May Custody Release Scheduled for Frost

It’s been a long 10 years for Jack Frost.
Frost, who was convicted on 69 felony counts of defrauding the Harvey & Bernice Jones Charitable Trust, is scheduled to be released from federal custody on May 29, almost exactly 10 years after his suspicious dealing with a Northwest Arkansas charity first came to light.
The prominent CPA, who never testified in his own defense, still isn’t talking about his fall from grace. Messages left for him at the City of Faith halfway house in Little Rock, where he is finishing four years of incarceration, were not returned.
But while Frost, now 75, has served his time, it’s not at all clear whether he has completely paid his debt to society. A continuing flurry of documents filed in U.S. District Court in Little Rock — most of them under seal — suggests that federal prosecutors are continuing to pursue assets to satisfy a $1.5 million restitution order.
H.G. “Jack” Frost Jr. was the founder of the Little Rock accounting firm now known as Moore Stephens Frost. But by 1997, he had long since left MSF to work exclusively for Harvey Jones, who died nine years after selling Jones Truck Line in 1980, Jones’ widow, Bernice and the business and charitable entities the Joneses created with their multimillion-dollar fortune.
In early April 1997, the Arkansas Democrat-Gazette reported that Frost had mysteriously been fired by Bernice Jones. The seriousness of the falling out was underscored when the Jones Charitable Trust cancelled its plan to fund construction of a student center on the campus of Hendrix College in Conway that was supposed to be named for Frost, a Hendrix alumnus and trustee.

