Connect with us

Hi, what are you looking for?

News

Hubbard Solicited And Received $600K For Failing Printing Business

By Bill Britt
Alabama Political Reporter

MONTGOMERY—Of the 23 felony indictments against Speaker of the House Mike Hubbard, Counts 15 through 19 deal with money solicited or received by his business interest, Craftmaster Printers, Inc.

Five individuals are named in the indictments. They are, in order: Dax Swatek, Will Brooke, James Holbrook, Jimmy Rane and Robert Burton.

Hubbard stands accused by the State of having solicited or received a thing of value, “an investment in Craftmaster Printers,” from Brooke, Holbrook, Rane, and Burton.

Count 13, which names Swatek in the indictments states that Hubbard only “solicit a thing of value.” Unlike the others named in the indictments, it does not mention Hubbard receiving a thing of value.

According to state law a person who gives a legislator a thing of value can also be charged under the same felony provision. 

Advertisement. Scroll to continue reading.

The language would indicate that Swatek was asked for the money but did not give it.

The omission of the word “received” definitely means something noteworthy “…because words have meaning, said a prominent defense attorney, speaking on background.”

Hubbard has been charged with a violation of Section 36-25- 5.1(a) of the Code of Alabama (1975) which is a class B felony.

According to State Ethics Law, a “Thing of value” is “Any gift, benefit, favor, service, gratuity, tickets or passes to an entertainment, social or sporting event, unsecured loan, other than those loans and forbearances made in the ordinary course of business, reward, promise of future employment, or honoraria or other item of monetary value.”

The State contents that Hubbard, “intentionally did solicit or receive a thing of value, ‘to wit: $150,000.00 investment in Craftmaster Printers’ from Brooke, Holbrook, Rane, and Burton.

Why would these five business men invest a total of $600,000 in a printing company with a history of bankruptcy and debt? Revelations about Craftmaster’s bankruptcy first came to light in 2006. For years, Hubbard has painted the bankruptcy as a non-event or “bogus allegations” by “liberal special interests” as part of a smear campaign against him.

(See article here.)

Advertisement. Scroll to continue reading.

In 2000, a group of investors – led by Hubbard, Thomas B. “Barry” Whatley, Doug Taylor, and former Auburn coach, Pat Dye, purchased Craftmaster and its debt from its owners for $1.

At the time, Craftmaster was some $5 million in debt and its Dunn and Bradstreet financial ratings had plummeted.

[Source: Based on bankruptcy filings, Dunn&Bradstreet reports]

In 2002, the company reported net losses of $368,412, according to a Craftmaster annual Income Statement for that year. The following year, Craftmaster lost $882,645.

Only after an “extraordinary” adjustment in the numbers had been made, the company was able to show a profit for the year.

[Source: See Annual Statement for 2003]

During this time period, unnamed creditors forgave $1.3 million in debt, which enabled Craftmaster to report being $440,000 in the black for 2003.

Advertisement. Scroll to continue reading.

[Source: See Annual Statement for 2003]

In late 2004, Craftmaster was being devoured by debt. With many angry creditors, and mounting pressure, Hubbard and company looked for a way to dodge the debt bullet.

The beating heart of the Craftmaster operation was a top-of-the-line Speedmaster Six Color Printing Press, along with a Heidelberg Spectral Photometer. In 2004, Hubbard and company defaulted on a $2.6 million loan from Heidelberg Print Finance.

On page 108 of Hubbard’s book, “Storming the State House” Hubbard tries to sweep the default on the loans and the impending bankruptcy under the rug by blaming those who had control of the day-to-day operations.

On November 4, 2004, Heidelberg Print sued for breach of contract in Lee County Circuit Court.  Heidelberg demanded full payment of the $1.7 million loan balance and sought immediate return of the press and other equipment.

[Source: Craftmaster Defaults on Heidelberg Press document]

At the same time, Craftmaster faced default on $4.8 million in principal, interest, late charges and attorneys’ fees owed to AuburnBank, for a mortgage loan for the new building and land Craftmaster purchased in Auburn around 2000.

Advertisement. Scroll to continue reading.

At this point Hubbard and his partners were forced into bankruptcy.

