By JOAN McCOY
Leader staff writer
Back when building was booming and mortgages were easy to come by, two local men started buying fixer-uppers with the intention of remodeling and selling them.
They brought in investors to buy homes in Jacksonville, North Little Rock, Little Rock and Cabot. They are now in bankruptcy and owe local banks and other creditors hundreds of thousands of dollars.
The story of the failure of that venture was told this week in the Arkansas Democrat Gazette, detailing the problems of former Air Force pilot Grant Exton and Jason Wilkinson, a CPA, two-time president of the Jacksonville Chamber of Commerce and recent candidate for Lonoke County sheriff.
Both men, who lived in Austin, have filed Chapter 7 bankruptcy, which could relieve them of their debt. Wilkinson filed in January in Durham, N.C., where he is living with his wife and children.
Exton filed in Little Rock earlier this month.
According to their petitions, Exton and his wife have assets including their $519,000 home totaling $671,110 and debt totaling $5.4 million, while Wilkinson and his wife have assets including their $568,000 home that total $698,000 and $5.2 million in debt.
But their debt doesn’t include the debt of the investors who were willing to sign mortgages to buy more houses for Exton and Wilkinson to rehab in exchange for part of the profit, mortgages that they must now pay since G&K Home Solutions LLC, the company Exton and Wilkinson ran, has failed.
Bankruptcy might be only the beginning of their problems since investigation for fraud by federal agencies is ongoing. But at its heart, it was a tale of ambition and misplaced trust that smacked of a type of scheme known as affinity fraud.
Many of those investors were connected to Little Rock Air Force Base like Exton and went to church together. They have been left holding $15 million in mortgages that many of them signed without looking at the property. They felt a connection to Exton, which is a key component in affinity fraud.
The U.S. Securities and Exchange Commission describes affinity fraud as investment scams that prey upon members of identifiable groups and that the fraudsters either are or pretend to be part of that group.
“These scams exploit the trust and friendship that exist in groups of people who have something in common. Because of the tight-knit structure of many groups, it can be difficult for regulators or law enforcement officials to detect an affinity scam,” the Securities and Exchange Commission warns on its website.
To avoid affinity fraud, “check out everything — no matter how trustworthy the person seems who brings the investment opportunity to your attention,” the commission advises.
At this point, the only thing that is certain is that Wilkinson and Exton failed in business and they are trying to overcome their financial difficulties through bankruptcy.
The evidence is written in their petitions, filed Jan. 29 and April 4.
Their creditors include Arvest Bank, Bank of the Ozarks, Centennial Bank, CitiBank, First Arkansas Bank and Trust, One Banc, Regions Financial and Southern Bank.
Gary Boldt is also listed in the bankruptcy petition. He was an investor who loaned Wilkinson and Exton money outright to buy a business in Little Rock and was not repaid.
