The law offices of Gana Weinstein LLP are investigating investor recovery options due to the alleged Ponzi Scheme orchestrated by Arthur Adams (Adams) and Madison Timber Properties LLC (Madison Timber) by The Securities and Exchange Commission (SEC).
The complaint against Adams and Madison Timber was unsealed on May 1, 2018 Mississippi federal court revealing the SEC’s fraud charges against the Mississippi company and its principal who has been accused of stealing from at least 150 investors in a $85 million Ponzi scheme. Adams and Madison Timber agreed to a permanent injunction, an asset freeze, and expedited discovery.
The SEC’s complaint alleges that Adams misled investors by telling them that their money would be used to secure harvest timber rights from land owners in several states. The SEC alleged that Adams promised investors annual returns of 12-15%. However, Madison Timber is accused of never having obtained any harvesting rights at all. Instead, Adams allegedly forged deeds and other documents to purportedly reflect the value of the timber on the land. The SEC also alleged that Adams paid early investors with later investors’ funds and convinced other investors to roll over their investments and remain invested in the scheme. Adams is also accused of using investors’ money for his own personal expenses and to develop an unrelated real estate project.
In a parallel action, the U.S. Attorney’s Office for the Southern District of Mississippi announced criminal charges against Adams. Also in May 2018 Adams plead guilty to charges of wire fraud involving the Ponzi scheme which ensnared investors at least 14 states.
There is also evidence that investment professionals were paid by the Ponzi scheme to recommend Adams’ fraud. Advisors have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client after conducting due diligence. Due diligence includes an investigation into the investment’s properties including its benefits, risks, tax consequences, issuer, history, and other relevant factors. Appropriate due diligence would identified glaring red flags that an investment in Madison Timber was not appropriate.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. The investment lawyers at Gana Weinstein LLP represent investors who have suffered investment losses due to allegations of wrongdoing. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.