foreseeable future.”

Meanwhile, she has been subpoenaed by the government to document the funds or lack thereof in the retirement, pension and profit-sharing plans, according to the complaint. McAlister allegedly told her to provide the government with nothing but bank records.

In asking for actual and punitive damages, interest, court costs and attorneys fees, the plaintiffs allege that McAlister convinced his clients to invest to relieve his own exposure at the quarry and the fish house.

The complaint alleges that he failed to disclose inadequate capitalization and abnormally high risk of the ventures, failed to disclose the true financial situation of both and has used the funds for his own private purpose in an improper, unethical, unprofessional and illegal manner.

McAlister is chair of the Rebsamen Medical Center board of directors, former president of the Jacksonville Chamber of Commerce and a former Pulaski County Special School District board member.

McAlister’s firm has audited Jacksonville’s finances for more than 20 years.

“We always put the process out for bid and his firm comes in with the best bid,” Mayor Tommy Swaim explained.

“His audits have always been good and accurate. The private firm audits are always reviewed by the state, and we’ve never had any problems.”

The mayor added that the state just finished reviewing the last audit and found no problems.

The Leader could not reach either Patrice Griggs or her attorney, Tony L. Wilcox of Jonesboro.