Jury awards $4.5 mil­lion in fraud trial

Northwest Arkansas Democrat-Gazette - - NORTHWEST ARKANSAS - RON WOOD

FAYET­TEVILLE — A Wash­ing­ton County jury awarded a Spring­dale woman al­most $5 mil­lion in dam­ages in a civil fraud law­suit.

Nancy Kay Martinez won the ver­dict in late June. Ju­rors found Jay and Jen­nifer McLel­land, them­selves and through their com­pa­nies, NWA Spe­cialty Group, Rely Hold­ings and Cat­max Trust, sold Martinez a house they didn’t own and took money and equip­ment from a joint busi­ness ven­ture.

Claims in­cluded breach of con­tract, fail­ure to com­ply with fidu­ciary duty, con­ver­sion of money be­long­ing to Martinez through unau­tho­rized checks, trans­fers, with­drawals and other trans­ac­tions, un­just en­rich­ment, de­ceit and con­spir­acy to de­fraud.

“The court does find that the ev­i­dence pre­sented in this case presents a clear case of fraud or de­ceit,” Cir­cuit Judge Doug Martin wrote in his or­der of judg­ment.

Specif­i­cally, the jury awarded Martinez $290,225 for the de­ceit, plus pre-judg­ment in­ter­est of $35,304. Puni­tive dam­ages against Jay McLel­land, Jen­nifer McLel­land, Rely Hold­ings, NWA Spe­cialty Group, Cat­max Trust and Jen­nifer McLel­land as trustee of Cat­max Trust were as­sessed at $750,000 each, for a to­tal of $4.5 mil­lion, ac­cord­ing to Greg Brown, the at­tor­ney who rep­re­sented Martinez.

“This was prob­a­bly the clear­est case of fraud and theft I’ve seen in 12 years of do­ing this,” Brown said. “I’ve seen a lot of it, but this one was pretty ob­vi­ous.”

Cir­cuit Judge John Threet said puni­tive judg­ments of that size are ex­ceed­ingly rare in Wash­ing­ton County in his ex­pe­ri­ence.

A call seek­ing com­ment from McLel­lands’ lawyers, Stan­ley Bond and Emily Hen­son, was not re­turned

Wednes­day. The de­fen­dants have asked for a new trial on the puni­tive dam­ages award, ar­gu­ing it is ex­ces­sive.

Martinez sued in Au­gust 2016. She con­tended she had an agree­ment with the McLel­lands to buy a two-acre lot in Sloan Es­tates sub­di­vi­sion for $150,000, but, af­ter pay­ing more than $158,000 to Rely Hold­ings, she learned the McLel­lands and Rely Hold­ings never held an own­er­ship in­ter­est in the prop­erty. Pay­ments on the prop­erty were made by Martinez to var­i­ous ven­dors and sup­pli­ers the McLel­lands owed money but she never re­ceived ti­tle to the land, ac­cord­ing to the law­suit.

The other dam­ages were re­lated to a joint busi­ness ven­ture be­tween the par­ties in an equip­ment ren­tal busi­ness. Ac­cord­ing to the law­suit, Jen­nifer McLel­land pro­vided false fi­nan­cial state­ments, never came up with her share of the start-up costs and then, along with Jay McLel­land, be­gan tak­ing money out of the com­pany’s ac­counts and selling equip­ment from the busi­ness.

Gar­nish­ments have been filed and ef­forts are un­der way to re­cover prop­erty and col­lect the jury award.

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