CHOCTAW — Arkansas businessman Eldon Blackaby billed the city of Choctaw for everything from mortgage payments on a 2,500-square-foot house for him and his wife to a trip on a chartered jet between Arkansas to Oklahoma under the guise of legitimate business expenses, the city claims in court documents.
On Wednesday, Choctaw said that it had requested a state audit of Choctaw Town Square LLC, led by developers Eldon and Kurt Blackaby. The Bentonville, Ark., company had been entrusted with developing a 39-acre retail development anchored by a Walmart Supercenter with the aid of city incentives.
The Choctaw City Council moved to ask for the state audit after invoices that Choctaw Town Square LLC submitted to the city for business expenses began to spark suspicion, Choctaw Mayor Randy Ross said.
“Some of the stuff didn't pass the smell test,” Ross said. “It's good business for us to ensure that taxpayer money is being spent appropriately — there needs to be some accountability to ensure that there is no self-dealing on some of these transactions.”
Derrick Davidson, an attorney for Choctaw Town Square LLC, said the city's accusations of fraud were unfounded.
“Its something they are fabricating to try to build their image in the eyes of their constituents,” Davidson said.
In February, Choctaw Town Square LLC sued the city of Choctaw in federal court over money it claims the city owes it for construction and legal costs. Choctaw Town Square LLC claims in its lawsuit that city officials have refused to reimburse it for construction costs from a $7.5 million tax increment financing bond the city issued last year to help finance the development.
City officials stopped making payments to the developer after requesting more information on invoices submitted to the city.
“Before the lawsuit was filed, everyone was happy with the work Choctaw Town Square has done,” Davidson said.
The city has since moved to counter sue Choctaw Town Square LLC for the return of more than $1.9 million paid as a developer fee that the city claims was improperly collected, as well as damages and other expenses.
The partially city-funded Choctaw Town Square shopping development has encountered several problems since Choctaw officials signed an agreement with Choctaw Town Square LLC in 2010 to develop the site on NE 23 east of Henney Road.
Choctaw has pledged water, sewer and traffic improvements worth an estimated $9.6 million for the Choctaw Town Square project to lure new business to the city.
The developer also claims in its lawsuit that Choctaw should pay for Choctaw Town Square LLC's legal costs to defend itself against a lawsuit filed by former Choctaw City Manager Robert L. Floyd.
Floyd moved to sue Choctaw and Choctaw Town Square in June. The former city manager claims in his lawsuit that the city council wrongfully fired him after he questioned the dollar amount on an invoice Choctaw Town Square LLC submitted to the city.
The city plans to continue developing the Choctaw Town Square site without the Arkansas developers, Ross said Wednesday.
Plans for a Walmart Supercenter on the site remain on track, Ross said.