Thursday, December 5, 2019

McHenry Acquitted in Madison Timber Fraud

 Collection of all posts about Lamar Adams/Madison Timber case. 

UPDATE (4:30 PM): ACQUITTED! Jury acquitted McHenry on all three counts after two hours of deliberation.

Original Post: William McHenry, Jr. is on trial this week in U.S. District Court in the Madison Timber fraud case.  A grand jury indicted him earlier this year for securities and wire fraud.  The case is assigned to Judge Carlton Reeves.

Lamar Adams pleaded guilty in U.S. District Court to one count of wire fraud last year.  The Justice Department said in that case Adams defrauded 320 investors of more than $164 million in a ponzi scheme that sold phony timber investments.  The Court sentenced Adams to serve 235 months in prison.   The SEC accused Lamar Adams of operating a Ponzi scheme that defrauded 150 investors out of more than $85 million since 2005, in a lawsuit filed in U.S. District Court on April 20.   The SEC said Adams sold bogus timber rights, deeds, and promissory notes guaranteeing 13% interest rates.  The Justice Department stated in a March press release:

William B. McHenry, 71, of Canton, has been indicted by a federal grand jury for his role in a multi-million dollar Ponzi scheme that adversely affected hundreds of  victims across multiple states over a number of years, announced U.S. Attorney Mike Hurst and  Special Agent in Charge Christopher Freeze with the Federal Bureau of Investigation in Mississippi.

McHenry appeared before U.S. Magistrate Judge Linda R. Anderson today for his initial appearance  and arraignment on the Indictment.  The case is currently scheduled for trial on April 15, 2019,  before U.S. District Judge Carlton W. Reeves in Jackson.

“Those who prey upon and steal from others will soon find themselves on the wrong side of the law.   We will continue to investigate this massive scheme wherever the evidence may take us and will  vigorously pursue and bring to justice any other wrongdoers who were involved,” said U.S. Attorney  Hurst.

McHenry is charged with one count of securities fraud and two counts of wire fraud involving a  scheme to defraud investors, all in connection with a Ponzi scheme using Madison Timber Properties,  LLC, a company wholly owned by Arthur Lamar Adams.  Adams has previously been convicted and  sentenced for his role in the Ponzi scheme.

As charged in the Indictment, beginning as early as 2008 and continuing through April 2018, McHenry  assisted in a scheme to defraud investors by soliciting millions of dollars of funds for Adams  under false pretenses, failing to use the investors’ funds as promised, and converting investors’  funds to McHenry’s and Adams’s own benefit without the knowledge of the investors. Instead of  investing McHenry’s clients’ money, Adams used the invested funds for  his own personal benefit and for purposes other than those represented to investors, which also  included making payments due and owing to other investors, thus perpetuating the Ponzi scheme.
During the fraudulent scheme, McHenry recruited investors, and fraudulently obtained well in excess  of $18,000,000 from more than 25 investors located in multiple states.
As alleged in the Indictment, as part of the fraudulent scheme, McHenry 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 McHenry, Adams nor Madison Timber Properties had such timber rights or contracts  with lumber mills, except in only a few instances.

McHenry and 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.

McHenry and Adams created false documents causing investors to believe that their investments were  secured by sufficient collateral from which they could recover all or part of their investment in  the event that Madison Timber Properties defaulted on the loans. Specifically, Adams created false  timber deeds purporting to be contracts conveying timber rights from landowners to Madison Timber  Properties. Adams forged the signatures of landowners and also created false timber deeds  purporting to convey timber rights from Madison Timber Properties to the investors.

To further lull investors, Adams had many of the documents notarized to make the investments appear  legitimate. McHenry and Adams also required the investors to agree not to record their timber deeds  unless Madison Timber Properties defaulted on the loan agreement by failing to make a payment.

McHenry misled his investors to think that McHenry was a principal officer of Madison Timber  Properties and was personally invested with his own funds in the enterprise.  Instead, McHenry in  fact only received a ten percent commission on all the investments he recruited, which McHenry failed to disclose.

