Home » NEWS » Law & Accounting » UPDATED — U.S. Attorney charges Jackson man in $100 million Ponzi scheme

UPDATED — U.S. Attorney charges Jackson man in $100 million Ponzi scheme

By TED CARTER

In a plea federal prosecutors indicated would later be changed to an admission of guilt, a 58-year-old Jackson man pleaded not guilty Tuesday afternoon in what could be Mississippi’s largest Ponzi scheme ever.

The U.S. Attorneys office in Jackson alleges Arthur Lamar Adams used fraudulently deeded timberland to bilk well over $100 million from hundreds of investors in Mississippi and elsewhere starting in 2011.

U.S. Magistrate Linda R. Anderson released Adams on a $25,000 unsecured bond but ordered him confined to his home and under GPS monitoring.

In an email after Tuesday’s hearing, a spokeswoman for the U.S. Attorneys Office said Anderson continued the hearing “for entry of guilty plea.” A date for the guilty plea hearing has not yet been scheduled, spokeswoman Shelia Wilbanks said.

» READ MORE —  PONZI POINTS: Notable from the charging document

» CLICK HERE TO READ USA vs. Arthur Lamar Adams

A federal criminal information charges Adams with with two counts of wire fraud involving a scheme to defraud investors, and one count of bank fraud. He faces up to 50 years in prison and fines of $1.25 million, Wilbanks said.

The Associated Press reports that Adams’ attorney John Colette of Jackson says his client likely will plead guilty and is cooperating with prosecutors.

Meanwhile, the Securities and Exchange Commission has frozen Adams’ assets, though a press release issued Tuesday did not specify the amount of assets frozen.

“We acted quickly in this case to protect the victims of the alleged Ponzi scheme by obtaining immediate injunctive relief and an asset freeze,” said Richard Best, director of the SEC’s Atlanta Regional office.

Prosecutors say Adams set up a SEC-registered company, Madison Timber Properties, to solicit money from investors. Adams told investors they’d get returns of 12 percent to 13 percent for financing contracts to buy timber rights to be sold to lumber mills at a higher price, the U.S. Attorney’s office said in a press release.

“However, neither Adams nor Madison Timber Properties had such timber rights or contracts with lumber mills, except in only a few instances,” U.S. Attorney Michael Hurst Jr. said in the press statement.

Specifically, Hurst said, Adams devised a scheme to defraud investors by soliciting millions of dollars of funds under false pretenses, failing to use the investors’ funds as promised, and converting investors’ funds to Adams’s own benefit without the knowledge of the investors.

Adams obtained “well in excess” of S100 million from more than 250 investors in at least 14 different states, Hurst alleged.

Adams perpetuated the Ponzi scheme by making payments due some investors from money solicited from other investors, federal authorities charge.

Hurst said that except for a few instances, Adams’ Madison Timber Properties never had timber rights nor contracts with lumber mills.

Adams’ fraudulent contracts with investors most often came in the form of promissory notes on behalf of Madison Timber Properties to be paid at 12-13 percent interest rates over 12 to 13 months, authorities said.

Adams created false documents to mislead investors into believing that their investments were secured by sufficient collateral from which they could recover all or part of their investment in the event that Madison Timber Properties defaulted on the loans, Hurst alleged.

“Greed is not good,” Hurst said in his press statement. “Greed drove this individual to lie, cheat and steal from fellow Mississippians, and led him to prey upon others outside our state, simply to personally benefit himself. While this may be one of the largest Ponzi scheme ever committed in our state, our citizens can rest assured that these criminal actions by this defendant sadly affecting so many people will be met with swift and certain justice.”

Prosecutors declined to say whether any accomplices to the scheme will be charged.

Authorities also declined to say how they learned of the scheme, though speculation is that a bank alerted them after noticing suspicious wire transfers.

Meanwhile, the U.S. Attorney’s office is urging investors in Madison Timber Properties to gather and retain any documents that they have concerning their investments with Madison Timber Properties or Adams. The FBI and the U.S. Attorney’s Office will be reaching out to identified victims shortly, Hurst said.

Hurst declined to say whether any Adams has assets that could be used to help repay defrauded investors.

The FBI and the SEC are handling the investigation. Assistant U.S. Attorney Dave Fulcher is prosecuting the case.

 

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About Ted Carter

One comment

  1. MS Bus Journal seems to be far more concerned with a political agenda supportive of a clique of well connected deep pocketed individuals at the expense of the struggling. While I have read several opinion pieces that allude to a sense of fairness those are apologetic. Mississippi is and will continue to be at the bottom of all that benefits those struggling while glorifying and rewarding those who enjoy choking a grand life and future from the struggling and they will do so with the congratulations of the BJ.

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