Tuesday, February 5, 2008

Ed Peters: Do Leopards Ever Change Their Spots?

While the controversy rages over the of role former Hinds County District Attorney Ed Peters in the Dickie Scruggs scandal, the media has so far ignored his involvement in the long-forgotten NASA fraud case from the mid-1970's. (469 F. Supp. 54) See http://groups.google.com/group/jackson-jambalaya/files (click on Peters case link)

NASA (National Account Systems Association) was an investment scheme cooked up by Mr. Peters and Charles Steen which promised to pay a rate of return at 12% interest (The market rate then was 6%) to investors. Charles Steen was earlier convicted in Alabama of operating a similar bogus investment scheme and served a three-year prison sentence. NASA was shut down by then-Mississippi Secretary of State Heber Ladner in 1974 for violating state securities laws after the scheme took in $340,000 from Mississippi investors. ( See "Peters Liable for NASA Fraud" by Bill Minor, Capitol Reporter, December 7, 1978)

The victims sued Mr. Peters and three other defendants in federal court to recover for alleged violations of federal and state securities law. The Court ruled Mr. Peters "was a controlling person of the issuer and is jointly liable for all violations of the Securities Act and the Exchange Act". The scheme involved the selling of accounts receivables purchased at a discount(with the money from the promissory notes) as promissory notes to investors. Unfortunately for the investors, the receivables originated from STARCO, a bogus paper company. Mr. Peters was also the attorney for STARCO (Conflict of interest?).

"NASA itself never issued any stock and never had any paid-in capital as required by law. Neither Peters nor Steen paid for any stock and none was issued. NASA was a corporate sham." (page 10 of Court's opinion). It should also be noted these companies had no reserves nor collateral, in violation of the law.

U.S. District Judge Orma Smith issued the following findings about Mr. Peters in the opinion:
"In the present case, Peters owed a special duty of diligent investigation and disclosure. Not only was he the lawyer responsible for the issuer's compliance with applicable laws, he also permitted his name (and his office) to be exploited as “president” of NASA when he clearly knew the daily operation of NASA would be controlled by Steen. He permitted NASA to utilize his signature stamp and made no effort to determine how his signature was being used...."

"Peters, as lawyer for the issuer, secured an exemption based on promotional material furnished to him by Steen. He did not make a reasonable inquiry to ascertain the truth or falsity of the representations when these statements could have been readily verified by a lawyer. He secured the certificate of exemption without which these securities would not have been offered or sold when he knew or should have known that NASA was in violation of law, had issued no stock and had no paid-in capital. During the term of the offering, when Peters had ample opportunity to detect the misrepresentations, he failed to report violations to NASA, to the Secretary of State of to the Securities & Exchange Commission."

The court concludes that without the active, affirmative assistance of Peters as lawyer for the issuer, including the use and exploitation of his name, the sale would not have been accomplished. Therefore, under applicable law, Peters was a participant in the sale and is jointly liable with the issuer for all damages....

Further, the Court concludes that, because of his approved designation as “president” and his role in connection with the sale, Peters was a controlling person of the issuer and is jointly liable for all violations of the Securities Act and the Exchange Act..

Peters, moreover, materially and substantially aided and abetted the issuer in connection with the offer and sale of these securities. The “scienter” requirement is satisfied because the evidence establishes overwhelmingly that Peters' conduct was grossly negligent and reckless. His conduct was an extreme departure from and a gross violation of the duties imposed on him as lawyer for the issuer. The preparation and assistance with the materially false and misleading statements and the course of conduct of Peters clearly imposes aiding and abetting liability on him as a matter of law...

The court concludes, therefore, that Peters, as lawyer for the issuer, is jointly liable for all violations of s 12(2) and s 17(a) of The Securities Act, s 10(b) of the Exchange Act, Rule 10b-5, Mississippi “Blue Sky” law and common law....

It should be noted the same court ruled "In the case of defendant Peters, the evidence does not show that he profited financially in any way in the subject transactions and the court cannot find that he intended to defraud plaintiffs.."

Despite this Panglossian finding by the court, it does not take a genius to figure out what happened. Mr. Peters acted as President of NASA and the attorney for other companies in the scheme controlled by his partner, Mr. Steen. Mr. Peters was so negligent in this deception the NASA phone line rang in the Hinds County District Attorney's office. (To think Tyrone Lewis was demoted for less). The offices of NASA and the District Attorney were in the same building. Mr. Peters inexplicably did not check the background of Mr. Steen, which would have revealed a criminal record. He allowed Mr. Steen to have his signature stamp, something an attorney should never do. It boggles the mind to think Mr. Peters took a prominent role in the companies involved yet was able to escape a harsher judgement. Bernie Ebbers is probably wondering right now why this defense did not work for him.

