Prosecutor files charges against two backers of Arkansas casino amendment

Jamie Stengle

Thursday, Oct. 19, 2000 | 4:30 a.m.

LITTLE ROCK - The head of a group wanting to legalize casino gambling in Arkansas said Thursday that a prosecutor acted unprofessionally in filing charges against two major backers less than three weeks before the general election.

Pulaski County Prosecutor Larry Jegley said Wednesday that affidavits were issued for the arrest of Jim Harris and Bob Buchholz, both of Dallas. They are accused of selling stocks without a license, selling unregistered stocks, and providing false information to the Securities Commission.

Bobby May, the president of Arkansas Casino Corp., said at a news conference today that bringing the charges 20 days before the election was "unprofessional, ... immature (and) unethical."

Jegley said Harris and Buchholz convinced more than 300 people to invest at least $1,000 in their stock. The Securities Commission said Harris and Buchholz sold more than $300,000 in stocks.

"They are just a bunch of skunks," Jegley said.

The proposed Amendment 5, to be voted on Nov. 7, would allow the Arkansas Casino Corp. to build casinos in six Arkansas counties. It would also authorize a state lottery and legalize charitable bingo. Its backers say proceeds would eliminate the sales tax on groceries and fund college scholarships for all Arkansas high school graduates.

May said it appeared the charges were a ploy.

"I think this is a desperate attempt to discredit the company - to try to get the people of this state to distrust us," May said Thursday morning at a news conference that had been scheduled previously.

But, to dispel questions about the company's backing, May released a list of more than 300 stockholders - well more than half of which are Arkansas residents.

At the news conference, the casino supporters said their internal polling showed that 50 percent of Arkansans favored the casino plan, while 46 percent opposed it. The polling was done Sept. 11-15 among 600 likely voters and had a margin of error of plus or minus 4 percentage points.

Jegley and the state Securities Department had raised questions about whether the stock sales were proper.

According to the Idaho Secretary of State, a business named North Star Mining Company was created in 1899 and in 1997 the company changed its name to Arkansas Casino Corp. After casino plans were underway, the company changed its name again to Natural Resources Inc.

The Securities Commission said the company is not registered with them or with Standard & Poor's Register of Corporations.

"It's cheating them, it's getting people to invest in something without knowing what they're investing in and losing money because they had inaccurate information," said Securities Commissioner Mac Dodson.

Jegley said the evidence that led to the charges shows that backers of the amendment have done everything they can to avoid state regulation and get around the normal requirements of disclosure to investors.

Glen Hooks, spokesman for Amendment 5, said the charges were political - filed as a way to influence voters.

Harris is a former board member of Arkansas Casino Corp. and Buchholz is a current board member. According to the affidavit, Buchholz is the owner of more than three million shares of stock in Natural States Resorts. Harris owns more than 600,000 shares of common stock in the company, the affidavit said.

May said the securities charges were addressed previously in a Texas federal court and that the Arkansas Securities Department was ignoring that.

Jegley said the Arkansas charges were a separate matter.

Buchholz said the charges were without merit.

"Is this the way y'all do business in Arkansas? You don't like a guy's gambling amendment, so you charge him with felonies?," Buchholz told the Donrey Media Group. "I have never submitted false information to S & P's," Buchholz said. "I have never sold or offered to sale unregistered securities, period."

The Arkansas affidavit said fraud was committed with the company submitted fraudulent information to Standard & Poor's indicating they had bought Targeting Publishing Inc., when in fact it had not. It said the representation was made to satisfy the requirement that companies listed have current business operations.

The affidavit also said Natural State Resorts illegally sold unregistered stock when it agreed to acquire DKE Entertainment Group, Inc., which was a subject of the Texas case.

May said the DKE matter had been settled in Texas, but Jegley said that case wasn't pertinent to the Arkansas allegations.