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GREENSBORO — Steve Arnold, vice chairman of the Guilford County Board of Commissioners, cannot avoid paying more than $1 million to a creditor in a bankruptcy dispute, a judge has ruled.

In issuing the opinion Wednesday, U.S. Bankruptcy Judge Thomas W. Waldrep Jr. found that Arnold transferred tracts of land to relatives to avoid creditors after defaulting on loans and agreements. Waldrep said there were “multiple badges of fraud” in the case, in which Arnold admitted under oath to trying to keep assets from creditors.

Waldrep found that Arnold attempted to avoid repaying Manuel and Christine Perkins after they co-signed for a $1.27 million line of credit for Arnold’s construction business, Arcon Inc. The land development deal for which Arnold needed the money failed in 2005, according to court records, and he stopped making payments on the line of credit and a subsequent settlement agreement.

Several attempts to reach Arnold and his attorney for comment Wednesday were unsuccessful.

As president and sole shareholder in Arcon, Arnold personally guaranteed the company’s debts. After defaulting on payments to the Perkinses in 2007, Arnold transferred a number of land parcels to his parents and father-in-law one business day before a judgment for

$1.27 million was entered against him in Guilford County Superior Court, according to court records.

That transfer prevented the Perkinses from getting liens against Arnold’s property to recoup their investment. Arnold testified in a bankruptcy hearing that the timing of the move was a coincidence. Arnold and his company filed for bankruptcy later that year.

In a December 2007 bankruptcy meeting, Arnold was asked under oath why he had made the land transfers. He said it was to keep a particular creditor from “coming after it,” according to court records.

Arnold later claimed this comment was sarcasm, but Waldrep said he didn’t find that credible.

Arnold has said of the comment, “I have never said anything dumber.” In a footnote in his opinion the judge wrote “The court is inclined to agree with this statement.”

Manuel Perkins, 75, said Arnold is “just dishonest and doesn’t want to pay his debts. That’s all there is to it.”

The Perkins’ attorney, Jimmy Summerlin, said he has rarely seen so straightforward a case.

“I’m frankly surprised it had to go all the way to this stage,” Summerlin said. “Usually when you’re dealing with a bankruptcy case and someone’s trying to hide property, they don’t transfer it directly to their families — to their father-in-law — and do it right before a deadline like that. That makes it more clear.”

Summerlin said he and the Perkinses consider the court order Wednesday a moral victory.

“When we go searching for assets, I’m not sure there will be that much there,” Summerlin said. “I doubt we’ll find much under his name.”

“I won’t live long enough to see any of this money back,” Manuel Perkins said. “But what really bothers me is he’s robbing my children of their inheritance.”

It is unclear how the order will affect Arnold’s other outstanding debts which, according to bankruptcy documents, exceed $12 million.

Commissioners Chairman Melvin “Skip” Alston declined to comment on the case or how it might affect Arnold’s performance as a commissioner.

Other commissioners were split on the question.

“It’s not our job to be the judge of Steve Arnold,” said fellow Republican Commissioner Billy Yow. “His constituents are going to have to decide whether this will affect his ability to be a commissioner or a leader, but he has been a fine one for a number of years.”

In the coming year, Arnold will stand for re-election in District 2. He ran unopposed in 2006 and has not had a close race since first being elected in 1990.

“I don’t think his personal business has anything to do with his business as commissioner,” Yow said. “It’s not like as vice chairman he’s going to have the run of the county’s checkbook, but if he did, I’d have all the confidence in the world in him.”

Commissioner Paul Gibson, a Democrat and frequent critic of both Alston’s and Arnold’s leadership, was less charitable. He called on Arnold to resign.

“He has been patently dishonest in his dealings, and he shouldn’t hold office,” Gibson said. “The citizens of Guilford County should be able to know that their elected officials are trustworthy and honest people.”

In the past, Arnold has publicly contemplated stepping down from the board over what he’s called “a rough few years.”

While dealing with various business problems, he has been sued for slander and libel and even ordered arrested and jailed for refusing to comply with court orders in a separate case in Randolph County. That order was later lifted when Arnold agreed to pay thousands and turn over documents related to another construction deal.

 Contact Joe Killian at 373-7023 or joe.killian@news-record.com