Friday, May 11, 2018

Victim Sues Timber Trolls

The first lawsuit against Lamar Adams and his Timber Trolls fell this week in Madison County Circuit Court.  Highway 22, LLC sued Lamar Adams, William McHenry, Madison Timber Properties, and a several John Does for fraud suffered in a Ponzi scheme created by Lamar Adams.  Adams pleaded guilty in federal court Tuesday to one count of wire fraud and admitted he operated a ponzi scheme that defrauded 250 investors out of more than $100 million.

Highway 22 invested $169,500 in an investment plan sold by Madison Timber Properties.  Adams was the sole owner of MTP.  The complaint claims that McHenry sold the bogus investment to Highway 22.  McHenry had known the agent of the trust, Sherri Hughes, and her family for years.  The lawsuit claims that he exploited the friendship to gain her trust and sell her the investments. 

H-22 at first invested $150,000 in the "investment plan."  The complaint spells out how the scheme worked as seen through the eyes of a victim (instead of a prosecutor):

McHenry and/or one or more of the other MTP Parties and/or John Does 1-5. The scheme (the MTP
Investment Plan) was promoted as, among other things, a vehicle through which funds would be
invested in timber in or around the State of Mississippi for the purpose of engaging in a variety
of activities related to the purchase and subsequent sale of timber to paper mills and/or other
purchasers of timber. The investors in the MTP Investment Plan would receive a promissory note from MTP and/or other entities owned and/or controlled by the MTP Parties and/or John Does 1-5,which at all pertinent times was a "security" within the meaning of the Mississippi Securities Laws*, twelve post dated checks equal to an investor's principal investment amount plus the promised return and/or profit on the principal and an original timber deed from MTP, and/or other entities owned and/or controlled by the MTP Parties and/or John Does 1-5, that the MTP Parties represented to the investors constituted collateral and/or security for the
promissory note. The MTP Parties also provided investors with a copy of timber deeds that purportedly demonstrated that MTP, and/or other entities owned and/or controlled by the MTP Parties and/or John Does 1-5, owned the subject timber that was "securing" a given investor's investment...

 Ms. Hughes later increased the investment.  However, the day came when Armageddon struck:

14.  On May 1, 2018, Ms. Hughes presented the MTP check no. 10319 dated May 1, 2018, in the amount of $14,125.00, made payable to H-22 and drawn on MTP's account at River Hills  Bank, for  payment.  River  Hills Bank  declined  to cash  the subject  check  and directed  Ms. Hughes to MTP. 

Ms. Hughes made a beeline to the Monroe County courthouse and attempted to record the deed but found out to her horror that the deed was no good: 

Thereafter, H-22 signed the Timber Deed and Cutting Agreement ("Timber Deed") provided  to  H-22 to "secure" its $169,500.00  investment,  attached  hereto  as part  of Composite Exhibit "A", and attempted to record the deed in the land records of Monroe County, Mississippi. H-22's agent  that attempted  to record  the subject  Timber  Deed,  with the aid and assistance  of a member of the office of the Chancery Clerk of Monroe County, Mississippi discovered, among other things, that the land on which the subject timber was located did not exist and the grantor listed in the Timber Deed and Cutting Agreement under which MTP allegedly held title to the subject timber, attached as part of Composite Exhibit '·A", did not own any land in Monroe County, Mississippi. Simply  put,  the  subject  Timber  Deed  was  bogus,  fraudulent  and  a  sham  used  as  a  vehicle  by McHenry and the other Defendants (who knew and/or should have known the Timber Deed was not legitimate) to perpetrate, among other things, a fraud on H-22 and/or Ms. Hughes and wrongfully lead H-22 and/or Ms. Hughes to believe their investment was secured and upon which H-22 and/or Ms. Hughes reasonably relied.
 The lawsuit includes a copy of a promissory note, a timber deed, and a cutting agreement.  The promissory note states that the amount invested is $169,500.  The note states that payments were to begin on March 1, 2018 and end a year later.  The note was secured by a timber deed.  Lalmar Adams signed the note.  Diane Lofton was the notory public.  The deed (p.17) was signed by Adams and Eddie Abdeen (for the trust).  The second deed was signed by H.C. Alton as grantor.

