Jackson Jambalaya

The Madison County Journal reports construction will soon begin on the Livingston Township development in Madison County :

"A general store, four restaurants and an art gallery are just a few of the teasers developer David Landrum released about the commercial makeup of the Town of Livingston set for a groundbreaking and reception next week.

The 47-acre mixed-use development is located at the corner of Mississippi 463 and Mississippi 22 and will bring shops, eateries and office space to an otherwise rural and residential part of the county.

The busy intersection is positioned at a central point between Flora, Madison and Canton and has drawn high interest from commercial retailers hoping to tap nearby residents who represent some of the highest household incomes in the state.

The first phase of the project will encompass 20 acres of mostly commercial space built around the site of the original Town of Livingston established in 1829." Article

However, the development will apparently use taxpayer money for the construction of some buildings. The Madison County Community Facilities Corporation applied for a $5.8 million USDA loan to construct a schoolhouse and courthouse on the site. The corporation was established by the Madison County Economic Development Authority earlier this year. The articles of incorporation state the three board members of MCCFC are Dick Hutchison, Bill Guion and Jack Harrington. MCCFC will also "have unlimited corporate authority to incur indebtedness" although the corporation will not be able to borrow over $10 million without approval of the Madison County Economic Development Authority.

The Board of Supervisors endorsed the loan application in a September 19, 2011 letter to Jack Harrington, President of MCCFC. Board President Tim Johnson wrote "We are pleased to support the USDA Rural Development application being submitted by Madison County Community Facilities Corporation to construct the convention and meeting facilities at Livingston Township. Sincerely, Tim Johnson."

The decision to issue the letter was made at a special meeting of the Supervisors on the same day. Local firm Stone Adams Financial Partners will prepare the application package (Former USDA employee Nick Walters is President of Stone Adams.). The only representative from MCEDA and MCCFC present at the meeting was Jack Harrington.

Hmmm....... Jack Harrington, where have we heard that name before? A quick check of the JJ archives reveals..... the Steadivest fraud case. Steadivest was a family of companies established by Marshall Wolfe and Jack Harrington to pursue real estate investments. Construction, rehabs, mortgages, listings, buying & selling properties- Steadivest aimed to be the supercenter of all things real estate in the Jackson area. Local investors lost millions of dollars when Steadivest collapsed in 2009. The investors sued Steadivest alleging fraud and filed complaints with the Secretary of State's office.

The Secretary of State's office issued a cease & desist order against Steadivest LLC, Marshall Wolfe, and Jack Harrington. The state accused them of operating a phony investment scheme that used several companies to steal millions of dollars from unsuspecting investors. The state fined Mr. Harrington $170,000 for his role in the fraud on December 10, 2010. Earlier post on Steadivest cease and desist order. Mr. Harrington was the President, Chief Operating Officer, and Chief Financial Officer of Steadivest, LLC.

The original order stated Steadivest operated a "ponzi scheme", misled investors, and defrauded them by diverting the invested money for other purposes. The state said the company did not keep records, never had a real audit of its finances, and intentionally deceived investors. The Secretary of State found the defendants guilty of five counts although it later dismissed two of them. Mr. Wolfe and Mr. Harrington appealed the Secretary of State's decision to the Attorney General. The Attorney General has not ruled on the appeal.

Mr. Harrington's role in the Steadivest fraud case is receiving more scrutiny at the federal level. The Steadivest companies filed bankruptcy petitions in federal court in 2009. The bankruptcy trustee, Derek Henderson, filed a complaint against Mr. Harrington earlier this year in U.S. Bankruptcy Court (Complaint posted below.).

The trustee accused Mr. Harrington of looting Steadivest as it collapsed. Instead of protecting investors money, the trustee alleges Mr. Harrington kept selling shares and then transferring money from the sales to himself as the company imploded. The trustee claimed the company received $484,000 from investors in March 2008. Steadivest then paid $306,302 to Mr. Harrington through another company only a few days later. Mr. Henderson charged:

"Harrington defrauded SV and the investors of SV. Harrington accepted funds from investors to purchase membership interest in SV when at the same time intended to take these funds for this personal use."

The trustee cited another example of fraud. One investor placed $968,937 with Steadivest in August, 2008 to pay for a project (Highland Heights). Mr. Harrington withdrew $936,481 on the same day the investor deposited the money with Steadivest.

The trustee charged Mr. Harrington with one count of misrepresentation and fraud, one count of breach of fiduciary duty, recovery of property, and one count of fraudulent transfers. Mr. Henderson asked the court to void the transfers and recover damages of $1,242,781 from Mr. Harrington. The complaint is still active in bankruptcy court.



Earlier posts about Steadivest










Note: This is from an earlier post where I speculated whether Mr. Harrington committed bankruptcy fraud using a property in Reunion:

"Then there is this one in Reunion Subdivision:
151 Cedar's Cove. Steadivest Development gave a warranty deed for this property to Selectbuilt, which is partly owned by Jack Harrington, who is still listed as an officer of Steadivest Resources and Steadivest, LLC. He is a co-defendant along with Marshall Wolfe in lawsuits filed by several Steadivest investors. Mr. Wolfe listed himself on the deed as the manager of Steadivest, LLC. The transfer was signed on February 5, 2009 but not recorded until March 23, 2009, the day Mr. Wolfe submitted a petition for Chapter 11 bankruptcy for Steadivest to the bankruptcy court.

