Jackson Jambalaya

Bankruptcy trustee Derek Henderson filed suit against the Investlinc/TFC Income Fund in February. Mr. Henderson alleged bankruptcy fraud on the part of Investlinc, as he claimed it looted Steadivest as the company collapsed and investors lost millions of dollars. The fund was operated by Marshall Wolfe and Jack Harrington. Lee Paris was the promoter.

Steadivest was a Ponzi scheme operated by Marshall Wolfe and Jack Harrington. The Secretary of State issued a cease and desist order and heavily fined the two individuals. The Steadivest companies filed bankruptcy in 2009.

The Steadivest officers and Investlinc, a Lee Paris-owned company, established the Investlinc/TFS Income Fund. SEC filing The Investlinc/TFS Income fund was used to purchase rental properties. The fund would then sell shares to investors. The investors would receive shares of the overall rental income in exchange for their investments. Several investors sued Investlinc/TFS Income Fund, the Steadivest companies, and various officers. Mr. Paris was a promoter for the fund. His role was to sell shares to investors and handle private placements for Investlinc/TFS. FINRA recently imposed a $10,000 fine on Mr. Paris and suspended him from working um, under his own supervision for six months. FINRA ruled he sold shares of failing investments to investors after he should have known, or did know they were in default on paying investors.

Mr. Henderson claimed right before Steadivest filed bankruptcy (which took place only a few days after the investors filed a lawsuit in Rankin County), Investlinc suddenly placed liens on properties held by Steadivest. In effect, Investlinc suddenly took possession of Steadivest properties. Such an action would deny the ability of creditors to recover against them in bankruptcy court. It should also be noted that Mr. Paris replaced himself as the majority owner of Investlinc Securities with Meadowbrook Capital. Meadowbrook would thus appear at first glance the majority owner for Investlinc even though Mr. Paris is the owner of Meadowbrook. Ah, the shell games.

The trustee asked the court to reverse the transfers and called the Investlinc/TFS Income Fund a classic Ponzi scheme. The lawsuit is fairly complex but the interesting stuff starts on page 17, paragraph 41.



Here is a copy of the complaint:



JJ speculated whether bankruptcy fraud took place in a 2009 post:

"Did Steadivest seek to shield some of its properties from creditors in bankruptcy court? Steadivest filed a petition for Chapter 11 bankruptcy on March 23, 2009. Earlier post about bankruptcy filing for Steadivest However, another company with the same owners, management, and address as Steadivest placed liens on several properties owned in Hinds County by Steadivest. The transactions were:

111 Carolyn Avenue Lienholder: Investlinc Inc./TFS Income Fund; $87,730.
2822 Engelside Drive Lienholder: Investlinc Inc./TFS Income Fund; $37,109
222 Lea Circle Lienholder: Investlinc Inc./TFS Income Fund; $20,831
(KF note: Much longer list in link to earlier post posted below)

The Carolyn Avenue transaction is typical for these properties. On March 5, a deed of trust was issued for Steadivest as owner of the property and a lien held by Investlinc Inc./TFS Income Fund, LLC. The deed of trust list them both as having the same address: 4 Country Place, Pearl, MS. The lien is for $87,730 (click on link above for the deed of trust. Filler pages were omitted from upload). The deed of trust only mentions a lump sum is owed, no payment schedule or loan terms are mentioned in the document. On the signature page, Marshall Wolfe signs for both Steadivest and Investlinc, stating he is a member of each LLC. The total amount of these liens is $145,670.

Investlinc Inc./TFS Income Fund, LLC is a firm that provides "financing for real estate investment and development" according to its SEC filing. Its principal address listed with the SEC is 4 Country Place, Pearl, Mississippi 39208. It was created on December 26, 2007. Patrick McRaney, a member of Steadivest, is listed as the Executive Officer. Marshall Wolfe is listed as an Executive Officer. Lee Paris is listed as Promoter. Jack Harrington signed the filing as the Chief Financial Officer of the firm and is also listed as an Executive Officer.