Mr. Peters' claim was he was just a Mississippi bumpkin who had no clue as to what a security was even though he was the District Attorney for the largest county in Mississippi and one of the sharpest lawyers in the state. The Court accepted his defense and merely charged him with being reckless, ignorant, and negligent BUT liable for the fraud anyway even if he did not profit from it. Hmmm....he gets involved in a case that blows up but yet there is no finding he profited from it. Does anyone see a pattern here?

The plaintiffs were awarded damages of $240,000. The defendants appealed to the Fifth Circuit Court of Appeals but the case was settled before it was heard. Despite the Court's findings, the state of Mississippi NEVER PROSECUTED ANYONE IN THE CASE! One must wonder where the true negligence occurred: in the office of the Hinds County District Attorney or the Mississippi Attorney General.

Do not even ask what action the Mississippi Bar took against Mr. Peters as it waited two years before issuing a cute little public reprimand to the District Attorney. However, it should come as not surprise to anyone who studies this case that Mr. Peters is once again involved in a controversy involving corruption and fraud.

Additional reading:
The Clarion-Ledger, "Hinds D.A. Reprimanded for 1974 Legal Job", January 6, 1981
The Clarion-Ledger, "Peters Stays Quiet on Reprimand by Peers, November 13, 1980
The Clarion-Ledger, "D.A. Asks Overturn of Ruling", March 8, 1979
The Clarion-Ledger, "Ex-D.A. Peters, Lawsuit was only NASA Benefit", October 6, 1978
The Capitol Reporter, "Book Closed on Ed Peters' NASA Boondoggle", January 8, 1981


Anonymous said...

heard from a friend:
John Grisham is scheduled to speak at MS Col law school on 2/13 at 6pm in the auditorium. media isn't invited.

Anonymous said...

Who wants to bet that despite King's taking on Peters in this post that Laddsworld doesn't pick it up via link?

Kingfish said...

I'm not after glory........

I'm after Spartacus

Anonymous said...

kingfish, you impress me as a unique source for good information; please consider altering your font colors; your current scheme is very hard on the eyes; simple black on white is far superior.

Anonymous said...

Jim Giles advocates black-on-white text? That's deeply, deeply ironic...

Anonymous said...

Yes, please change the white on black. I try reading your blog but it very much hurts the eyes.

Anonymous said...

The change is an improvement but still the very best is a black font with a white background; you may consider it boring and your choice more spicy and consistent with 'jambalaya' but traffic is hard enough to come by without dissuading people with font and background colors; and your knowledge and skill on this particular subject is diminished with your presentation choices; I have a lot of experience at bad HTML but with a Blog you have got a professional looking presentation form to input your text; don't mess it up with a black background; just a little Google research on this issue and you will confirm this point for yourself.

Anonymous said...

Jim Giles: White Nationalist HTML Consultant!

"The problem, Kingfish, is that you have too much BLACK on the screen with just a little bit of WHITE text on it. What you really need is a predominantly WHITE screen to enhance the visitor's experience!"

Anonymous said...

Jim Giles: White Nationalist HTML Consultant!

"The problem, Kingfish, is that you have too much BLACK on the screen with just a little bit of WHITE text on it. What you really need is a predominantly WHITE screen to enhance the visitor's experience!"

Anonymous said...

Jim has been cordial. He's not crossed any lines.

Anonymous said...

No Jim has not crossed any lines. Let's all play nice children. We don't all have to agree, just agree to disagree as they say.

By the way Fish, this is an excellent gathering of information here on Peters.

Anonymous said...

When you have only one trick pony and a staff of green interns ...

LADD: Remember that journalistic pieces take longer than posting blog entries (which I like, too), so bear with us.

Kingfish said...

I've noticed now she is exhorting people to step away from their keyboards and get involved in Jackson and has taken some shots at local bloggers lately without actually calling them out. Getting more involved is great but I'm not buying it.

As for the black text, I like this blog to have an edgy and different look to it. I see what you mean about the white on black. I played with some blogger templates tonight. Made it MUCH worse. Tried this one: http://www.mortgagemambo.blogspot.com/ as I would prefer to use a style similar to Bloomberg, black with the main body having a white background. I do like the black for photos and videos, better contrast usually. See all those dividers between each link on the right? looks crappy. Then the html will allow me to expand the margins as I have done on the current template. The problem is it has these crappy looking black dotted divided lines that enclose each post and THAT can't be expanded so the text is still squeezed and makes the post look much longer than it really is. The white background was nice but then what the template allowed you to do was much more limited.

As for Mr. Giles, as long as everyone is being nice to each other, I don't care wha tthe politics are.

Anonymous said...

It is very interesting for me to read the blog. Thanks for it. I like such themes and anything connected to this matter. I would like to read a bit more soon.

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Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).

Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.

In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.

Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!

This is definitely a Beaver production.

Note: Security provided by INS.

Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

Note: Security provided by INS