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Second Mississippi man indicted in $85M timber Ponzi scheme

A second Mississippi man has been charged in a Ponzi scheme in which investors lost more than $85 million.

William McHenry of Canton pleaded not guilty Friday in federal court in Jackson to an indictment charging him with one count of securities fraud and two counts of wire fraud. He remains free on $10,000 bail with a current trial date of April 15 before U.S. District Judge Carlton Reeves.

McHenry’s lawyer, Frank Trapp, did not respond to an email seeking comment.

The scheme’s leader, Arthur Lamar Adams, pleaded guilty to wire fraud charges last year and is serving a 17-year prison sentence.

The indictment charges that McHenry was a salesman in a scheme selling bogus timber rights for Madison Timber, claiming investors were buying the rights cheaply from timber owners and selling them at higher prices to lumber mills. Investors loaned money to Madison Timber Properties in exchange for a guaranteed annual interest rate of 12 percent or more, but in reality new loans were used to pay old investors. Adams skimmed some for himself and used some to pay 10 percent commissions to salesmen, including McHenry.

A separate civil suit brought in October by a receiver trying to recover assets charges that McHenry made at least $3.5 million in commissions between 2010 and 2018. The indictment alleges he sold investments worth “well more” than $18 million to more than 25 people.

McHenry operated a separate company called First South Investments, but the indictment says McHenry worked from 2010 to 2018 in a shared office with Adams and Madison Timber. It also says he followed the same procedures as Adams, using fake timber deeds with forged signatures. Investors agreed not to legally record the deeds unless Madison Timber defaulted on its payments. The indictment says McHenry represented that he was part-owner of Madison Timber, when in fact he held no position with the company and had invested none of his own money.

More than 250 investors in at least 14 states lost money in the overall scheme, prosecutors have said. They argued during Adams’ sentencing hearing that at least 34 investors sustained “substantial financial hardship.” The minimum investment was generally $10,000, but some invested much more.

Among other investors who were defrauded was U.S. Sen. Roger Wicker, the Mississippi Republican.

Receiver Allyson Mills has thus far recovered more than $4 million for investors, according to court filings.

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