Patrick McRaney is also listed as the registered agent for Steadivest Capital, LLC and the officer of the the Steadivest Contrarian Fund. Jack Harrington is listed as the member/officer of Steadivest Resources, LLC and Steadivest, LLC. Marshall Wolfe is listed as the member/officer/director of Steadivest Capital, LLC, Steadivest Properties, the registered agent of Steadivest Development, LLC, and the officer of Steadivest Lending (now defunct). Lee Paris, listed as a promoter, is not mentioned with any other companies of which Wolfe, McRaney, and Harrington are members. Investlinc, Wolfe, Harrington, and McRaney are defendants in a lawsuit alleging investment fraud filed by several plaintiffs last week in Rankin County Circuit Court. Earlier post about lawsuit

What is odd about these deeds of trust is they were executed less than a month before Mr. Wolfe submitted his bankruptcy petition for Steadivest. If the properties have liens, the properties are somewhat shielded from other creditors in bankruptcy unless the Court rules these are fraudulent transactions and cancels the liens. The fact Mr. Wolfe used another company he ran that was in the same office to place liens on properties on properties he owned a month only a few weeks before he filed Chapter 11 bankruptcy makes these dealings highly suspect." Earlier post with more extensive list of properties.

In other words, the Investlinc/TFS Income fund looted Steadivest of its properties right before it filed bankruptcy by suddenly placing liens. Liens that would protect them from other creditors. What is interesting is nineteen days before the bankruptcy filing (March 4), Mr. Paris established Meadowbrook Capital, LLC. Mr. Paris replaced himself as the majority owner of Investlinc Securities with Meadowbrook Capital even though Mr. Paris is the majority owner of Meadowbrook. The result is at first glance, Mr. Paris's name is scrubbed from the ownership rolls of Investlinc at the SEC or FINRA's website. One has to look up Meadowbrook Capital itself in the filing to find Mr. Paris's name.. The SOS website reports Meadowbrook Capital is the "manager" of Investlinc/TFS Income Fund. Mr. Paris is listed by the SOS as the sole member of Meadowbrook. Investlinc claimed in a court filing it was victimized by Mr. Wolfe as the other investors were." Earlier post

Soooo....... how much snake oil has Mr. Paris sold?

The Financial Industry Regulatory Authority (FINRA) imposed a $10,000 fine on local investment guru Leroy Paris, II and suspended him from working under his own supervision for six months. Mr. Paris agreed to the sanctions. FINRA is the leading independent regulator for all securities firms "doing business in the United States".

Mr. Paris owned and operated several investment firms: Meadowbrook Capital, LLC. and Meadowbrook Securities. Meadowbrook Capital is also the 100% owner of Investlinc Securities, LLC. Mr. Paris was the owner of that company but made Meadowbrook Capital the formal owner on March 4, 2009. His firms offered investment opportunities for private investors. Mr. Paris sits on the boards of several charities and penned several essays in the Northside Sun describing his mission trips to Africa.

Mr. Paris signed the consent decree "without admitting or denying the findings". The decree focuses on Mr. Paris's role in the sale of private placements for Medical Capital Holdings, Inc. and Provident Royalties, LLC. The SEC prosecuted Medcap for fraud after receiving over $2 billion from investors (yes, that is a "b") and defaulting on over $1 billion in notes. SEC complaint, Receiver's website. A federal court agreed with the SEC and placed the company in receivership on August 3, 2009. Copy of order. Medcap sold receivables with interest rates ranging from 8.5% to 10.5% and terms of one to seven years. Medcap used broker-dealers such as firms operated by Mr. Paris to sell the receivables. Articles about Medcap failure. Here is one juicy Medcap story.

FINRA stated Mr. Paris did not perform due diligence in selling $635,000 of Medcap securities to seven investors in the second half of 2008 even though Mr. Paris should have known Medcap was "having trouble making both principal and interest payments". Medcap had sent a letter to broker-dealers on August 5, 2008 stating it could not make principal payments on time. A September 30, 2008 report stated Medcap was 35 days late in making principal payments. Wells Fargo and Bank of New York Mellon sent a notice of default to all noteholders on November 10, 2008 (p.5). The result was several investors probably lost their money when Medcap collapsed.

Mr. Paris also sold securities for Provident Royalties. Investor protection.com states
"Texas-based Provident Royalties LLC and three company founders have been charged with securities fraud by the Securities and Exchange Commission (SEC) for allegedly bilking thousands of oil and natural gas investors in an elaborate $485 million Ponzi scheme....

