Tuesday, September 8, 2020

Lawyers & Their Money, Part II

A fight between Adara Networks and attorney Shane Langston stays alive in Hinds County Chancery Court thanks to the Mississippi Supreme Court.  Mr. Langston and several prominent Mississippi lawyers invested millions of dollars in the California technology company.  Mr. Langston tried without success for several years to check the books. In frustration, he sued Adara and its CEO in 2018 for an accounting.  Adara argued Mississippi courts had no jurisdiction to hear the case but the Chancellor held otherwise.  Adara appealed but the Mississippi Supreme Court ruled the Chancellor did indeed have jurisdiction over Adara last week.
A group of Mississippi plaintiff's attorneys invested some of their tobacco windfalls in Adara.  Mr. Langston claimed in the original complaint:

For approximately twenty years or more, Mississippi investors have provided tens of millions (perhaps over $100 million) of capital to Adara. Further, Adara has received tens of millions of dollars in revenues. For years and years and years, in violation of Florida corporate law, Adara failed to account for these investments and revenues. In violation of Florida corporate law, virtually no shareholder meetings were held, and no financials were provided to the shareholders. There was no accountability.

From time to time over the years, Plaintiff and other investors asked Adara for some accounting. Each time, such inquiries were discouraged on grounds that a merger or buyout was imminent and such disclosures would adversely impact the negotiations. Often, following such inquiries, a "press release" would be published consistent with the "buyout" claims and consistent with Adara's claims that it had IT patents and technology that was generating and/or would be generating millions and millions in revenues.

Frustrated to no end, Plaintiff and other investors (including Lance Stevens, Esq., Roderick Ward, Esq., Christopher Jones, CPA, Joe Roberts, Esq., Vic Welch, Esq., and Ed Welch) on January 24, 2018, demanded the financial disclosure required of Adara under Florida corporate law. (See 1.24.18 Demand attached hereto as Exhibit A.)



The complaint states Ken Primos asked Mr. Langston to invest in Adara in 2002.  The lawyer bought one million shares of stock for $500,000.   Adara "rarely, if ever" held a stockholders meeting nor did it provide financials.  Mr. Langston stated whenever he or anyone else asked for the required financial disclosures, the CEO would have Mr. Primos or Crymes Pittman, Sr., tell Mr. Langston that the company was on the verge of completing a business deal that would bring "tens of millions of dollars in revenues" and that disclosure of the financial statements (to the shareholders) would "jeopardize" the deal.  He was eventually warned that some investors could not be trusted  with company financial information.   Mr. Langston questioned why the company lost $8 million in 2009 while earning "less than $500,000 in revenues" in an email sent to Mr. Johnson in 2011.  He repeatedly tried to see the company's financial statements but was rebuffed each time.  The opinion states:

¶9. Networks Inc. countered the shareholders request by producing only selected documents on April 9, 2018 in Jackson, Mississippi. However, before allowing the investors to review any documents, Networks Inc. required execution of a confidentiality agreement. That agreement contained a clause requiring that any dispute arising under that agreement would be governed and interpreted by the laws of Mississippi and, further, that any disputes that arose were subject to the jurisdiction of Mississippi courts. Langston alleged that the selective production failed to encompass the documents requested and required by either Florida or Mississippi law.

¶10. Among the documents produced were financial statements showing that in 2012 more than 90percent of Networks Inc.’s cash assets were on deposit with Trustmark National Bank in Jackson, Mississippi. Furthermore that percentage increased in 2013, 2014, and 2015, before subsequent withdrawals by Networks Inc. substantially decreased the balance in 2016 and 2017. After review, the shareholders again requested full compliance with the law, but the requests were ignored. Finally, Langston filed a complaint for accounting in the Chancery Court of the First Judicial District of Hinds County, Mississippi, an appropriate venue. 
The complaint asked the court to order Adara to provide all corporate minutes, all financial statements, a list of all past and present shareholders, all contracts, all tax returns, all audits, and other information (p.8).    Mr. Langston also asked the court to permit a limited amount of discovery.

Adara claimed a Mississippi court had no jurisdiction over the company.  The Court said sorry, Charley.  The clause in the confidentiality agreement stated any legal disputes must be adjudicated in Mississippi.  A substantial number of investors are Mississippi residents.  The bank account is in Mississippi.   Adara paid promoters in Mississippi to recruit investors for 16 years.

The company tried to wiggle its way out of this Mississippi mess by arguing Langston did not allege it committed a tort.  The Court said the plaintiffs alleged Adara violated Mississippi laws regarding the duty of care corporate officers owed shareholders.


The Court remanded the case back to Hinds County Chancery Court and ordered the Chancellor to proceed.  Mr. Langston represented himself with assistance from attorneys Kevin White and Chris Broome.  Our old friend Sheldon Alston, Sr. represented Adara.   Chancellor Patricia Wise sealed the case. 






40 comments:

Anonymous said...

If you're a lawyer that can barely turn on a computer, then maybe you shouldn't be investing in IT companies.

Anonymous said...

Reminder of the good old days when lawyers could make millions without bring bright or working hard.

BREAKING NEWS said...

For the first time in recorded history, Lawyers feel like they have been financially screwed and they aren't happy. Film at 11.

Anonymous said...

Should have invested that money in APPL stock...

Anonymous said...

2:47 you misspelled luddite

Anonymous said...

Doctors and lawyers have been falling for crap like this since the dawn of time. Mainly because they are so smart.

Anonymous said...

I would love to know what the pitch was. What was this "networking" company doing that was so different that the established ones?