The case is assigned to Judge John Emfinger.  Attorney Eddie Abdeen represents the plaintiff.

*So is anyone in state government going to prosecute these "promoters" and "recruiters" for selling unregistered securities? Asking for a friend.

Earlier Posts
Lamar Adams pleads guilty.  
 Bank lent millions to Lamar Adams for development.
 SEC: Ponzi scheme began in 2004. 
Flashback Friday
Clearcutting the timber. 
Wicker wobbed in Ponzi scheme.
Pinnacle Trust issues statement on Ponzi scheme
Lamar Adams waives indictment.
Feds: Lamar Adams took over $100 million in Ponzi scheme.


Anonymous said...

I believe I can guess the identity of some of those John Does...

Anonymous said...

Will all these "astute" investors eventually get bailed out and get their losses covered by some government entity?

If I recall correctly, that is what happened in the Madoff scandal, at least to a certain extent. Maybe also the Stanford scandal, not too sure.

PotentPotables said...

When is Gilbert's office going to say anything about this? I can't recall seeing any official comment out of the Securities Division yet. If this scheme was easy enough to sell to a "senior US Senator", how many state gub'ment officials have a slice of it in their portfolios as well?? Would love to know.

Anonymous said...

Any internet law commentary on whether the palintiff's family members may be subject to clawback provisions due to "successfully" + "investing" (see factual allegation 9) in the alleged scheme?

Anonymous said...

Did real people sign the timber deeds?

If not, the notaries could be liable.

Anonymous said...

Is that even a valid property description in Monroe County?

Section; 12: Township; 10 North: Range 2 East:
All that part in Section 12 that lies South of Mogomer Road.
Less and except the Southeast Quarter (1/4) of the
Southwest Quarter (1/4) of the Southwest Quarter (1/4) and
Shalfer Road R.O.W.
Containing 418 acres more or less.

Anonymous said...

The notary's, at best, are only liable to the $5000 bond they have to purchase annually for $100. They may have some type of E&O built in depending on who they got their bonds with but at most it's probably only $50,000.

Anonymous said...

No, that’s not a valid legal. That township and range do not exist in Monroe County. I teresting that the plantiff hired the same attorney whise signature is on the timber deed. Why rehire an incompetant attorney to recover your loses?

Anonymous said...

Oh Del-bertttttttttttttttttttt....... Are you going to back off of this one, too?

Anonymous said...

Legal question - why are they John Does at this point? Wouldn’t plaintiff know who the recruiters were?

Anonymous said...


When are you going to look at Buster Bailey and the First Investment scheme?????

Why do all the State and Federal officials turn a blind eye to this obvious Ponzi Scheme.

Thank you,
An Investor

Anonymous said...

The notary would not be liable if the document itself was fraudulent. The notary only ascertains the identity of the person signing it and determines if that person is of sound mind and not under duress. So in this case, the notary would only have to be present when Mr. Adams or others were signing. I've seen no claim that she was not. A notary is not empowered nor allowed to investigate whether or not the document itself was valid.

Anonymous said...

Not the Stanford Losers....
We are still BIG LOOSERS !!!

Anonymous said...

11:21, obviously your recollection ability is not very good, because no, there is no 'government entity' that is going to 'bail out' the investors. And no, there was no 'government entity' that bailed out the investors in the Madoff scam.

The Federal Court system, probably including the Bankruptcy Courts, will be involved in trying to disgorge any money made from the scheme and distributing it among the investors, somewhat equally, based on their investments and any returns they may have received. If you consider that the government 'bailing out' the investors, your consideration of the government's role is somewhat jaded. As a proper function of the judicial system, the courts and US Attorney's office will try to find any assets available that were acquired by this scheme, or that are remaining in order to return a portion of investor's losses. This could even involve some of the investor's principal investments - not just the interest dollars that they received - that can be clawed back by the courts. But no, there is not a 'government entity' that is going to take care of those that foolishly invested their dollars in this scheme and with this crooked individual.