Trust Betrayed
The first hint at a reason for the split followed in mid-May in a shocking report published simultaneously by Arkansas Business and the Northwest Arkansas Business Journal: Frost’s compensation from the Trust, of which he was co-trustee with 91-year-old Bernice Jones, had grown from less than $70,000 in fiscal 1992 to almost $340,000 the next year and more than $350,000 in fiscal 1994, which ended in November 1995.
The story cautiously hinted that Jones might not have been aware of Frost’s ballooning income from the nonprofit. She hadn’t signed the IRS 990 forms, and Frost had moved the required legal notice of their availability from the statewide Democrat-Gazette to the much smaller North Little Rock Times.
Frost resigned as the Trust’s co-trustee the day the story appeared. In July a granite bust of Frost was removed from the garden of the Harvey & Bernice Jones Center for Families in Springdale, the primary beneficiary of Bernice Jones’ legendary philanthropy.
In August 1997, the Trust broke its silence by filing a civil lawsuit that accused Frost of defrauding the Trust of more than $1.6 million by forging Jones’ signature on checks, destroying documents and misleading auditors.
The civil suit revealed that the Arkansas Business/NWABJ story only glimpsed the tip of the iceberg. Even the $67,452 that the charitable trust paid Frost in fiscal 1992 was unauthorized, and Frost’s self-dealing had grown to $478,500 in fiscal 1995, which had ended in November 1996. In the first three months of 1997, he had paid himself $170,000 from Trust funds.
The total diverted to Frost or his Jack Frost Management Consulting Co. between November 1993 and March 1997 was more than $1.44 million, and another $182,000 was diverted from the Trust to a Shreveport oil drilling company on Frost’s behalf.
During the same period, according to the complaint, Jones Investment Co. had paid Frost a legitimate salary totaling more than $1.1 million, which was supposed to compensate him for all Jones-related work, including work for the charitable Trust.
“The actions of Frost have been deliberate, intentional, and reprehensible,” the lawsuit filed by Lowell attorney David Matthews said. “Frost has knowingly converted money to his own use which would otherwise have been available for charitable and philanthropic purposes. His actions have harmed not only the Trust, but the beneficiaries and future beneficiaries of the Trust.”
Frost denied any wrongdoing and claimed that the terms of the trust organization allowed him, as trustee, “reasonable compensation” for his duties. He also testified in a deposition that he had never signed Jones’ name on checks, as the trust charged.
Civil vs. Criminal
The civil suit was settled in 1998. The terms were confidential, but tax returns and a subsequent order of restitution indicate that Frost paid the trust $277,417 over a period of months.
In February 1999, almost two years after the embezzlement was discovered, a federal grand jury in Little Rock indicted Frost on 70 felonies: 62 counts of money laundering, three counts of filing a false tax return, two counts of wire fraud and one count each of mail fraud, making false statements to a grand jury and obstruction of justice. The charges upped the amount of the Trust’s loss to $1.8 million.
Another year passed, and a jury was seated in federal district court in Little Rock when a ruling by U.S. District Judge James M. Moody brought the proceedings to another halt. Frost’s defense attorney, Tim Dudley of Little Rock, was preparing to argue that Frost was authorized to sign Bernice Jones’ names on trust checks, and Moody ruled that federal prosecutors could not use his previous affidavit — in which he denied signing her name — against him.
Prosecutors appealed, and the 8th U.S. Circuit Court of Appeals in St. Louis eventually agreed with them: Frost’s earlier sworn statement was fair game. He finally went to trial in November 2001, with Bernice Jones (via videotape), his ex-wife and former secretary testifying against him and Little Rock attorneys William H. Bowen, Alston Jennings and Robert Shults acting as character witnesses on his behalf.
Frost’s contention that he had the right to compensation from the Trust was hurt by evidence that he had personally informed the Internal Revenue Service shortly after Harvey Jones’ death that trustees would not be paid by the Trust. If that policy were to change, he told the IRS in May 1990, the trustees would consult with trust departments of banks in the area to determine what a reasonable compensation would be. That was never done.
On Dec. 5, 2001, a federal court jury in Little Rock convicted Frost on 69 counts — all except one that had been dropped by prosecutors. At sentencing the following June, Moody noted that he had received “more than 30 letters” on Frost’s behalf, “many from people that I know and many from people whose opinions that I deeply respect.” Still, Moody said, he had no choice but to send Frost to prison. He sentenced Frost to 70 months in prison — a stretch reduced by “good time” — and ordered him to pay $1.5 million in restitution and to forfeit a 1995 Chevrolet Tahoe.
Still, Frost remained free for almost a year and a half while his appeal of most of the convictions was considered by the appeals court in St. Louis. The judges there weren’t impressed with his argument that he could compensate himself with Trust funds without Jones’ approval:
“The evidence at trial indicated that Frost believed he needed Bernice Jones’s consent prior to compensating himself from the Trust. Checks drawn on the Trust’s checking account required the signatures of both Frost and Bernice Jones. Frost forged Bernice Jones’s signatures on invoices and checks to make it appear that Bernice Jones had authorized the payments,” the appeals court noted in affirming his conviction in March 2003.
“Frost does not attack the government’s proof on any of the statutory elements. Instead, he argues that nothing in Arkansas law or the trust instrument requires the consent of both trustees before one may be compensated by the trust for services rendered to the trust. We do not agree that the government, having proved beyond a reasonable doubt each element of the offense, must also prove a violation of Arkansas law.”
Moody gave Frost until May 27, 2003, to report to federal prison, less than four months before Bernice Jones died at age 97. In October 2003, Frost filed a motion asking Judge Moody to recommend substance abuse treatment, a motion Moody granted the following March.
But that didn’t end Frost’s battles with the federal justice system. He claimed evidence had been withheld, an argument that he had failed to include in his appeal to the 8th Circuit. He argued that his sentence should have been reduced as a reward for making stipulations and admissions of guilt on some points of the indictment, an argument that didn’t impress Moody.
“There can be no dispute that Frost put the Government to its burden of proof at trial,” Moody wrote in an order denying Frost’s motion seeking a corrected sentence. “Frost may have conceded his guilt on particular points during the proceedings, but these concessions were more for strategic purposes than to signify his acceptance of responsibility for charges brought against him.”

Follow the Money
Frost also disputed the court’s right to order $1.5 million in restitution to the Jones Trust since he and the trust had already reached an out-of-court settlement in the civil suit. But Moody rejected that argument:
“The Court was aware of the settlement between Frost and Mrs. Jones and offset the amount of restitution by the amount Frost had already paid. Moreover, the Court is not bound by the settlement between a defendant and a victim.”
How much of that restitution has been paid is unknown and not subject to the federal Freedom of Information Act. Dr. Joel Carver and Daniel Ferritor, trustees of the Jones Charitable Trust, did not return calls seeking comment. But there are hints in the public record that prosecutors have continued looking for assets.
For instance, in October 2005, Moody ordered the forfeiture of Frost’s half-interest (with Ben O. Price) in a commercial property occupied by Cici’s Pizza on Central Avenue in Hot Springs. In January 2006, Mark Goff, owner of the Cici’s franchise, exercised his lease-purchase option on the building and land, and half of his $330,500 purchase price was paid to the federal government.
In June, the U.S. Attorney’s Office filed a curious motion apparently seeking access to copies of checks that defense attorney Tim Dudley received from Frost and the deposit slips associated with those checks. The motion itself is sealed, but Dudley’s response, in which he asks the judge to specifically limit his order to those items, is open.
Moody’s subsequent order is sealed, as are nine more motions and three orders filed between Sept. 28 and Feb. 14.