Jackson Jambalaya

 Madison Timber Receiver Alysson Mills suffered an embarrassing loss in federal court yesterday after a jury found Baker Donelson not liable for damages and faulted the Receiver for not pursuing claims against investors who profited from the Ponzi scheme. The Receiver also announced she settled with UPS for $6.5 million in a separate lawsuit.

Then-Baker Donelson partner Jon Seawright and its lobbyist, Brent Alexander, sold investments in Madison Timber for Lamar Adams.  Both men pleaded guilty for their roles in promoting the Ponzi scheme.  Seawright served a year in prison and was released in 2024.  The Court sentenced Alexander to probation.   

Mills tried to pin their activities on Baker Donelson and filed a clawback lawsuit against the law firm, Seawright, and Alexander.  However, Baker Donelson fought back and fought back hard as it deposed numerous Madison Timber victims and investors. 

The case finally went to trial last month, lasting all of five weeks.  The jury found the Receiver did not prove her claim against Alexander and Seawright for civil conspiracy but proved her claim for aiding and abetting against the two men.  

The jury also ruled Mills proved her claim for negligent supervision against Baker Donelson and said such negligence caused injuries of $1.4 million. The jury awarded another $1.4 million in damages against Alexander and Seawright for civil conspiracy.  However, the jury found the Receiver could have recovered at least $10 million if she had taken "reasonable steps to recover profits Madison Timber paid to investors who were 'net winners'." 

 The "net winners" profits were $15 million.  The jury determined $10 million should have been mitigated by the Receiver.  Since she erred in not trying to get the money back from those who cashed out, the jury ruled the damages assessed ($1.4 million for Baker Donelson and $1.4 million for the Baker Boyz) should be deducted against the $10 million mitigation.  Thus the defendants will pay nothing towards the Madison Timber estate. 

Thus Baker Donelson will not pay a dime towards the Receiver and the Madison Timber Estate.  

The jury wrapped up the verdict by finding the Baker Boyz acted with Baker Donelson's apparent authority but did so outside the scope of their employment.   Baker Donelson was cleared of approving Alexander and Seawright's "wrongful acts. 

U.S. District Judge Carlton Reeves did not allow the jury to determine punitive damages.   

The opposing sides issued dueling press releases. 

Receiver Alysson Mills' Statement 

The jury found that Jon Seawright and Brent Alexander aided and abetted Lamar Adams; that they acted with Baker Donelson’s apparent authority, such that the law firm is vicariously liable; and separately that Baker Donelson negligently supervised them.

The jury awarded a total of $2.8 million, which is twice the amount investors in the Alexander Seawright Timber Fund lost. The judgment entitles us to ask defendants to reimburse the receivership estate for its costs.

The jury found we proved our claim for punitive damages against Seawright and Alexander but did not award punitive damages, presumably because it found they had been punished enough, a finding that I believe is just. The finding, however, may entitle us to ask them to reimburse the receivership estate for its attorneys fees.

The jury found I could have recovered $10 million if I had pursued net winners, but it did not get to hear the value of settlements that I otherwise reached with net winners, which is more than $9.4 million. Under Mississippi law, a jury may hear the fact of settlement but not the amount, which is something the court accounts for post-trial.

I am grateful for the jury’s service, particularly in such a long trial.

I am very proud of the jury’s finding of liability on the part of Baker Donelson.  When we filed the lawsuit in December 2018, it called the allegations meritless.  For eight years it has denied any responsibility.

Settling parties, such as Butler Snow, received what is known as a bar order.  Because Baker Donelson did not settle, it did not obtain a bar order. This means that investors in the Alexander Seawright Timber Fund, including former Baker Donelson clients, may now independently sue Baker Donelson, and there already exists a finding of liability.

There remain loose ends to clean up, but this trial likely concludes the receivership estate’s litigation. I can now report that the tentative settlement agreement with UPS is worth $6.5 million.

In the end, with these anticipated collections, our total collections likely will be approximately $53 million, or 100% of total net losses.  That does not include judgments (for instance, against Bill McHenry) that I may never collect.

I am proud of my counsel (principally Brent Barriere, Kaja Elmer, and Maggie Daly of Fishman Haygood and Lilli Bass of Brown, Bass, & Jeter). They obtained a settlement or judgment against every responsible party we sued or otherwise targeted.

Baker Donelson Statement

“The jury’s verdict resulting in a zero-dollar liability for the firm is extremely gratifying and clearly reflects Baker Donelson was not responsible for the Madison Timber Ponzi scheme perpetrated by Lamar Adams. As we have said since this case began: The firm had no knowledge of the Ponzi scheme. We are disappointed the jury found the firm responsible for two claims and continue to believe they are unfounded given that the testimony of every witness overwhelmingly confirmed the firm was not responsible for it, did not receive any money from it, and did not cause the Madison Timber investors’ losses.  