Documents filed as part of the bankruptcy show, that Hubbard and the other investors in Craftmaster “were personal guarantors of only a small portion of the debt at Auburn Bank.” According to the bankruptcy document, the investors were personal guarantors of $80,000 of the $4.8 million debt.

(See document here.)

According to the public records, the bank agreed to accept a substantially reduced payment of $3.1 million on the remaining debt, meaning the bank lost $1.7 million to Hubbard and company. But, even with the reduction of debt, Craftmaster was not in a position to accept the bank’s offer.

(See article here.)

On December 10, 2004, Hubbard incorporated a brand new partnership called Swann Investment LLC, whose members were listed on Alabama Secretary of State records as:

•Scott Bridge Co., the Opelika-based bridge/road construction company that did millions of dollars of business with the State.

Advertisement. Scroll to continue reading.

•Thomas Whatley (the partner in Craftmaster Printing)

•Pat Dye, controversial former Auburn football coach and then board member of Colonial Bank.

•Hubbard Properties (Owned by Mike Hubbard. The company held title to the building that serves as the Auburn Network headquarters).

•Fuller Properties Ltd., owned by developer and then Opelika Mayor Gary Fuller.

•Randy Brown

•Rishi Rajan, an Auburn urologist

•D.S. Holdings

Advertisement. Scroll to continue reading.

•Charles Parnell, the lawyer who represented Craftmaster in the bankruptcy filing.

Hubbard then led Craftmaster into an agreement with Swann Investments, LLC, to buy the land and building at 687 North Dean Road in Auburn. Swann Investments and Craftmaster then entered into an agreement for the buyer to lease the land and building back to Craftmaster at the favorable price of $20,000 per month.

After building the shell needed to protect his interests, Hubbard, through Swann Investment, then took out a $2 million mortgage with First National Bank of Lee County and coupled it with another $1.1 million, closed the deal with a total of $3.1 million allowing Hubbard/Craftmaster to pay off AuburnBank.

It is speculated that the $20,000 in monthly lease payments to Swann Investments is apparently to pay the interest and principle on the First National Bank loan.

Masterfully, Hubbard organized a matrix of companies and cronies to save his struggling business, denying creditors millions in owed funds along the way. This from a man who promised to bring his business acumen to State government to clean up waste and fraud in Montgomery.

The question now remains: Why would smart businessmen like Will Brooke, James Holbrook, Jimmy Rane, and Robert Burton “invest” such large sums of money in a failing enterprise?

COUNT 15

Advertisement. Scroll to continue reading.

Hubbard,did intentionally solicit a thing of value, to wit: an investment in Craftmaster Printers, from Dax Swatek. 

Count 16

Hubbard did intentionally solicit or receive a thing of value, to wit: $150,000.00 investment in Craftmaster Printers, from Will Brooke, Board Member of the Business Council of Alabama.

Count 17

Hubbard did intentionally solicit or receive a thing of value, to wit: $150,000.00 investment in Craftmaster Printers, from James Holbrook, and/or Sterne Agee Group, Inc.

Count 18

Hubbard did intentionally solicit or receive a thing of value, to wit: $150,000.00 investment in Craftmaster Printers, from Jimmy Rane, President of Great Southem Wood

Advertisement. Scroll to continue reading.

Count 19

Hubbard, did intentionally solicit or receive a thing of value, to wit: $150,000.00 investment in Craftmaster Printers, from Robert Burton, President of Hoar Construction.

 

Written By

Bill Britt is editor-in-chief at the Alabama Political Reporter and host of The Voice of Alabama Politics. You can email him at [email protected] or follow him on Twitter.

DIG DEEPER

Economy

The new plant expansion will create 261 new jobs in the Opelika area.

State

Opelika Mayor Gary Fuller was elected president and Tuskegee Mayor Lawrence F. “Tony” Haygood Jr. was elected vice president.

News

State Sen. Randy Price, R-Opelika, had his 63rd birthday Monday — a birthday that many feared he would not live to see, due to...

Legislature

State Sen. Randy Price, R-Opelika, released a statement Friday regarding his health following his hospitalization and diagnosis of COVID-19. Both he and his wife,...