Judge says return Alexander fire truck

A Pulaski County Circuit Court judge has ruled the City of Alexander should have its repossessed fire truck returned as soon as possible. The ruling was made Monday, November 4 by Circuit Judge Tim Fox.

The decision was in response to a "Cross Complaint and Petition" filed by the City against First Government Lease Company and its owner Paul Anthony Graver. Graver lives in Chicago and his business is located in Northfield, Illinois.

The dispute is over a 1999 Freightliner fire truck. The truck was repossessed while sitting in a restaurant parking lot. It was then taken to a lot in Memphis, Tennessee.

According to documents included in its petition to the court The City of Alexander entered into a lease-purchase agreement with First Government in May, 2008. The amount of the lease-purchase was $50,000 for the truck and an additional $24,325 in interest. The agreement is for seven years at $884 per month.

According to a report by Arkansas Division of Legislative Audit for the City's budget year of 2008, in May the City also entered into another lease-purchase agreement with First Government Lease to buy two police cars. The cost of two vehicles is "$44,700 with an annual interest rate of 6.25% to be repaid by a monthly payment of $977 for 60 months (5 years)."

But, that's not the numbers provided by First Government Lease Company to Legislative Audit. According to the amortization schedule the loan amount is $48,528, $3,828 more than the original $44,700. The interest rate on the schedule was also increased from the original 6.25% to 8%.

The same thing was done to the fire truck agreement. According to the amortization schedule provided to Legislative Audit it shows a loan amount of $52,859 instead of the agreed to $50,000. Instead of a set dollar amount of interest there is an interest rate of 9.5%.

These aren't the first lease-purchase agreements between Alexander and First Government Lease Company. According to Legislative Audit's report for the City's budget year of 2007, in August the City combined six lease-purchase agreements consisting of police and fire vehicles, equipment, "and an addition to the fire station" on South Alexander Road. The "addition" was actually the purchase of property next to the fire station.

The original terms of the agreement were a loan of "$350,000 with an annual interest rate of 9.9% to be repaid by a monthly payment of $4,971 for 168 months (14 years)" the report states.

But, according to the amortization schedule the loan was for $435,975, $85,975 more than the original $350,000, with an interest rate of 9% instead of 9.9%. The payment period was also reduced to 12 years instead of 14.

Apparently, Graver (First Government Lease Company) bundled the three loans and sold them to First State Bank in Oklahoma. Mayor Michelle Hobbs stopped making the monthly payments in March of this year claiming the lease-purchase agreement was illegal under the Arkansas Constitution, which restricts how cities can take on interest-paying debt.

First State Bank filed a lawsuit suing Alexander and First Government Leasing, claiming the bank was defrauded into thinking it would acquire a mortgage and lease-purchase agreement for improvements to an Alexander fire station that it says were never started.

Graver's attorney, Matt Campbell, told Judge Fox because Alexander is disputing the legality of the lease-purchase agreement that gives Graver grounds to repossess the fire truck. He also said Alexander was notified the truck would be repossessed and why.

Alexander City Attorney Carla Miller told the judge the City had not been notified of the pending repossession. She added there's no lien on the vehicle and Alexander is ahead of schedule on payments as far as October, 2014.

According to court documents Graver bought back the lease-purchase agreement from First State Bank October 10, then filed a lawsuit that same day in Illinois court. The fire truck was then repossessed October 11.

When fire fighters discovered the truck missing from the restaurant parking lot the State Police were called. According to the incident report provided in the City's court documents State Police were called at 12:59 PM. Assistant Fire Chief William Blankenship was already following the fire truck on I-440 east of I-30 heading for Tennessee.

Two officers in separate vehicles eventually caught up to the fire truck on eastbound I-40. The driver of the follow-up vehicle showed officers repossession papers which included a letter from First State Bank in Oklahoma authorizing the repossession, the police report states.

The two men allowed Blankenship to remove equipment and firefighter's other personal belongings that aren't directly connected with operating the fire truck.

Even though the repossession papers indicated Graver had permission from First State Bank to repossess the fire truck, an affidavit introduced during the hearing by Miller tells a different story. In the affidavit First State Bank President Michael George states, "First State Bank did not authorize Paul Anthony Graver, First Government Lease Co., ... to take any action against or with the City of Alexander, including, but not limited to, attempting to collect any money, taking possession of any vehicle, personal property, or real property, or negotiating any settlement in connection with the indebtedness that is the subject of this suit or otherwise."

* Sources for this article include an article appearing in the Arkansas Democrat-Gazette (by John Lynch, November 5, 2013), audit reports for the years 2007 & 2008 written by the Arkansas Division of Legislative Audit and court documents filed by the City of Alexander.