The SEC alleges that Provident falsely promised investors yearly returns of up to 18% and misrepresented how 85% of the funds raised through the offerings would be used to purchase interests in oil and gas real estate, leases, mineral rights, and interests, exploration and development. In reality, the SEC says that less than 50% of investor funds were used for their stated purpose."

FINRA in effect called the sales a ponzi scheme (p.7) as they were used to "pay earlier investors their dividends and the return on principal, rather than being invested in oil and gas assets" (as they were told the money would be used.).

FINRA stated Mr. Paris sold $1,090,000 to seventeen investors. Once again Mr. Paris failed to perform due diligence or his assigned responsibilities in selling the securities. The order states Mr. Paris "did not perform any due diligence (p.8). It states he did not visit the company, did not see or request an financial information and did not conduct any follow-up due diligence one he made the decision to sell the securities. The order said reports were available to Mr. Paris that would have shown Provident was having trouble meeting its obligations when he was selling its securities to investors. Under the order, Mr. Paris can continue to work in the securities industry but under the supervision of another company. Mr. Paris is not allowed to be a principal in any firm for six months.

WLBT story

First part of lawsuit
Second part of lawsuit

Investors of SteadiVest filed a lawsuit in Rankin County Circuit Court yesterday against SteadiVest owner Marshall Wolfe, Attorney Patrick McRaney, Joel Travelstead, Investlink/TFS Income Fund, The Investlinc Group, and several John Does. The suit charges the defendants with the following counts:
Count I: MTW Fraud
Count II: Steadivest Capital/TFS Fraud
Count III: Steadivest, LLC Fraud
Count IV: Negligent Misrepresentation
Count V: Conversion
Count VI: Civil Conspiracy

The lawsuit seeks return of all monies lost, attorneys' fees and court costs, and punitive damages. The lawsuit claims the defendants defrauded the plaintiffs of over six million dollars through the sale of phony promissory notes, (remember Ed Peters and the Nasa case?), which defendants used to support a lavish lifestyle while lying to investors about the true nature of the financial state of Mr. Wolfe's companies.


Note: Will write more later, don't have time to write a full post.

Copy of Petition for Temporary Restraining Order against Steadivest

Several plaintiffs filed a Petition for a Temporary Restraining Order against Steadivest in Rankin County Chancery Court on March, 20, 2009. Steadivest is a "family" of companies operated in Pearl by Marshall Wolfe and was the subject of a post yesterday about its problems in bankruptcy and suspected fraud. Rick Lacey, Mike Yarbro, Sue Yarbro, MYSY Rental, Inc.,, A.J. Warren III sought relief from the Court against Steadivest and Mr. Wolfe. The petition states:

"Plaintiff Rick Lacey is a member and minority owner of Steadivest, LLC. ....

Plaintiffs Mike Yarbro, Sue Yarbro, MYSY Rental, Inc., Mike Lacey, and A.J. Warren, III are creditors of Steadivest, LLC.....

Defendant Marshall Wolfe made material misrepresentations to induce the Plaintiffs to invest and/or loan money to, or for Steadivest, LLC. Certain of the representations made by Wolfe were, upon information and belief, either intentionally, or negligently, inaccurate. These acts on the part of Wolfe have and will continue to adversely impact the Plaintiffs and others similarly situated.

Upon information and belief, the Defendants, individually and collectively, have committed waste of the assets of Steadivest, LLC and have failed to act in the best interests of the subject LLC, its members, and its creditors to the extent that the LLC is no longer able to meet its financial obligations. Moreover, Marshall Wolfe individually has admitted that Steadivest, LLC and its subsidiaries are in financial peril.

Plaintiffs have rightfully requested a financial accounting and audited financial statement concerning the condition of Steadivest, LLC from Defendant Wolfe on many occasion between October, 2008 and March 18, 2009. Defendant Wolfe, on behalf of Steadivest, LLC, has wholly failed and contumaciously (Give that word to O'Reilly or the Hot for Words girl) refused to produce the requested documentation to Plaintiffs."

