By D.R. STEWART World Staff Writer on Dec 15, 2011, at 2:31 AM Updated on 12/15/11 at 3:44 AM
A Utah bank that sued bankrupt Arrow Trucking Co. and its top executives, alleging fraud that cost it at least $15.1 million, has been awarded a $500,000 judgment against former CEO James Douglas Pielsticker, court documents show.
However, Pielsticker and Transportation Alliance Bank of Ogden, Utah, agreed in a settlement reached outside court that Pielsticker would only have to pay 7 percent interest payments monthly on $250,000 of the judgment until Dec. 20, 2018.
Pielsticker has agreed to pay TAB a balloon payment on Dec. 31, 2018, consisting of principal and interest of $292,882, the agreement shows.
The settlement includes the provisions that if Pielsticker defaults on his monthly payments twice in a 12-month period without curing the defaults, or defaults a third time in 12 months, the bank will enforce its $500,000 judgment against him, documents show.
"TAB shall not be required to give more than two notices of default under this agreement and Pielsticker shall only have two opportunities to cure any defaults under this agreement within a rolling 12-month period," the agreement says. "In the event a default is not cured or a third default occurs within a 12-month period, TAB may enforce the agreed judgment as allowed by law and this agreement without any further notice or opportunity to cure."
The settlement, which is dated Nov. 11, is signed by Pielsticker and David E. Smoot, TAB's chief legal officer.
Smoot could not be reached for comment. Pielsticker declined to comment.
TAB's $500,000 judgment against Pielsticker was filed in Pielsticker's personal bankruptcy case in U.S. Bankruptcy Court in Dallas, court documents and officials said.
TAB had claims of $12 million against Pielsticker in his personal bankruptcy case, records show.
Under the bankruptcy court judgment, TAB, Arrow's former lender, has agreed to discharge all of Pielsticker's debt except $500,000, court documents and officials said.
"Plaintiff has agreed that other than the amounts conceded by the defendant, plaintiff will not seek to have any other amounts to be determined or declared non-dischargeable," the court judgment says.
In February, Pielsticker filed his personal bankruptcy petition, listing assets of $2.54 million and liabilities of $24.03 million.
Creditors holding unsecured nonpriority claims of $20.4 million included TAB; Arrow Bankruptcy Estate and Trustee Patrick J. Malloy III, $8 million; and several Tulsa banks and dozens of businesses - most of whose claims have been discharged in Pielsticker's bankruptcy.
The Utah bank's claims arose out of Arrow's Chapter 7 liquidation filing in U.S. Bankruptcy Court in Tulsa and TAB's lawsuit against Arrow and its top executives in U.S. District Court in Tulsa. Both were filed Jan. 8, 2010.
TAB alleges in its lawsuit that executives and officers of Arrow and its affiliated companies committed bank fraud and wire fraud that cost TAB at least $15.1 million.
The lawsuit alleges the defendants submitted thousands of fraudulent invoice reports to TAB totaling more than $27 million, of which the bank believes more than $12.5 million were inflated.
Mark Zannotti, a Tulsa attorney who represents Pielsticker, said the settlement agreement with TAB is in the interests of both parties.
"Doug is happy to get this behind him, get his financial house in order and get on with his life," Zannotti said. "There is no admission of any culpability or any fraud by Mr. Pielsticker. This (settlement) would take care of all claims between TAB and Mr. Pielsticker."
TAB's Dallas attorney, Joseph Friedman, did not return calls seeking comment.
D.R. Stewart 918-581-8451
don.stewart@tulsaworld.com
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