We firmly believe the facts and the law have convincingly displayed and supported our many defenses since the outset, and we are grateful for the tremendous efforts of Craig Singer, Jim Crongeyer, and our entire trial team at Williams & Connolly and Watkins & Eager.”

EXPLAINING THE VERDICT:

• The jury specifically found that the plaintiff receiver failed to take steps to mitigate her damages (i.e. did not attempt to claw back profits from nearly all the investors who profited) and failed to do so in the amount of $10 million, which zeroes out all damages against the firm.  
• The jury rendered a Take-Nothing verdict against Baker Donelson, Brent Alexander, and Jon Seawright.
• The jury ruled against Alexander and Seawright for $1.4 million, the exact amount their ASTFI investors/members lost. (see below in Background Facts)
• The jury ruled against Baker Donelson on theories of negligent supervision and apparent authority, also for the same $1.4 million in damages.
• The court did not allow any claim for punitive damages to go forward against Baker Donelson because the evidence did not support it. The court did allow the claim for punitive damages to go forward against Alexander and Seawright, but the jury awarded “zero dollars” in the punitive damages phase against Alexander and Seawright.

BACKGROUND FACTS:

• Brent Alexander and Jon Seawright operated their own company, Alexander Seawright Timber Fund, LLC (ASTFI), and none of their investors who testified at trial believed it was sponsored by Baker Donelson.
• No one, including Lamar Adams’ closet allies and every witness, was aware of the Ponzi scheme until Adams confessed. Alexander, Seawright, investment bankers, banks, Madison Timber’s professionals, and extremely wealthy individuals with their own advisors were all fooled by Adams. Adams fooled everyone, and he testified to that effect. Even the receiver testified she knew of no one who had actual knowledge of the Ponzi scheme until it collapsed. 
• Like everyone else, Baker Donelson had no knowledge of Adams’ Ponzi scheme until it was uncovered in 2018. 
• Baker Donelson did not represent and received no money from Madison Timber, Lamar Adams, or Alexander and Seawright.
• Before Alexander and Seawright left Baker Donelson in 2020 and 2021, respectively, they steadfastly maintained they had done nothing wrong. They later pled guilty in 2022 and 2023, respectively, not to being involved in Adams’ Ponzi scheme, but to deceiving their ASTFI investors.  
• Baker Donelson never represented Madison Timber, Lamar Adams, or ASTFI.
• Pursuant to the 2024 Court’s Order on damages, the receiver is only able to pursue net losses. The figure is calculated using the amount lost by investors (the net losses). Of the many investors who lost money in Madison Timber, the vast majority (whose net losses totaled $52 million) had no contact with Alexander and Seawright.
• For the 34 ASTFI member/investors, the net loss totaled $1.4 million. Alexander and Seawright paid $1 million in restitution to the receiver for those 34 investors to make them whole (they had already received distributions from the receiver to offset a portion of the $1.4 million), pursuant to the Court’s Order. 
• The net winners’ (the investors who made money on their investments) total was approximately $15 million. The receiver did not seek claw-backs from the net winners.
• The receiver, Allyson Mills, has sued many other defendants, and they all settled. She has already collected approximately $46 million in settlements and other recoveries and receives a contingency fee on her claims made against these settling defendants related to this matter.
• This was the last case related to Madison Timber, and the only one to go to a jury trial.
• This is the only case brought by the receiver where the target defendant (Baker Donelson) received no money. In every other case, the entities or individuals received money from the Madison Timber scheme, and in many cases, millions of dollars. 

December 20, 2018 Post

Jon Seawright is a lawyer at Baker Donelson while Brent Alexander is a lobbyist at the firm. Seawright and Alexander created a timber investment fund, Alexander Seawright Timber Fund I, in 2011 that would invest in Madison Timber. They began pitching the investments to Baker Donelson clients: 

75. Throughout this time period Alexander and Seawright pitched their fund to potential investors, including Baker Donelson clients, as an exclusive “friends and family” fund. Alexander often used the phrase “simple, elegant and profitable” to describe the fund. He told investors that “we are in it”— a lie; neither Alexander nor Seawright invested their own money in the fund—“our neighbors, lots of physicians, many of the attorneys at Baker Donelson and other firms, a United States Senator etc.”

78. Alexander and Seawright specifically targeted individuals who had recently sold assets because they knew those individuals had money to invest. Such individuals included clients for whom Baker Donelson had recently closed transactions.

