Friday, October 2, 2009

Steadivest scrum update

  • Synopsis
  • Travelstead Motion to Dismiss
  • McCraney Notice to Remove
  • Exhibits

Well, the Steadivest scrum is heating up as two of the defendants in the lawsuit have filed motions in court. The lawsuit claimed Steadivest and other defendants defrauded investors for millions of dollars in a sale of phony promissory notes. Defendant and Attorney Patrick McCraney, Jr. filed a motion to remove the lawsuit to federal court, claiming it belonged in the bankruptcy action. Fellow defendant Joel Travelstead filed a Motion to Dismiss and claimed he lost $200,000 to fellow defendant Marshall Wolfe. As this case has grown pretty complex, I've written a synopsis so that this case is easier for readers to follow.

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.). It dabbled in mortgage lending, new construction, buying and selling real estate, renovating and flipping properties, and managing real estate portfolios for investors. It sold promissory notes to investors as well. Earlier post

Several individuals were connected with most of these companies: Marshall Wolfe, Patrick McCraney, Jr., and Jack Harrington. Patrick McRaney is listed as the registered agent for Steadivest Capital, LLC (formerly TFS, Tactical Financial Solutions) and the officer of the the Steadivest Contrarian Fund. Jack Harrington is listed as the member/officer of Steadivest Capital, 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). These individuals also were listed according to an SEC filing as the executive officers for a fund called the Investlinc/TFS Income Fund. Lee Paris was listed as a promoter of the fund and the majority owner was another company owned and operated by Wolfe. It should be pointed out this was a fund and not Investlinc Securities that is also owned by Mr. Paris.

Several investors sought a temporary restraining order against Steadivest in March. TRO post with copy of petition. Several days later Steadivest filed Chapter 11 bankruptcy, thus quashing the TRO request. The investors then filed a motion in bankruptcy court as creditors asking the Court to convert the Chapter 11 filing to a Chapter 7, alleging Wolfe was only filing bankruptcy for one company (where all the debts were placed) while operating his other companies. The Court agreed and converted the 11 to a 7 and all Steadivest companies were placed under the same filing.

The investors then filed a lawsuit in Rankin County Circuit Court claiming Wolfe, Harrington, McCraney, Investlinc/TFS Income Fund, Steadivest, Justin Adcock, and former partner Joel Travelstead committed fraud and operated a Ponzi scheme with their money. Earlier post, includes copy of lawsuit. Investlinc recently filed a Motion to Dismiss and claimed Wolfe was never an employee or officer of Investlinc and that he "fleeced" Investlinc as well. Investlinc claimed "As he did with the Steadivest Companies, Wolfe deceived, betrayed, and victimized the Investlinc Fund and its investors." Post on Motion to Dismiss filed by Investlinc. Several of the investors were close to Wolfe: his next-door neighbors, childhood friends, members of his church, and members of his wife's family.

It should also be pointed out Bancorp South fired Wolfe for selling unregistered securities (promissory notes) to his Bancorp South clients for a company he was operating "on the side" in 2004. The bank then reported his actions to the Securities Division of the Secretary of State. The State fined him $10,000 and suspended his license for one year. The State also fined MTW, the "side company" $10,000, of which Travelstead was a part-owner and cited Travelstead as an active participant in the violation. Post on discplinary actions. Travelstead ceased his association with the Wolfe/Steadivest companies in 2007 and now claims he was victimized by Wolfe as well.

Jackson Jambalaya also examined the deeds for dozens of properties owned by Steadivest in Hinds and Madison counties. The deeds of trust for many of them were suspicious in nature as they showed liens placed on them by Investlinc/TFS Income Fund only a few weeks before Steadivest filed its bankruptcy petition. JJ also discovered a warranty deed for a property in the Reunion subdivision in Madison County that was transferred from Steadivest to Jack Harrington, a member of Steadivest Capital. Post on possible shell games

Travelstead's Motion to Dismiss
Joel Travelstead filed a Motion to Dismiss on September 28, 2009 in Rankin County Circuit Court in response to the lawsuit filed against him by the Steadivest investors. The Motion states Travelstead severed all ties with these companies in 2007 and the Plaintiffs make no specific allegation of fraud or misrepresentation against him and that the action against him is vague. He claims he lost $200,000 after he left the company and has the same rights as they to recovery.
Copy of Motion to Dismiss