Anonymous said...

Delbert is too busy helping MDWFP buy up 17,000 acres of Anderson-Tully land to enlarge the Mahanna WMA in Warren and Issaquena counties to worry with a trivial 100 million ponzi scheme.

I've known Sheri Hughes and her husband since we are kids and worked for Sheri's dad when in i was in high school. They're a fine family. I hate they got wrapped up in this timber fraud.

Anonymous said...

In regards to the notary's liability, I would note that either "HC Alton", the supposed property owner and Grantor, either signed a fraudulent document knowing there was no such timber/land he was purporting to grant, or he didn't sign it and the notary notarized his signature without confirming it was actually his.

In regards to Mr Abdeen, if I was him, I would be a little nervous. He signed the Timber Cutting Agreement on behalf of his client. As the attorney/trustee, he should have at least done a tile search to confirm that this land even existed before signing it on behalf of his client.

Anonymous said...

Attn 2:55 So now it is Delbert's fault that greediness caused these people to lose their money. You are an idiot.

Anonymous said...

ATTN 3:32 - I was simply commenting on prior posts at 11:27 and 12:44 about when Delbert's office would comment or to do something. I said nothing about it being his fault.

Who's the idiot now?

Anonymous said...

Maybe FEMA will bail out the investors. After all, this is a real disaster.

Anonymous said...

heck, is there even a "Mogomer Road or Shalfer Road in Monroe County?

Anonymous said...

11:21 is right. In the Madoff mess, the victims sued everyone with six degrees. Walter Noel of Fairfield Greenwich and his family are a classic example. The litigation included all the children and their spouses that benefited directly or indirectly. Fairfield Greenwich put more than 7b into Madoff's operation. That litigation was settled for a paltry 80m. Walter's partner, Charles Murphy committed suicide last year in spectacular fashion. Walter & Co. are living most of their year at the family compound in Mustique, and could not be reached for comment. That should give everyone an idea of how things will likely shake out.

The SEC was also included in litigation because they in effect colluded with Madoff (he had family members working at the agency with some serious conflict of interest). The SEC and its agents should have been held accountable for dereliction of duty at the very least.

The federal courts "naturally" ruled that as a government agency the SEC and its employees could not be held accountable for failure to do their job. Something a privately held business would have been gutted for. That brings in all the questions about commodities, options so forth and so on.

It is my personal opinion that if you are in any oversight position for a government agency, you should have to maintain a performance bond (paid pre tax out of your salary). Further depending on what you do and how high you are on the flow chart, is how much it needs to cover. Just like lawyers and doctors are required to have malpractice. That way the tax payer has recourse, instead of getting served up insult to injury, when some bureaucrat is just collecting a pay check.

I find it hard to believe all of this was going on since 04, at the "Mecca of Mississippi Society" no less and it took this long before anyone started asking questions.

Anonymous said...

Years ago, Lamar and one of his cohorts tried to get a new attorney to produce a title opinion for cutting timber, insisting that the land was not subject to any liens. I hope you are all sitting down for this: a title search revealed that the land was subject to a $500,000.00 deed of trust by a well-known bank. It's safe to say that Lamar did not use that title opinion.

Anonymous said...

The comments on this subject are almost as entertaining as the ones back during the Claiborne/Austin Frazier prosecution . . .

Anonymous said...

Yes, they are. I could talk these morons into my timber scam.

Anonymous said...

Just a question. Madoff took in huge sums of money and encouraged his investors to leave it in their accounts and not withdraw so it could “grow”. He kept the funds in a personal bank account in the billions. Then he fraudulently created financial statements showing growth for his investors, while spending the principal on personal extravagances, vacation homes, cars, etc. Only when the markets crashed and masses of people started requesting principal withdrawals was Madoff exposed as a fraud. With this local fraud, it appears investors principal was returned plus “interest” in a short 12-13 month period of time. Would seem that unless there were investors who had large sums of principal “invested”, that was subsequently spent by the fraudster(s), while they were collecting interest checks only, that total losses would not be as sensational as 100 million sounds and the last ones holding the bag like above would be affected the most

Anonymous said...