Anonymous said...

Would’ve made something had he stayed local and invested in forged timber deeds.

Anonymous said...

3:21 PM
Well a lot of them think they know more than they do. Not knocking doctors, but my brief 2 year stint in a hospital there were some that thought they were God's gift to humanity and they let you know it.

Anonymous said...

If a lawyer gets sick and goes to a doctor, does he tell the doctor he's a lawyer????

Anonymous said...

" Send Lawyers, Guns & Money".

Warren Zevon, 1978.

Anonymous said...

I’m surprised we didn’t have a few politicians get scammed by this bunch too.

Anonymous said...

to all the wiseasses who hate members of the bar.........................................anyone can get flim-flamed. just look at you precious republican senator wicker who got taken by the lamar adams timber scam. its funny that i dont see any of you millionaire haters riding to his rescue.

Anonymous said...

5:58

Shakespeare was right.....

Anonymous said...

to 4:45......''brief 2 year stint''........tell us , was it a mental hospital?

Anonymous said...

I sure hope 5:58 isn’t a lawyer. That’s one of the weakest arguments I’ve ever heard. Lol

Anonymous said...

Sounds like another Lamar Adams golden opportunity investment return!

Anonymous said...

A fool and his money....

Anonymous said...

Given the low profile that this operation has been able to keep for the last 15 to 20 years, I hope that Kingfish will be able to bring this up to date and out in the open. This may be just a failed enterprise or a scam. More daylight will give us the "real deal".

Anonymous said...

This money is in a country far far away.

And the headline is so shitty.

Leave it to a jealous half blogger shilling for the clicks to impregnate hate in a headline when there are dozens of likeable doctors and biz guys who lost millions.

I guess hate and jealously male clicks.....hell here I am right?

In reply to 5:44 p.m. I said...

The more fitting Warren Zevon tune to these guys, Lamar Adams and the rest of their ilk would be "Seminole Bingo" from 1995.

Anonymous said...

To 5:58 (Esq.):

You know Wicker is a lawyer, right??

Also, please bone up on the esoteric underground skill known as “basic grammar” before posting again.

Anonymous said...

One thing I would like to say. It takes an attorney to understand legal terms and it takes doctors to understand medical terms. But when a poster rambles on and on and on with a sort of language that no one can possibly understand such as 8:27, it makes me wonder if they have been drinking, drugging or just can’t compose a sentence that can be read and understood. I see that a lot in comments made here. Just stupid rambling.

Anonymous said...

If he had invested in Facebook at $23, he would have over 6million today...

Anonymous said...

5:27 am

Maybe the lack comprehension Lies with you?

Maybe you don’t know enough about Adara or its investors?

Maybe you should read some more and ask questions.

Nah....that’s what this site is for....superficial pass at facts and clicks. Clicks = $.

Anonymous said...


If KF starts a betting pool, my bet will be that lots and lots of money was paid out in some form of compensation to the people doing everything in their power to keep the financials from being provided to investors.

i.e. the company hasn’t been kept in business because it is actually going to be profitable some day. It is being kept in business for the purposes of paying out salaries and commissions to those keeping the financials private.


P. S. Didn’t we hear about Mississippi investors losing all of their money in a company that ended up relocating to China, that, for many years, was always about to hit it big, but never did? KF?

Anonymous said...

6:31 PM
No it wasn't Whitfield. It was South Central Medical Center.

Anonymous said...

So, bottom line is he made poor choice of investment and lost. Now he sues for his poor choice??

Anonymous said...

Is there water in the Adara well?

Anonymous said...

6:31 PM
No, but it's where most Jacksonians should be sent. I was actually employed at a real hospital.

Anonymous said...

7:02. The problem with your information is that the person who sold him this scam would not have made any money off of the Facebook purchase. Other than maybe a small commission.

Anonymous said...

“Practicing” is only for doctors and lawyers. Meanwhile, the rest of us are expected to be perfect and disclose everything under the sun.

Anonymous said...

I don't understand on what grounds they could have possibly claimed Mississippi Courts did not have jurisdiction

Anonymous said...

"I don't understand on what grounds they could have possibly claimed Mississippi Courts did not have jurisdiction"

This is "American rules" litigation - you can sue anyone for anything and you can claim anything you wish...and run the risk of sanctions if you go too far. It doesn't happen often, but if you get too far afield it can come back to bite you.

Anonymous said...

Good luck in getting a prompt ruling in Hinds Chancery. We have several cases pending with different Chancellors that go back years.

Anonymous said...

When you buy stocks, you hope they will go up in value, but you realize there is risk and may decrease in value. Unless you are a lawyer. If you are a lawyer, you buy stock hoping it will increase in value, but if it doesn’t increase in value, you sue someone. Is there a problem with this system?

Anonymous said...

Looks like these buffoon lawyers got the full Dickie and Lamar bendover treatment. Greed and lack of investment knowledge will get you every time.

Anonymous said...

8:44 You aren't too sharp, brother. The corporation laws in every state require that a company have shareholder meetings and are transparent with their books as to their stockholders. Langston's suit appears to be only one which tries to compel Adara to live up to its legal obligations in that regard--which apparently includes the understandable "show me the money." Langston appears to be gathering information, like a good lawyer or even good investor, to determine if grounds exist for a civil suit or a criminal complaint. The company's response looks like stonewalling.

Anonymous said...

2:08 seems a little testy. Do you think he/she may have invested in this “gold mine“?

Anonymous said...

to 12:32.......hes not testy......he right .

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