Sen. Jake Files' financial woes mount, Democrat-Gazette reports | Arkansas Blog

Sen. Jake Files' financial woes mount, Democrat-Gazette reports

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MOUNTING PROBLEMS: Debts pile up for Sen. Jake Files.
  • MOUNTING PROBLEMS: Debts pile up for Sen. Jake Files.
Michael Wickline of the Arkansas Democrat-Gazette reported in detail this morning a growing list of financial problems for Republican Sen. Jake Files of Fort Smith.

According to a federal tax lien filed in Sebastian County, he's $111,000  in arrears on payment of federal payroll taxes by his construction business for money he failed to pay dating back to the second quarter of 2014.

His businesses are also into the state for a growing sum on apartment projects.

His businesses — a variety of limited and general partnerships — are $167,000 in arrears on loan payments and fees owed on apartment projects financed with federal money funneled through the Arkansas Development Finance Authority. One partnership hasn't made a loan payment on a Fort Smith apartment project since January 2013.  The loans are not guaranteed by the limited or general partner. Such non-recourse lending is nice if you can get it. These days, based on my experience,such arrangements are hard to find in the private sector. The state can't foreclose because it doesn't have first lien on the projects.

Failure to pay taxes owed is, I've always thought, akin to theft of public money, spiritually if not legally. It would be interesting to know, for example, if Files was drawing money from his various companies for his own living expenses while failing to pay federal tax withholding, Social Security and Medicaid payments for his workers. It was deducted from THEIR paychecks.. That money will be owed to the workers by other taxpayers if Files doesn't pay it.

For his part, Files said he's working to right his business. He claims he can resolve the federal liens in 30 to 45 days. As for the troubled apartment projects, Files says he has no involvement beyond his relationship to the companies that got the loans in the first place.

Files said 2014 was a tough year in the construction business and his work in the legislature took him away from business.

We broke news earlier of an emergency loan made by a lobbyist, Bruce Hawkins to Files, who told me at the time he could have easily obtained bank financing but turned to Hawkins because he understood he could be a source of money. His needs included covering a hot check he'd written to a material supplier, later paid. The Democrat-Gazette reported earlier on state tax liens for failure to remit payroll withholding against Files that have been settled.

Files is  not well-positioned, it would seem, to join the vanguard of Republicans likely to be talking in the legislature of drug testing, fees, co-pays, work requirements and the like necessary for the undeserving poor workers who get federal subsidies for health insurance coverage. Nor should he be talking soon about running government like a business. Files is chair of the Senate Revenue and Taxation Committee.

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