Oddly enough, William McHenry sued Lamar Adams for $10 million on May 16, 2018 in Madison County Circuit Court.  McHenry claimed in the lawsuit:

2. Prior to the last days in April 2018, McHenry had an amicable business and personal relationship with Adams. On several occasions, McHenry and Adams, along with other investors, purchased real estate for investment. McHenry was aware of Adams’ successful business dealings with a number of sophisticated, successful businessmen and financial and investment advisors. From these business and personal dealings, Adams gained McHenry’s trust. McHenry’s experience with and observations of Adams dealings with others gave McHenry the belief that Adams was a sophisticated, highly competent businessman who was reliable, honest and had integrity. Unbeknownst to McHenry, Adams exploited McHenry’s trust and confidence in his business acumen.

3. Adams’ scheme to defraud included representing to McHenry, H-22, Eddie Abdeen and others “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.” As part of the scheme, Adams created “false documents to lull” McHenry, H-22, Eddie Abdeen and numerous others to believe participation in the timber financing was safe and secure. In that respect, Adams “created false timber deeds” and “forged the signatures of landowners” in order to make the financing arrangement “appear legitimate.” To aid his deception, Adams had “documents  notarized  to  make  the  investments  appear  legitimate”  to  McHenry,  H-22,  Eddie Abdeen and others.....

6. Adams betrayed and duped McHenry into believing the timber financing loans were secure while providing an attractive rate of return. In short, McHenry had no idea or inkling Adams was a crook.

7. As a direct result of Adams’ fraudulent ponzi scheme, McHenry was named a defendant in this lawsuit and has suffered injury to his good reputation and name in the community  and  with  the  people  who  he  introduced  to  Adams  and  MTP  through  adverse publicity and his being unfairly associated with Adams’ fraudulent scheme.  Adams and MTP’s fraudulent ponzi scheme has exposed McHenry to this legal action and other potential claims as well as costs of defending himself and his good reputation....
Stay tuned.


Anonymous said...

71 years old

Guess he figures this is reason to plead out because any time is a death sentence

He owned a slew of rolexes and guns and utvs.....he’s been burying rolexes for months.

His goal is to delay trial, lose, appeal and stay out in bond until his last best days are gone.

Not a bad plan

Anonymous said...

Hate to say it, but this guy may we’ll have been unaware of the scheme. Makes my stomach turn just thinking about it. Poor guy could die in prison.

Anonymous said...

So, I just pulled the docket on this case, and I noticed Docket Entry 38, which is Judge Reeves's order denying a motion to quash filed by Brent Alexander. Apparently, Mr. Alexander and Jon Seawright went to some lengths to avoid service of a trial subpoena. Months before, Alexander hired Reeves's former law partner Brad Pigott. Pigott - on the Wednesday before Thanksgiving - filed a motion to quash the trial subpoena, partly raising that Judge Reeves should be recused. Judge Reeves denied the motion, noting the oddity of it. Very interesting tactics by Brent. And Baker Donelson still employs him, which blows my mind.

Anonymous said...

11:26 -

Interesting indeed.

One assumes that if the trial subpoenas stay un-quashed, Alexander and Seawright will invoke their Fifth Amendment privilege, correct?

Anonymous said...

Is this the first Trial for those involved. McHenry was also an investor. Lamar was that much of a snake.

Anonymous said...

Investors, banks, fdic didn’t know (although I think the feds were the best suited to catch the kiting early but there is never any accountability there) Why is McHenry any different? Proximity? You may live next door to an axe murderer. Assumptions are dangerous things

Anonymous said...

12:34 - the feds; the banks; the investors ---- none of those were the ones selling others on the value of this investment. McHenry was.

He wasn't "living next door", he was in his own bedroom.

The 'kiting' was not the big part of this scheme, but it probably was what finally brought it to light.

Your analogy falls flat on its face - try again with some better excuse for McHenry's actions

Anonymous said...

He might just have to sell the watches. Also, the investor’s attorneys, who advised them to go ahead, should be held accountable for no due diligence and verifying the legal descriptions.

Anonymous said...

The Clarion-Ledger is reporting that McHenry was found not guilty after 2 hours of jury deliberation. I don't want to take their word for it. What say you, Kingfish?

Anonymous said...

Knew this Mchenry when he lived in Greenville, which is where grew up. As an adult he would bounce checks all over Greenville and the have to sneak out of town,only to come back after a couple of years to do the same thing A real scumbag

Anonymous said...

