A Tale of Timber Schemes (Part 2)

A Tale of Timber Schemes (Part 2)

Last month we started the conversation about what could be called the largest Ponzi scheme in Mississippi history. The scheme promised investors a 13% rate of return on their investment and were given 12 signed checks that were post-dated over a period of 13 months to show the “guarantee” of results. There were even some who had gotten the promised amounts, which sealed the deal for new investors. Generally, the investments were sold by lawyers and other professionals that the investors knew and trusted. However, no one thought to even call the landowners whose signatures had been forged on the information documents.

The targets were primarily the well-to-do of Mississippi. The scheme started with Larmar Adams, owner of Madison Timber Company, Inc., who claimed to have investments in timber-related activities. He used other individuals, whom he called promoters, who sold the investments for a commission. However, the SEC got involved and accused Lamar Adams of operating a Ponzi scheme that defrauded 150 investors out of more than $85 million. Attorney Alysson Mills was appointed receiver in the case. Her job was to recover assets, distribute them among the victims, and provide progress reports to the court.

Mills sued two prestigious law firms (Butler Snow and Baker Donelson) to recover the commissions paid to the lawyers in their firm and two others who had recently left the firm, and were serving as promoters. Mills took them to court, charging them as unauthorized and unlicensed brokers in violation of federal and state law. They cashed checks while doing little to earn them. They did not have their investors’ best interests in mind. No one performed even a cursory inspection or vetting of Madison Timber Company which supposedly was providing the “investors”. Such an investigation would have quickly shown the company’s claims were bogus.