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Main | After Mistrial, Feds Will Retry Accused $100 Million Ponzi Schemer »
Tuesday
May012018

Feds Allege Mississippi Man Ran $85 Million Timber Ponzi Scheme

"Greed is not good. 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."

- U.S. Attorney D. Michael Hurst, Jr. 

In what may be the largest Ponzi scheme in Mississippi history, civil and criminal authorities charged a 58-year old man with raising at least $85 million from investors who thought they were profiting from the harvesting of timber.  Arthur Lamar Adams, 58, made his first appearance today after being arrested earlier in the day on two counts of wire fraud and one count of bank fraud.  Each of the wire fraud counts carries a maximum twenty-year prison sentence while the bank fraud charge carries a maximum thirty-year term.  The type of charging instrument used, a criminal information, suggests that Adams and prosecutors have reached a plea agreement.  According to the New York Times, Adams' lawyer has confirmed that his client is cooperating with prosecutors.  

Adams founded Madison Timber Properties, LLC ("Madison"), which held itself out as a timber harvesting company.  The company began soliciting potential investors in 2004, offering annual returns ranging from 12% to 15% through the harvest of timber from plots of lands owned by third parties.  In many cases, investors were told that they had sole rights to timber harvested from specific plots of lands.  Investments were typically memorialized by a one-year promissory note that could be rolled over, a timber deed and cutting agreement, a security agreement, a tract summary with the purported timber value, and a title search certificate.  Adams and Madison raised at least $85 million from 150 investors throughout the southeastern United States that would purportedly be used to purchase additional timber tracts.  

Many of these promises, however, were false according to authorities.  For example, Adams is accused of never having obtained the requisite harvesting rights to the land as he had claimed.  Many of the investment documents were allegedly forged by Adams, including the timber deed and cutting agreements as well as the tract summary showing the purported timber value.  In many cases, Adams is accused of pledging the same plots of land (to which he had no rights) to multiple parties.  Adams also allegedly misappropriated investor funds for unauthorized purposes, including for his own personal benefit and the development of unrelated construction projects in Oxford and Starkville, Mississippi.  New investor funds were also used to pay returns to existing investors - a classic hallmark of a Ponzi scheme.  

In parallel civil proceedings, the Securities and Exchange Commission filed an enforcement action accusing Adams and Madison of violations of federal securities laws.  Adams and Madison agreed to the entry of an asset freeze and permanent injunction.  

A copy of the SEC's Complaint is here.

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