Ms. Mills claims victims “reasonably believed” their investments in Madison Timber and Alexander Seawright Timber Fund I, were “backed and promoted by, and had been vetted by, Baker Donelson.”

Remember when the Kingfish pointed out that Baker Donelson was promoting Alexander’s financial expertise on its website back on May 4?

Baker Donelson bragged about Alexander's investment expertise on its website:

A rapidly growing area of Mr. Alexander's practice is advising venture capital and related investors on public policy issues. He has passed the Series 65 Registered Investment Advisor Exam, an examination required by the Securities and Exchange Commission (SEC), the National Association of Securities Dealers (NASD) and the North American Securities Administrators Association (NASAA) for individuals who serve as principals in, or advisors to, hedge funds that invest in stocks, bonds and other financial instruments. He has also passed the Series 3 National Commodity Futures Exam, an examination required by the Commodities Futures Trading Commission (CFTC), the National Futures Association (NFA) and the SEC for individuals who serve as principals in, or advisors to hedge funds which trade futures and options.

Well, the Receiver noticed as well: 

81. Alexander and Seawright referred potential investors to Baker Donelson’s website, which shows that Jon Seawright is not merely a shareholder in Baker Donelson’s Jackson office but an elected member of the firm’s national governing Board of Directors. Baker Donelson is a law firm, not an investment advisory firm, but its website touts Jon Seawright’s advanced degree in taxation and “extensive experience” in business development and capital formation. Its website presents Brent Alexander as a “Senior Public Policy Advisor” who is qualified by regulators to serve as a principal in, or advisor to, hedge funds and who has a “rapidly growing” practice in “advising venture capital and related investors.”

82.  Baker Donelson knew Alexander and Seawright relied on their affiliation with Baker Donelson in securing investments and allowed it.

83. Alexander and Seawright used Baker Donelson’s Jackson office’s address for official business. They and Adams held “closings” at Baker Donelson’s Jackson office. They used Baker Donelson’s runners to pick up investors’ checks.

84. Alexander and Seawright enlisted their colleagues at Baker Donelson, including in offices in other states, to introduce them to potential investors. They asked their colleagues to “[h]elp us get a meeting if you’re able,” adding “[i]f you can get us in the door, it would mean a great deal.” Their colleagues obliged.

89.   Between 2011 and April 2018, Alexander and Seawright withdrew over $980,000 from the Alexander Seawright Timber Fund I, representing their “shares” of investors’ returns.  In addition Adams separately paid them over $600,000 representing undisclosed “birddog fees.”

90.   On information and belief, Adams also sometimes paid Alexander and Seawright bonuses, including Christmas bonuses in cash that he had delivered to Alexander and Seawright at their Baker Donelson office.

101. In 2015 Alexander and Seawright had an idea.   They had been making monthly investments  with  Adams  of  between  $100,000  and  $500,000  using  other  people’s  money. Alexander proposed that “[we] systemize this a little and take it to the next level.” Over the next two years Alexander and Seawright would brainstorm a new model that could make Alexander and Seawright rich.  Alexander estimated that if a fund put $1 million in Madison Timber and then reinvested the principal and interest each month for ten years it would make $17 to $18 million. What if the fund  put $10 million in?

102. The idea consumed Alexander.  He texted Seawright, “Woke at [sic] at 2 thinking about the structure of the timber pool.  We pull this off, we get rich.”   Using Baker Donelson’s conference rooms and resources, he hosted meetings with and made presentations to accountants, investors, and  advisors to push his idea and debate the merits of a five-year versus ten-year model. He  reported   the  models  gave  people  “much  more  level  headed”  than  he  “an  orgasm  as  to  its  potential.”  Fearing that “now that they have seen up our skirts” people will “try to cut us out,”  he had prospective partners execute a non-disclosure agreement that Seawright drafted.

103.     Alexander  and  Seawright  gave  their  new  model  a  new  company  and  named  it Alexander Seawright Timber Fund II, LLC.

112.  Just  days  before  Alexander  and  Seawright  would  have  deployed  their  “key  investor”  and  client’s  money,  Adams  turned  himself  in.   As  news  spread,  the  investor   sought information  from  Alexander.   Alexander  told  the  investor  that  Alexander  and   Seawright  were victims:
Investor: How did you get hooked with him?
Alexander: My clients are hanging with me.  They know I am a victim.
Investor: To think I was  almost out of my entire life earnings makes me shiver
Alexander: Everyone knew him.  Country club fixture.
Alexander: Would not let you lose your savings. Investor: Man it was close ...a day or two... 
Alexander: To be clear, Jon and I were the victims of fraud.