The petition sought to bar Wolfe from any contact with Steadivest and keep him from withdrawing any assets from the company. It also asked the Court to bar him from the premises as they feared documents would be destroyed. The TRO request was never adjudicated as Mr. Wolfe filed a Suggestion of Bankruptcy in response to the petition on March 25, 2009, citing his filing a petition for bankruptcy in Bankruptcy Court on March 23, 2009. The response was successful as federal law provided an automatic stay of this legal action against Steadivest. The plaintiffs however, filed a motion shortly afterwards asking the Court to convert the Chapter 11 filing to a Chapter 7. They argued Mr. Wolfe only filed bankruptcy for one of his companies and was using the Court as a shell game of sorts to stick one company with the bad debts while he continued to operate his other companies (Companies that all had the same address, same owner, and were in the same industry.). The Court agreed and ordered the conversion to a Chapter 7 filing.

I wrote yesterday this case raised every red flag possible for a case of suspected fraud. Sources have told JJ the amount of money investors lost was close to twenty million dollars (A list of the debts has not been released by the Court yet.) and that Mr. Wolfe claims his company collapsed because of the subprime lending meltdown. If this is true, nothing could be further from the truth as when Mr. Wolfe was producing his slick little videos last year, subprime lending had already disappeared in the mortgage industry.

Mr. Wolfe took money from local investors (many of whom went to church with him at Pine Lake Baptist Church) to lend out to individuals interested in purchasing cheap properties in the Jackson area to either rent out or "flip". Mr. Wolfe never financed more than 65% loan to value on the property, which put his company in a good position in case of foreclosure (This is verified on his website.). Mr. Wolfe charged the borrower 3% monthly and guaranteed a return to his investors. Unfortunately, Mr. Wolfe liked to live the good life as he bought a million dollar home in the Palisades and was known for his extravagant living while his investors' money disappeared. If this storyline sounds familiar, it should as regular JJ readers will remember the Linda Harmon story reported earlier this year on this website. One can only hope Mr. Wolfe is not the Mississippi Madoff as this story develops.

Has another scam taken place in Jackson? Such a scenario might be the case according to recent U.S. Bankruptcy Court filings in Jackson. Steadivest is a "Family of companies" according to a letter written by its managing member, W. Marshall Wolfe. The family consists of Steadivest Capital, Steadivest Development, Steadivest Lending, Steadivest Properties, Steadivest Resources, and the Steadivest Contrarian Fund (Hereafter the "family" will be referred to as Steadivest.).



Copy of deed of trust






Steadivest advertises on its website expertise in property management, mortgage lending, realtor services, and construction. It promotes its "portfolio services to investors and even offers a "buyback" of properties if necessary:
"SteadiVest’s real estate investment portfolio Program was developed to provide an alternative for investors to achieve exceptional returns in non-owner occupied rental real estate without the challenges of investment property selection and daily management and with all the benefits of portfolio diversification. Your SteadiVest™ portfolio will be professionally selected and managed. Through our SteadiVest™ family of companies, we utilize our proven techniques and experience to select investment properties that will provide a mix of geography, size, current income and appreciation potential. Then we actively manage every aspect of portfolio growth and administration right up to the day you exit your portfolio.

We even offer a guaranteed buy-back* of your SteadiVest™ portfolio properties. Our goal is to build your portfolio value as consistently as possible while minimizing any action from you…and we keep you informed of that value every step of the way through our focused reporting. "

Steadivest even went so far as to produce several slick videos such as this one,



for potential clients, touting investment opportunities in Mississippi. This operation provided an affluent lifestyle for Mr. Wolfe as he purchased the home in the Palisades shown above (The home is currently for listed for sale at $879,900. The deed of trust shows he borrowed $754, 400 from Regions Bank on an ARM at 6.375% for a fixed period of five years.). However, things were apparently not doing as well as claimed by Steadivest. Steadivest, LLC filed for Chapter 11 bankruptcy on March 23, 2009. There were between 100 and 199 creditors according to the petition and assets between one and ten million dollars were listed as well. Liabilities were estimated claimed as being less than ten million dollars. Ridgeland attorney Jeffrey Tyree represented Steadivest in the petition. Copy of petition

Investors lost millions of dollars in Steadivest. The top 20 creditors holding unsecured claims are:

Scott Stevens, Cabot, AR: $996,563
MYSY Rental, Inc, Flowood, MS: $996,563
Bobby Isonhood, Canton, MS: $958,694
Alex Breeland, Jr., Madison, MS: $805,224
Ray Montgomery, Jr., Brandon, MS: $737, 457
Natalie Dautenhaum, Brandon, MS: $328,660
Linda Matthews, Cabot, AR: $274,055
Richard Lacey, Brandon, MS: $268,604
Claude Smith, Brookhaven, MS: $205,115
Barbara Albritton, Jackson, MS: $196,993
Jack & Toni Williams, Brandon, MS: $149,484
Terry Bailey, Canton, MS: $127,560
James R. Donald, Raymond, MS: $116,059
Freda Hudson, Brandon, MS: $114,106
Arthur Warren, Flowood, MS: $109,821
Robert Isonhood, Liberty, MS: $99,656
John D. Smith, Brookhaven, MS: $98,371
Sheila Stone, Vicksburg, MS: $96,619
Alex Breeland, Canton, MS: $88,513
Leila Stone, Vicksburg, MS: $81,943

Total: $6,784,060.
Copy of list
List of all creditors

Although Mr. Wolfe filed for Chapter 11 bankruptcy, several creditors filed a petition with the court to convert the filing to a Chapter 7 bankruptcy. The petition claimed:

"Steadivest is a holding company with various operating subsidiaries as more particularly described on the flow chart attached as Exhibit "A". None of the operating entities have filed for bankruptcy protection; however, the operating subsidiaries all operating under the Steadivest company name as if it is one entity. In addition to the operating subsidiaries identified on the flow chart, the Lacey Group believes that three additional entities, Investline TFS Income Fund, LLC, Steadivest Contrarian Fun I, LLC, and Steadivest Kansas City, LLC are owned and/or affiliated with the Debtor. "

Steadivest claimed in state court it owned these subsidiaries. A cursory glance on the Mississippi Secretary of State's website at the list of companies in which Mr. Wolfe is an officer reveals he had his fingers in many corporate pies:
Jackson Property Liquidators
MTW Investment Financing (dissolved October 16, 2008)
Steadivest Capital (Created November 15, 2006)
Steadivest Development, LLC (Created October 26, 2005)
Tactical Financial Solutions (Created November 15, 2006)
Invision Real Estate and Property Management (Created August 7, 2007)
Steadivest Properties, LLC (Created August 7, 2007)

Steadivest Contrarian Fund is not owned by Marshall Wolfe BUT he was added as manager in corporate documents and SCF has the same address as the other Steadivest companies. It also was created on October 16, 2008, when MTW was dissolved. Steadivest Lending (Mr. Wolfe was an officer) was licensed with the Department of Banking as a mortgage broker but dissolved on December 15, 2008. However, the motion continues:

"Steadivest, through its subsidiaries, solicited individuals to loan money to Steadivest in return for promissory notes which paid above-market interest rates in monthly installments and contained a provision for repayment upon demand..."

"In November of 2008, Steadivest contacted its note holders and advised that it was unilaterally reducing the interest rate on its notes to 3% and suspending the demand feature of the notes. See Exhibit "B".

"Since the filing of the bankruptcy proceeding, Steadivest has not been able to pay its bills as they come due. Specifically, Steadivest was unable to meet its payroll on Friday, April 10, 2009 and has insufficient cash in the bank to pay the rent on the building where the business is located..." Copy of petition, Steadivest financial statements, List of properties owned by Steadivest

The Court agreed and ordered on May 15, 2009 a conversion of the bankruptcy petition from a Chapter 11 to a Chapter 7 filing. The case is currently pending further action as additional creditors had to be notified of the bankruptcy filing.

I have seen this scenario so many times that I can almost predict the outcome. Firm solicits investors in some exotic creation that promises a new way of doing business. Firm is actually a "family" of companies that are constantly created and dissolved with ownership moved around from officer to officer. Said companies also tend to have very short life spans. Owner lives high on the hog, buying a fancy home on the water in the Palisades as investors give him millions of dollars, only to see the money lost in bankruptcy. Owner files bankruptcy1 for one company while keeping the others operating, thus allowing him to continue the um, game (can't say scam, might get me sued at this point.). This one smells, folks and it doesn't take a genius to figure out what is going on in this case.