McCraney's Motion to Remove
McCraney filed in U.S. District Court in Jackson a Notice of Removal on September 30, 2009. The Notice argues all claims made by Plaintiffs are subject to binding arbitration agreements they allegedly signed. McCraney then argues the subject of the lawsuit is a matter for the Bankruptcy Court and the Court should determine if the Bankruptcy Court is the "appropriate forum". It should be noted McCraney listed Cynthia Speetjeens as counsel along with Judson Lee. Such an association requires no further comment. Copy of Motion to Remove

The pattern thus becomes more clear: several defendants are filing motions to dismiss and all claiming Wolfe victimized them as well. Translation: Everyone is throwing Wolfe under the bus. Wolfe's home is still for sale and its listing price was reduced from $879,900 to $749,000. It was first listed last fall for over a million dollars.

Several commentors accused this blog of favoring one side of the lawsuit by not including all of the exhibits filed by the Plaintiffs. Several have been posted already, here are the rest.
Exhibit 1 : A document prepared by Tactical Financial Solution (TFS). TFS later was renamed as Steadivest Capital and Jack Harrington and Marshall Wolfe were listed as members, McCraney as registered agent. The exhibit is 80 pages. Page 15 gives the bios of the management team.
Exhibit 2 : another document given to investors and prospects. It is 56 pages.
Exhibit 3 : more agreements, proformas, and information for investors


Anonymous said...

Kingfish, please continue to keep us updated on this. Thanks for all of the great work.

Anonymous said...

Incredible work, KF.

Anonymous said...

"Steadivest is a "Family of companies" according to a letter written by its managing member, W. Marshall Wolfe."

regarding a "family of businesses", you ain't seen NOTHING yet 'til you see the evans boys!


Anonymous said...

KF -

You know that anyone can file a lawsuit against anyone. Just because one party is on one side of the "v" and one party is on the other doesn't mean that one is right and one is wrong - or that one is good and one is bad. Just because the plaintiffs have lumped a bunch of people together as defendants doesn't mean that they were all in it together. Your statement that the defendants are trying to "throw wolfe under the bus" sure makes it sound like they were all in it together. Come on, man. Wolfe was driving his own bus and the judicial process will determine who was in the driver seat with him and who got taken for a ride. You are doing a really good job reporting on this case, but would you please be a little more careful with your characterizations and jumping to conclusions?

Anonymous said...

"doesn't mean that they were all in it together"

Explain how the fillings with the sos that show all are/were members or officers means otherwise? Black and white not a KF conclusion

Kingfish said...

Let me see. The various motions filed by defendants didn't have to say Wolfe fleeced or victimized them. They could have just kept to their arguments that there was a failure to state a claim, allegations were vague, no specific details provided, and so on. However, they went out of their way to state Wolfe screwed them over as well and that they should be entitled to recovery against him. They didn't have to do that and yeah, that is throwing him under the bus.

Kingfish said...

Don't forget the SEC filing as well.

I've also stated this is a lawsuit and a lawsuit is what one side claims the other side did. I've also posted all responses as well. I expect my readers to know these basic facts and that a lawsuit is not a statement of proof in and of itself.

Now the Bar's finding of fact in the Keith Shelton case, different story, hehe.

Anonymous said...

Funny that Travelstead is saying he was victim. seeing that he was one of the ORIGINAL 3 that started this ponzi scheme. MTW (Montgomery,Travelstead,and Wolfe) was where it all started. Steadivest did not actually take flight until after the two remaining partners, Travelstead and Wolfe seperated in 2007. It is hard to believe that Travelstead did not know what was going on after all he was the bookkeeper.

Kingfish said...

My understanding is he wasn't the bookkeeper. Yes, I know he is a CPA but I don't think he was the ledger guy for this operation. I could be wrong though. Those exhibits are rather interesting.

Anonymous said...

5:06 get your facts straight. Any fraud that occurred happened years after Travelstead was gone.

