Damascus businessman sues federal agents

John Stacks of Damascus, owner of Mountain Pure Water, says a lawsuit his company and several employees have filed against federal agents will show the agencies were in the wrong when they raided his plant in Little Rock in 2012.

 

The lawsuit claims that agents of the Office of the Inspector General of the Small Business Administation and the Internal Revenue Service violated the Fourth Amendment rights of employees of the Mountain Pure Water bottling plant when the agents “conducted a SWAT team raid” with drawn weapons and went on to detain and interrogate employees.

A judge recently denied the defendants’ motion to dismiss the lawsuit, giving Stacks hope for a landmark victory.

“People need to be held accountable when they get to a point of such extreme overreach,” he said.

Tim Dudley, attorney for Stacks, said the defendants have 30 days to appeal the decision, and an appeal would take a year to resolve. He added the government is immune from litigation, but a Supreme Court decision said a citizen could sue a federal officer for a violation of constitutional rights.

He added, “There are very few cases that deal with a SWAT raid when the government has no reason to believe that anyone at the location they are searching is armed or dangerous or drug dealers or gang members or anything of that sort.”

The IRS investigation stems back to a small business disaster loan Stacks obtained in 2009. He has been charged with making false claims when he said a 2008 tornado destroyed $500,000 worth of company equipment stored at his farm in Damascus. He was indicted last year by a Federal Grand Jury on 11 counts of money laundering and fraud.

Stacks says he has cooperated with the IRS every step of the way and that the charges against him are without merit.

“I look forward to my day in court in September,” he said. “To this day, we’ve never been late on a payment.”

Formerly the CEO of HomeBank of Arkansas, Stacks has taken a leave of absence per FDIC guidelines, he said.

“People hear these things and see it as there’s a possible wrongdoing within HomeBank, and nothing could be further from the truth,” he said. “HomeBank is a very well-run, good and honorable institution. With anyone under indictment, (the FDIC has) the authority to request you to take a leave. I went ahead, rather than fighting it, even though I didn’t think they had the right to do so. I’m still the principle stockholder.”

He said of Mountain Pure Water, “Our Little Rock plant is in a receivership. The primary entity that has loaned us money has taken ownership. We have lost so much money as a result of the raid and the indictment that it was impossible to generate income. Simmons Bank has taken ownership, and we’re hopeful there will be a new owner in the near future so those employees can continue on. We’ve laid off approximately 100 people who are off work today because of this type of government action — good people who worked there for many years.”

In response to the government raid, Stacks and several of his employees appeared in an online documentary called “Rampant Injustice” that features a re-enactment of the para-military-style raid. Duncan Outdoors of Conway and Tennessee-based Gibson Guitar also appear in the documentary, with their leaders saying similar events happened at their businesses.

Stacks said he has talked to many other businesses who have experienced the same thing, but most of them were too afraid of retaliation by the IRS to be mentioned by name in the documentary.

“When we have a government entity that we’re so afraid of, something’s wrong,” he said.

(Staff writer Rachel Parker Dickerson can be reached by email at rachel.dickerson@thecabin.net or by phone at 505-1236. To comment on this and other stories in the Log Cabin, log on to www.thecabin.net. Send us your news at www.thecabin.net/submit)

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