I might be interested in a good watch. Word on the street is NOT GUILTY verdict for McHenry. What law firm is he with? Mr. Adams was brought to this trial and testified to the fact that no one but himself knew what he was doing in his business and he was the sole owner of Madison Timber. Mr. Adam's and his family hobnobbed with the whose who of Jackson. How did he pull this off for so long? Doctors, Lawyers and anyone that was anybody was who he hung out with. Unbelievable!

Anonymous said...

Not guilty per the jury.

Anonymous said...

Right. He knew nothing about it. He was simply sitting on the town bench beside Floyd and Gomer and a man cam into town on the bus and trapped him.

Anonymous said...

Obviously McHenry will plead guilty to one piss-ant count. For the dunces in the bleachers who believe he was unaware and duped, Good God, you morons.

Anonymous said...

I understand a not guilty verdict has been returned. Guy was innocent the whole time....They made life hell for over a year. Glad anonymous 1:03 knows all about whos in whos bedroom.....

Anonymous said...

Word on the street? Since when was that a credible source? Adam Schiff get off of here.

Anonymous said...

I’ll say this, Lamar Adams is a soldier. He’s taking the fall for everyone. No way this guy is 100% guilty.

Anonymous said...

4:13 What piss-ant count is that?

Anonymous said...

4:40 Just a FYI "Word on the street" proved to be very credible source today.

Anonymous said...

"Not guilty" is not the same as "innocent." Don't confuse the two.

A jury NEVER finds a defendant "innocent," only "guilty" or "not guilty.

Anonymous said...

So, they could bring additional charges, but he can’t be put in jeopardy twice for the same charge. Stigma of perception of guilt will be his sentence.

Anonymous said...

One of the most seasoned AUSA’s in that office was taken off the case and replaced with a few folks that have barely tried any cases, much less anything as complex as this scheme. Please. How did a case this complex get tried so quickly? That office has been losing trials left and right.

Anonymous said...

That is incredible news in this cycle

The receiver must be feeling a little queasy

Anonymous said...

He's writing a book.
Bubba caught a break!

Anonymous said...

I am told Adams testified that McHenry did not know about the Ponzi scheme. If Adams’ office mate did not know, hard to believe anyone else knew.

Anonymous said...

burn him! he's a witch ! how do you know? he turned me into a newt.

the lynch mob takes another hit

Anonymous said...

2:09, the worst part of that is that the public servants already knew that but went forward anyways. Thats troubling.

Anonymous said...

That McHenry 'was also an investor' is a smoke and mirrors gimmick. When you're pulling in millions, it's sensible to 'invest' a hundred thou in your own fraudulent enterprise, or one in which you're partnered-up.

Even chop-shop owners keep up with a little maintenance on their buildings.

So, a jury of this wizard's peers actually believed him to just be stupid. Got it. And what does Mills claw-back from McHenry?

Anonymous said...

It is pretty obvious that McHenry and Adams had a deal worked out. There is no way that McHenry didn’t know it was a scam. Like another poster said, Not Guilty is not the same as Innocent.

Anonymous said...

Not very obvious to the jury.

Anonymous said...

The jury had to come back with a not guilty verdict because Adams testified that McHenry did not know it was a scam. It probably was plainly obvious to the jury that Adams is lying, just like it is obvious to the rest of us! At some point these guys ALL knew it was a scam, and they kept going with it, but the truth is no longer relevant now that Adams has exonerated them.

Anonymous said...

Anonymous 7:02 you saying that Mr. Adams committed perjury while under oath in this trial? For what reason would Adams perjure himself? Why would Adams exonerate anyone? Your post on here is probably the award winning post, its so stupid. Oh, were you in that courtroom? Asking for a friend...

Anonymous said...

Dang fella. You sound butt hurt. You must’ve been a victim of Lay Mar. maybe you should have hired somebody to read the legal description in the deed for you and do a little research.

Anonymous said...

It’s appears the State can now charge him with something. The Feds lost. Maybe a good attorney could tell us what should happen next, if a sensible attorney were prosecuting.

A Deal You Can't Refuse.. said...

Adams lied for one simple reason. Knowing that most of his holdings and resources are court-attached now, he has been assured that those he helps 'exonerate' will take good care of his family financially.

They're a 'band of brothers' in that respect.

Anonymous said...

Nothing else will happen.

Anonymous said...

I agree with 9:54 am! McHenry may still face civil suit and lose assets!

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