MTW was not a Ponzi scheme. If it were then plaintiff Ray Montgomery, who was one of the original owners, would be a defendant and not a plaintiff. The fact that Travelstead is owed money has nothing to do with when any fraud occurred. Also, MTW had a well-respected and independent (non-owner) CPA that kept the books, not Travelstead. This CPA would have no incentive to prepare anything other than accurate financials.

It is interesting to note that the complaint cites nothing substantive against any of the defendants other than Wolfe. Plaintiff's attorneys tend to throw everything that they can at all defendants unless they have nother to throw at them. Plaintiffs attorneys are also well-know for suing anybody that they think has money in the hopes that they will settle for a nuisance value. It looks like that is what is going on here. Got to love those plaintiffs attorneys that are "seeking the truth". Then again, maybe this plainfiffs attorney is working for free.

Anonymous said...

Good point about the plaintiff attorney 5:24. I assume that most of the JJ readers are conservative and I'm surprised none of them have picked up on this point. I also noticed that the complaint is about Wolfe and then simply lists other defendants.

Back to those good old plaintiff attorneys. Dicky Scruggs was the most well respected plainiff attorney in the state. Somebody please remind me where he is now?

Anonymous said...

KF -- I hope that the above comments start a broader conversation about our legal system and additional tort reform that is needed. In most European courts the losing party has to pay the legal fees for the prevailing party. This prevents plaintiff attorneys from filing frivolous lawsuits and also prevents them from naming a laundry list of defendants that they know have no liability.

By way of example, when a plainiff attorney files a medical malpractice suit, he tends to sue not only the doctor directly involved but also every doctor connected in any way shape or form to the other doctor (along with the hospital, nurses, and perhaps the mother of all of the doctors). They do this in an attempt to get money from parties that really have no fault. Unfortunately, some of these non-liable defendants settle simply to get out of having to spend much time and money defending the suit. In other words, if it will cost $50,000 to defend (and a whole lot of time and effort), why not pay the plainiff's attorney $25,000 to be dismissed. The Europeans have figured this out and as a result they don't have frivolous suits being filed like we do in the U.S.

Kingfish said...

1. Let us say alleged ponzi scheme. Right now that is an accusation and nothing has been proved.

2. Most of these defendants are members of some of the Steadivest LLC's. As members, are they not responsible for what other members do or can be held liable?

3. Travelstead was put on notice Wolfe was completely ethical when he got in trouble with the state. My question is why didn't travelstead bail out then instead of doing business with him for another three years (3 after the violation, 2 after the States action)? Wolfe was selling unregistered securities behind his employer's back and did it to two different employers. Travelstead is a CPA and can't simply claim ignorance. Having said that, those violations were for selling unregistered securities (something Ed Peters did as well. Too bad HE didn't get in trouble), which is a completely different game than what is alleged in the lawsuit.

As for MTW being a ponzi scheme and Mr. Montgomery's status, Mr. Montgomery sued Mr. Wolfe several years ago in federal court, alleging RICO violations and book-cooking. The case was settled and dismissed with prejudice. I'll post it up there today or tomorrow.

MTW was dissolved on October 16, 2008.

Kingfish said...

I should also add Montgomery amended his complaint to charging the defendant with securities fraud and claimed they were negotiating over buying out Montgomery's share. Here are the relevant documents:


amended complaint


Order dismissing complaint citing settlement

Anonymous said...

KF -- based on your faulty logic (that is, a partner is responsible for another partner's action) Ray Montgomery would be liable for all of the things that he alleged in the original lawsuit since he was a partner of Wolfe's.

The fact is that partners may or may not be liable for other partners actions. If the other partners didn't take any actions in furtherance of any violation then they wouldn't be liable. The bottom line is that the plaintiffs attorney hammers Wolfe but no other defendants. Is it possible that this is so because there is nothing to hammer them with (other than they happened to be partners with him, as was Ray Montgomery).

Has it been your experience that most (if not all) plaintiffs attorenys sue everyone and their brother (and sometimes their mothers) in the hopes of getting nuisance settlements.

By the way, were is Dicky Scruggs?

Recent Comments

Search Jackson Jambalaya

Subscribe to JJ's Youtube channel


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