The rehabilitation of a former fraudster

Monday, August 25, 2008 at 1:05am
Matthew Williams / The City Paper

Last Tuesday, Bankruptcy Judge George Payne’s downtown courtroom was the backdrop for an intriguing and almost feel-good side story to the sordid saga of 1Point Solutions, whose founder stands accused of stealing more than $15 million from employee pension and benefits plans.

The hearing revolved around payments made by auto parts dealer and 1Point creditor Beck/Arnley Worldparts to bankruptcy trustee John McLemore’s law firm Garfinkle, McLemore & Walker. But the real point of the gathering was one of the firm’s employees, R. Mike Curry, and the work he did in helping to unravel the alleged 1Point fraud.

Beck/Arnley attorneys argued that Curry’s background — specifically the time he spent in jail for bank fraud — was not adequately disclosed. They then questioned the utility of Curry’s contributions to the investigation of 1Point founder Barry Stokes.

Which raises the question: What exactly does a man like Curry do for a law firm?

Curry, who could not be reached for comment on this story, provided answers in a 78-page deposition taken July 17 by Beck/Arnley’s attorneys. In short, he now catches people doing some of the very things he himself once did.

If this sounds like the plot of a recent Steven Spielberg flick, you’re on the right path. Curry’s story echoes that of the now famous paperhanger Frank Abagnale, subject of the 2002 film Catch Me If You Can.

Abagnale criss-crossed the planet forging checks and assuming various aliases before being caught in 1969. Since serving his time — more than 13 years in three countries — Abagnale has built a successful legitimate life providing security-consulting services to the very people he was formerly in the business of duping.

Similarly, Curry has now made it his business to help unravel the intricate frauds perpetrated by some of Middle Tennessee’s most infamous fiduciaries, among them Stokes and Smithville insurance agent B. Don James.

But it didn’t start out that way.

During the ’90s, Curry was the successful president of the First National Bank in Pulaski, following in his father’s footsteps. But when his family’s farming operation began having cash flow problems, Curry began improperly borrowing money hoping to weather the storm and eventually turn things around.

They never did and instead spiraled out of control. As he describes in the deposition, “I thought I was smart enough to handle it and continued to borrow money and more money. And it got bad.

“It got to the point where I would have to borrow money from one bank in Nashville to pay the operating loan off in the other.”

The fraud came to a head in 1998, when Curry wrote cashier’s checks he couldn’t cover. Realizing the roller-coaster had stopped, he explained to the bank’s other leaders what he had been doing and resigned.

At first, Curry was optimistic the loans could be settled. But a clash with one of his brothers — a partner in the farming operation — over how to proceed left him on his own; he was forced to declare bankruptcy and was indicted by a federal grand jury. He cooperated and pled guilty across the board.

His attorney in the bankruptcy was McLemore, who is nearly ubiquitous when it comes to this region’s high-dollar bankruptcies.

Curry was convicted of bank fraud and served a little more than three years in various federal detention facilities. He was released to a halfway house in Nashville in November 2003 and contacted McLemore to ask about a job with the law firm — whatever they needed — until something else became available.

He went to work for Garfinkle, McLemore & Walker that same month. As he describes it, “I was the runner… because of my financial background I did start out doing some work on petitions for [McLemore]. I did the mail. It was basically — you know, anything that they needed doing, I did it.”

Over time, Curry began analyzing bankruptcy petitions for McLemore before meetings and court appearances. He became a valuable asset to the firm in large part due to his knack for spotting inconsistencies.

“You can kind of look at a petition and kind of get a feeling if there’s something there that’s not exactly right,” he said in the deposition.

Curry’s talent really became apparent in the case of B. Don James, a Smithville insurance agent who, it turned out, was running a $20 million Ponzi scheme. Curry also helped uncover the actions of a James creditor who was being paid back to the detriment of the rest of the group.

In another bankruptcy case, Curry was sent to run a trucking company where he discovered a scheme by which the former owner had attempted to steal one of the company’s trailers.

Throughout his deposition, Curry speaks very candidly about his past. His misdeeds have given him an advantage in his new role — one that’s empathetic more than financial or technical.

“I know how it is to wake up at 4:30 in the morning, knowing you’ve got to cover shortages that day and wondering if somebody is going to figure out today what you’re doing,” he said. “I think I’m pretty good at getting in their minds and knowing what they were doing and why they were doing it, and it gives me an advantage in going into these cases and having a pretty good idea where to look first.”

With the 1Point case, Curry spent time in Dickson running the skeleton-crewed company, trying to reconcile the accounts and figure out exactly where the company’s millions had gone. His banking talent has helped break down the walls 1Point’s founder built between the company’s individual units to hide the alleged fraud.

Additionally, it was Curry who insisted McLemore file a lawsuit against AmSouth Bank, 1Point’s primary lender, for negligence in discovering Stokes’ alleged misdeeds. And, while in Dickson, he found on Stokes’ computer the 200-page Abagnale-esque document, “How to Change Your Identity.” That discovery factored heavily in judges denying the ex-CEO’s June 2007 bid for pre-trial release.

Still, because of his past, Curry has to do his investigating in a rather hands-off manner. During last Tuesday’s hearing, Beck/Arnley’s attorneys questioned how he is able to provide meaningful benefit to the investigation if, per the terms of his current probation, he is, “prohibited from serving as an institution affiliated party with respect to any insured depository and from owning or controlling or otherwise participating in, directly or indirectly, in the affairs of any insured depository institution without prior consent of the FDIC or the Court.”

But by virtue of a clever dance, Curry said during his deposition and last week hearing that he has not done any of that.

“I’ve never had the password to QuickBooks or anything to get me into the computer. That’s by my choice.” And, during the 1Point liquidation, he added, “I did not have the password to any of the programs. I did not have the password to QuickBooks, the AmSouth accounts.”

Instead, Curry uses his knowledge to direct the people who do have such access. In court, he described his role as knowing the right questions to ask and helping them find where to look for inconsistencies.

He also said he’s willing to handle the more unpleasant tasks that come with high-profile workouts. He spent a fair portion of his time with the Dickson company fielding calls from many of 1Point’s thousands of angry creditors — some of whom assumed he was Barry Stokes.

Wrapping up last week’s hearing, Judge Payne ruled in favor of Garfinkle McLemore & Walker, asserting that Curry’s involvement in the case produced tangible benefits — in some scenarios, maybe even more beneficial than McLemore’s. In either case, he ruled that the firm was entitled to its payments and that Beck/Arnley and the rest of 1Point’s creditors are being helped by Curry’s involvement.

“Mike has been an excellent employee,” said Bobby Garfinkle, one of the partners who brought Curry on board almost five years ago. Garfinkle politely declined further comment, citing the ongoing nature of the Stokes matter.

Stokes is set to go on trial Sept. 9 and sources say Curry has moved on to other investigations. There’s a good chance much of the evidence provided in that case will be courtesy of Mike Curry. Chances are that, when 4:30 a.m. rolls around these days, he’s sleeping much more soundly.

Filed under: City Business