FORT SMITH -- State Sen. Jake Files lost the family home Thursday when it and two other properties were auctioned off to satisfy $2.1 million in loan defaults.
First Western Bank of Booneville successfully bid $2,048,400 on the three properties in three commissioner sales conducted by Sebastian County Circuit Clerk Denora Coomer in the lobby of the county courts building in Fort Smith.
Bank representative Eric Jones bid $1,435,500 on Files' family home at 300 Free Ferry Landing, $225,000 for the former FFH Construction property at 3203 Waco St. and $387,900 for an investment house Files bought but couldn't pay for at 4105 Free Ferry Road.
The bank was the sole bidder in all three auctions.
Files did not respond to an email sent to him Thursday seeking comment on the sale, where he and his family are living, and whether he still lives in Senate District 8, which he represents.
Files has served in the state Senate since 2011 and is chairman of the Senate Revenue and Taxation Committee. He has said he will not seek re-election.
A circuit judge issued a partial summary judgment last month in a lawsuit the bank filed against Files and his wife, Michaela, for defaulting on four loans totaling $2.13 million that the couple took out in 2013 and 2014. Michaela Files was included as a defendant because she signed the loan agreements with her husband.
With interest, the Fileses owed as much as they borrowed by the time Circuit Judge Michael Fitzhugh issued the summary judgment, according to court records. The Fileses never responded to the bank's filing of the motion for summary judgment (or a finding for the bank).
In addition to his business problems, the FBI is investigating Files over the disappearance of nearly $26,000 in state General Improvement Fund money that he authorized to be used on work at the River Valley Sports Complex that he and Lee Webb of Fort Smith were developing on city property at Chaffee Crossing.
Files admitted, in an FBI affidavit, that he submitted falsified bids for the job and structured them so one of his employees, DiAnna Gonzalez, would be awarded the contract for the job. Gonzalez said earlier this month that she did not know she was named as one of the bidders for the job until news accounts about the transaction were published.
The FBI affidavit said Files then used the General Improvement Fund money to pay FFH Construction employees and give bonuses to Gonzalez. He pocketed the remaining money, the affidavit said.
No charges have been filed against Files over the General Improvement Fund money.
Fort Smith is suing Files and Webb over failure to complete construction of the sports complex, which was to have eight tournament-quality ball fields and concession stands.
The city entered into a contract with Files and Webb in 2014 to build the complex and promised to contribute up to $1.6 million for the project. City directors voted to terminate the contract in early February of this year over the failure to complete the project after the city had paid in $1.08 million.
Fitzhugh's summary judgment ruling involving the First Western Bank loans is the latest in a list of financial problems that the Fort Smith Republican faces.
Files and FFH Construction LLC were declared in default in July of a loan from the Federal National Mortgage Association, or Fannie Mae. He and FFH Construction owed more than $1.9 million.
Coomer was to hold a commissioner sale Dec. 12 on the property Files pledged on the loan, Rock Creek Apartments at 3020 N. 50th St. An attorney for Fannie Mae contacted Coomer the day before the sale to cancel it because the judgment against Files and FFH Construction had been satisfied.
In another lawsuit, the Richard B. Griffin Trust dated Aug. 30, 1991, won a foreclosure judgment in May of this year for nearly $480,000 against Files, his wife and the company of Jonathan Foster, Files and Jett Harris LLC on two loans made to the company. Jake and Michaela Files were guarantors of a development agreement.
Two parcels of land pledged against the loans, at 8100 and 8105 Finches Grove in Fort Smith, were sold in a commissioner's sale May 19.
In January, Ed and Stacy Ralston won a nearly $480,000 judgment against Files' FFH Construction in a 2014 lawsuit over a home construction project.
Also in January of this year, American Builders and Contractors Supply Co. of Fort Smith won a $69,903 judgment against Files and FFH Construction for failure to pay for construction materials.
World Global Financing Inc. filed suit in Fort Smith in September against Files and FFH Construction for more than $16,000 for failure to pay for goods and services, according to court records. The lawsuit is pending.
A Section on 12/29/2017
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