6:03 - how do you figure, even with your commentary, that 11:21 was correct when they stated that some government agency would bail out the investors? You point out that investors with $7B invested walked away with less than $100k - and that no government agency came to their rescue. Yes, everyone and their brother will be sued in court - and lawyers will likely have a retirement account representing either the sue-ers or the sue-ees. But the government isn't about to pay off the folks who were expecting to see fantastic returns from loaning money to a timber cutter.

Anonymous said...

Wow. These are some very poor quality writings/opinions.

Anonymous said...

Have any of the 4 recruiters been charged?

Anonymous said...

Then why are you here 11:35?

Anonymous said...

I've checked and there IS no Mogomer Road in Monroe County; however, it's well known that there are at least 30,016 Gomers living therein.

Anonymous said...

Since this site promotes speculation let’s make a prediction....
1. McHenry will turn out to be the mastermind behind the scam Hence the quick plea deal with Lamar. McHenry will get the multi count indictment and serve more than 20. And let’s face it, Lamar isn’t smart enough to have dreamed this up. Too bad neither will be able to spend the cash stashed in Luxembourg but maybe will tell the fam the account numbers.
2. The promoters will get off with 1 to 3 years but will have to pay back all their ill gotten gain. Divorces in their future.
3. The law firms won’t be criminally prosecuted but will fight for years the civil suits filed enjoining them in the scam. Their E&O is the only real money out there.
4. large estate sales will be held at multiple locations in NE Jackson

Now that we have this one figured out, lets go to the scene of the next crime.......

Anonymous said...

When a "government agency bails out a victim," it is not FREE MONEY. It is OUR MONEY!

Anonymous said...

Who is McHenry? I know we see his name tossed around, but who IS he? Info please.

Anonymous said...

I have been wondering about Bailey and First Investment ...

Kingfish said...

I heard things

Anonymous said...

CAVEAT: before any idiot gets ready to buy something like this, you might try checking on your own to see what you can find out about the property. here are 2 good sites i use (the 1st is the best):

(1) (use your head when searching with this and you'll learn that there is no such land, street or person in Monroe co.)


or, a call to the Tax Assessor's office should tell uou all you need to know...

Anonymous said...

1:49 - The only person dumber than a Tax Assessor is a staff member working in that office. Tax Assessors are the dumbest-ass employees (public servants) of anybody working in any of the 82 counties. Those who are not crooked are just plain-out stupid, lethargic and ill-equipped to serve.

Anonymous said...

Aww.....did somebody lose their tax appeal?? Let mommy get you a passy...

Anonymous said...

8:04 & 8:06, my comment was meant to be denote 1:58 was correct in his reply to 11:21.

I was in a hurry to get out the door to go fishing, sorry about the typo and poor editing on my part.

Anonymous said...

How do you explain this one?

" comment was meant to be denote 1:58 was..."

Catching anything?

Anonymous said...

Yea a nice size red drum, a couple of excellent size amberjack and a big old tarpin. Life is good!

Hope that explains the typo about the typo. lol

Anonymous said...

6:17p...i've spent a good part of the last 43 years in courthouses around this state checking titles and insuring 'em in the practice of RE title law in MS, and my experience with assessors has been a little different than yours apparently (not counting holmes and jefferson counties!).

in this case, the idiot with the unrecorded timber deed could have called the monroe co. tax assessor and asked who was assessed with that property, or asked what parcels the grantor in that timber deed was assessed with and, in the case of this one in monroe county, said idiot would have gotten a quick "WTF-you-tawkin-bout?!? no such S-T-R in monroe county and no such land owner by that name in monroe county" which point said idiot should be immediately overcome by an epiphany and thereafter be enabled to make an important investment decision....or, he could just simply have another drink in the 19th hole with your buddy lamar and carry on as you were...

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