A federal jury deliberated for less than two hours Friday before convicting former Little Rock lawyer David Patrick Henry Sr., 71, of 26 counts of mail fraud and three counts of tax evasion relating to his management of a deceased friend’s family trust.
Jurors also signed a special verdict form finding that Henry’s house at 38 Hinson Road, which also has an address of 47 Valley Estates Drive, is subject to forfeiture by the government to help recoup hundreds of thousands of dollars he stole from the trust, which was established by the late Joe Thomas Swaffar, an architect, to support his wife and daughter after his death.
Henry faces up to 20 years in prison when sentenced in three to four months.
During a one-week trial before U.S. District Judge Brian Miller, Assistant U.S. Attorney Angela Jegley told jurors that Henry used trust funds to pay off the $296,000 mortgage onthe Hinson Road house, which was about to be foreclosed on. She said he made it appear that a check written for that amount in 2011 from the trust’s account was actually a mortgage investment made on the trust’s behalf, then later claimed it became a “toxic asset” as a result of a faltering housing market.
In fact, Jegley said, Henry had created a shell company called All American Oil so the company could get a “loan” from the trust to pay off the note on the house, in whichHenry and his family lived. The “loan,” however, was never repaid.
Jurors found that as trustee of the JTS Irrevocable Insurance Trust, Henry created a scheme, carried out from 2004 through 2012, to defraud the trust beneficiaries, Sandra Carol Swaffar and her daughter, Ashley. The jury found that he carried out the scheme by collecting approximately $1.6 million in life insurance proceeds on the Swaffars’ behalf to fund the trust, then depositing the money into financial accountsto which only he had access.
Of the financial accounts holding trust funds, Carol Swaffar received statements from only one account, which Jegley said Henry arranged to convince her that he was looking out for her and her daughter.
Jegley alleged, and jurors found, that Henry falsely told the Swaffars that he invested the trust funds in a $500,000 annuity, as well as oil and real estate investments. Carol Swaffar testified that he gave her a $4,000-a-month “ allowance” for living expenses, and then grudgingly evaluated, and sometimes permitted, larger withdrawals from the trust for the mother and daughter.
Swaffar said she didn’t authorize him to increase his monthly trustee fee from $500 to $2,000, nor did she authorize his use of trust funds for personal expenses that included roofing his house, paying his utilities, buying vehicles, paying his son’s college tuition, buying a $20,000 certificate of deposit for his son, and getting himself out of debt.
Northwest Arkansas, Pages 16 on 03/22/2014