SuperTalk Mississippi

FBI uncovers $100 million Ponzi scheme in Mississippi

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Earlier this week, a Jackson man was charged for his role in a multi-state Ponzi scheme which scammed more than 250 people in 14 states out of over $100 million.

58-year-old Arthur Lamar Adams has been charged with two counts of wire fraud involving a scheme to defraud investors, and one count of bank fraud, all in connection with a Ponzi scheme using Madison Timber Properties, LLC, a company owned by Adams.

A news release from U.S. Attorney Mike Hurst & Hurst and FBI Special Agent in Charge Christopher Freeze detailed how Adams began to defraud investors as early as 2011. 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, while instead using it for his own personal gain without the knowledge of the investors.

“As part of his fraudulent scheme, Adams falsely represented to investors that Madison Timber Properties was in the business of buying timber rights from landowners and then selling the timber rights to lumber mills at a higher price. The object of the scheme was to cause individuals to invest in loans that purportedly were for the purpose of financing contracts for the purchase of timber rights to be sold to lumber mills at a higher price. However, neither Adams nor Madison Timber Properties had such timber rights or contracts with lumber mills, except in only a few instances.

Adams entered into fraudulent investment contracts with investors, most often in the form of promissory notes on behalf of Madison Timber Properties. The loans typically guaranteed investors an interest rate of 12-13%, with the interest to be repaid to investors over the course of 12-13 months. The monthly payments due on these promissory notes were typically due on either the first or the fifteenth of the month.”

According to Hurst, Adams also created false documents claiming that the clients’ money was protected by significant collateral should he default on the loans, but this was not the case. Adams also forged the signatures of landowners and had the documents notarized to make them appear legitimate.

In some cases, Adams provided a “timber cruise summary” which stated the value of the timber located on a particular parcel of land. These “timber cruise summary” documents were also done under false pretenses to defraud and trick investors.

After the charges were filed, Hurst said that greed led Adams down this path, and he will now pay the price.

“Greed is not good,” Hurst warned. “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.”

Hurst went on to thank the FBI special agents and prosecutors in this case as they continue to find associated criminals and ensure that victims are assisted. To that end, the news release included a statement discussing what is next in the investigation for those who may have been victimized by the scheme.

“We know that investors are anxious to learn whatever they can about the status of their investments and the assets of Madison Timber Properties, LLC. Although we cannot provide further details at this time, please be assured that all those involved are working diligently to investigate this matter and to locate and preserve assets that can be used for restitution to defrauded investors.”

The case is being investigated by the Federal Bureau of Investigation and the Securities and Exchange Commission. The case is being prosecuted by Assistant United States Attorney Dave Fulcher.

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