Judge Rules to Liquidate Frank Whitbeck's Signature Life Insurance

Friday, Feb 26,2010, 10:34:11 PM Click:

So far it hasn't been a good 2010 for Frank B. Whitbeck.

Last week, Pulaski County Circuit Court Judge Jay Moody ruled that the Arkansas Insurance Department could liquidate Whitbeck's insolvent Signature Life Insurance Co. of Little Rock.

Whitbeck, who is serving a six-year federal prison sentence for mail fraud, was supposed to make a $2.68 million balloon payment on Nov. 1 to complete the insurance company's financial rehabilitation of Signature. (Whitbeck had siphoned more than 80 percent of the company's assets for his personal use and for his other company, Winrock Grass Farm Inc.)

Nov.1 came and went without Whitbeck making the payment.

The insurance company assets include about $500,000 in cash and two pieces of properties in Little Rock that have a listing price of around $600,000, although the actual price will probably be much lower.

After the company is liquidated, it's unclear how much Whitbeck would still owe.

"We've reserved for a later time those kind of issues," said the attorney for the Arkansas Insurance Department, Steve Niswanger. "We need to foreclose on the mortgage, we need to get a judgment against Mr. Whitbeck and we're going to be doing all those things at a later date."Adding to Whitbeck's misery is his failed bid to get out of prison.

Toward the end of last year, Whitbeck petitioned U.S. District Court Judge William Wilson Jr. to lower his sentence. Whitbeck claimed to have uncovered new evidence to show his alleged mistreatment by Metropolitan National Bank of Little Rock wasn't an isolated incident.

Whitbeck pointed to Fayetteville developer Tom Terminella's lawsuit against the bank as exhibit A that other businessmen were mistreated by the bank. Whitbeck argued that had Wilson known about the other mistreatment the court wouldn't have sentenced him to six years in prison. (Whitbeck started serving his sentence on Dec. 1, 2008.)

But Wilson didn't buy Whitbeck's argument. Wilson said the new evidence wasn't really new. Whitbeck had the opportunity to know about Terminella's allegations before he pleaded guilty in May 2008, Wilson ruled.

"It seems to me to be another attempt to attribute fault to someone else," Wilson wrote in his Jan. 13 order. "The fact remains - even in light of [Whitbeck's] 'new' evidence - that [he] intended to divert the assets for personal gain."