Under Section 547 of the U.S. Bankruptcy Code (concerning preferential transfers), there may be a question of whether these new liens and transfers are permissible under the law and if the trustee will reverse these transactions. Mr. Wolfe was a member of Investlinc as well, further demonstrating the pattern of last-minute inside-dealing regarding Steadivest-owned properties. What is also interesting is Bankfirst Financial Services issued two mortgages shortly afterwards of nearly $700,000 to Selectbuilt for the Reunion property. (One wonders what would happen to Bankfirst's mortgage if the Court were to nullify the Steadivest-Selectbuilt transfer.) Given current under-writing guidelines, the combined loan to value was probably not more than 75%. Thus the market value of this property is probably around a million dollars. The Steadivest swamp continues to grow."

The note was paid in full in January 2011 and released.

See sidebar on right for a collection of all Steadivest posts.

The Securities and Charities Division of the Secretary of State of Mississippi issued a final Cease and Desist Order against Steadivest on January 5, 2010. Final Order The SOS issued a pending order on November 18, 2009 against the Rankin County "family" of companies. JJ reported on November 24, 2009:

See section in sidebar for a collection of all posts on Steadivest.

The Securities and Charities Division of the Mississippi Secretary of State's office issued a Summary Cease and Desist Order against Steadivest on November 18, 2009. Copy of order. Steadivest is currently in Chapter 7 bankruptcy. Several investors sued Steadivest and several officers alleging they engaged in a scheme to defraud investors for several million dollars.

Steadivest is a collection of companies engaged in several activities related to real estate: mortgage lending, buying and selling properties, new construction, renovations, managing real estate portfolios, and selling promissory notes allegedly secured by real property to investors.
The Steadivest Companies and their officers are:
Steadivest Development: Marshall Wolfe (member)
Steadivest Capital, LLC: Marshall Wolfe (member), Patrick McCraney (registered agent), Jack
Harrington (member)
Steadivest Contrarian Fund: Patrick McCraney (member), Kelly Simpkins (registered agent)
Steadivest Properties: Marshall Wolfe (member), Kelly Simpkins (registered agent)
Steadivest Lending: Marshall Wolfe (member), Kelly Simpkins (registered agent)
Steadivest Resources: Jack Harrington (member), Kelly Simpkins (registered agent)

The order states Steadivest is a "holding company that offers real estate investment, property management, and bridge loan lending". Unfortunately for Steadivest investors, the State also said Steadivest was an elaborate "ponzi scheme". Steadivest sold shares to investors, raising $1,585,000 and spelled out to them in a Private Placement Memorandum (PPM).

A Private Placement Memorandum is "A legal document used in the private placement industry that gives investors details about a company’s business plan, investment information, and other pertinent details. Private placements are offerings of stocks or bonds that institutions or accredited, wealthy individuals may participate in, but which the public at large is excluded from." (Webster's)

The State initiated an investigation on May 26, 2009 after several complaints were filed with the Securities Division. The State found several violations.

Steadivest guaranteed the "investment funds would be held in escrow.... However, Steadivest failed to hold these funds in escrow." The State ruled Steadivest's actions showed "it had no intent to comply with the escrow terms" promised to investors. Steadivest would instead deposit the funds into its checking account where it was "commingled with Steadivest's operating cash" and that Steadivest used the investors' money to "pay bills and support the daily operations of the corporation."

Steadivest promised to maintain an open set of books that members could examine upon giving reasonable notice to the company. Unfortunately for the investors, Steadivest "never produced a single audited financial (statement)" and investors were never able to see the books.

The State stated Steadivest's presentations to the investors were of a "fraudulent nature" and that the escrow accounts were kept empty as the investors money was used to "prop up" the company instead of the intended purpose for the funds. Steadivest also used funds to prematurely pay off promissory notes held by Jack Harrington, a member of Steadivest.

Steadivest represented to investors the company was purchasing homes for a low price, renovating them, and then flipping them for a profit. The State said the figures used to show how this could make a profit for the company were "engineered solely for the purpose of fraudulently enticing investors." and that there were no profits made on these homes.

The Securities Division ruled "Steadivest mislead and deceived its investors in order to pay off mounting debt and keep its numerous subsidiaries afloat. In a "Robbing Peter to Pay Paul" Ponzi scheme, Steadivest mislead investors through a PPM (private placement memorandum which told investors where money would be spent) which Steadivest had no intention of honoring; through material misstatements of its CEO, Marshall Wolfe, and through material omissions in sales presentations and materials presented to its investors."

The State ordered Steadivest to Cease and Desist immediately from "further illegal activity". If Steadivest violates the order, the State can fine it up to $25,000 and imprison company officers up to five years in jail. Steadivest can request a hearing if it so desires.

It is also important to note several members of Steadivest were disciplined by the State in 2005. Marshall Wolfe was fined $10,000 and the State suspended his securities license for six months for selling promissory notes on real estate deals for MTW, a company he later owned (It was initially owned by his wife, brother-in-law, and Joel Travelstead. Wolfe later became a part-owner.) behind his employer's back to his clients. His employer, Bancorp South, discovered his double dealing, fired him, and reported him to the State. The Cease & Desist Order stated he committed the same violations while working for his next employer, Trustmark. The State ruled he sold unregistered securities and fined MTW Investments, an additional $10,000, as Wolfe sold the unregistered securities for MTW. Copy of earlier Cease & Desist Order

One investor, Bobby Isonhood, filed suit in August in Madison County Circuit Court against Marshall Wolfe. He obtained a default judgment which was entered against Mr. Wolfe on October 28, 2009 for $1,184,604. It is also unknown as to whether Mr. Wolfe or the officers of the Steadivest companies are the subject of any further investigation by federal or state authorities.

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.