A creditor has accused a northwest Arkansas real estate developer of committing fraud in order to obtain loans that totaled nearly $6 million.
BCMS Partners LP, which you may know as Rioux Capital of Austin, Texas, made the charge in a recent complaint connected to Brandon Woodrome’s personal Chapter 7 bankruptcy case, which he filed earlier this year in Fort Smith.
Rioux said nearly half of the $6 million has been repaid, but it argued in the pleading that the remaining $2.8 million shouldn’t be discharged from Woodrome’s bankruptcy because he allegedly committed fraud to obtain the money.
Rioux said Woodrome, through his Behr LLC — which also is in Chapter 7 liquation — provided “documents which he created or altered which established false and inflated proof of accounts receivable in an [unfortunately successful] attempt to secure continued financing from Rioux.
“Woodrome, at all times, was the managing member of Behr and was personally responsible for the creation and alteration of the above-described documents.”
One source close to the case said the FBI is looking into the matter.
Woodrome told Whispers last week that he didn’t want to comment.
In his bankruptcy, Woodrome listed debts of $4.2 million and assets of $670,000.
He reported a gross income of nearly $200,000 in 2015 and $93,400 in 2014.
Woodrome also has been named as a defendant in more than a dozen lawsuits since 2015.
Behr Bankruptcy
Before Woodrome filed for personal bankruptcy protection, his company, Behr, which does business as Behr Construction LLC, filed for Chapter 11 reorganization in October.
The company listed $5.7 million in debt and $3.9 million in assets.
In documents in the Behr bankruptcy, the acting United States trustee, Daniel Casamatta, shed some light on the company’s arrangement with Rioux. He said Behr entered into a factoring arrangement with Rioux in January 2015. That is, Behr assigned its accounts receivables to Rioux in exchange for operating capital pending the payment of the receivables.
By the end of July 2015, Behr had received more than $5 million from Rioux.
But Casamatta raised questions about the documents used to obtain the money.
“The invoices presented to support the accounts receivable were fabricated in either the amount or the complete invoice,” he said.
In February, Casamatta pushed for Behr’s bankruptcy to be converted to a Chapter 7 liquidation. It was no longer in operation. And the company had revenue of just over $31,000 between Oct. 14 and Dec. 31 — and about a fourth of that went to pay Woodrome.
“The primary party that benefits from the case remaining in Chapter 11 appears to be Mr. Woodrome,” Casamatta said.
U.S. Bankruptcy Judge Ben Barry agreed and ordered the conversion.
Behr’s revenue had been falling since 2013 when it was $10.2 million. The next year, it plummeted to $6.7 million, and revenue was estimated at $4.2 million for about the first 10 months of 2015.