The Securities and Exchange Commission (SEC) has leveled fraud charges against a Mississippi company and its principal for allegedly bilking investors in an $85 million Ponzi scheme.
Arthur Lamar Adams lied to about 150 investors, according to the SEC, telling them that their money would be used by his company, Madison Timber Properties, to secure and harvest timber from various landowners located in Alabama, Florida, and Mississippi. He promised annual returns of 12-15 percent.
However, Madison Timber never got the harvesting rights. Instead, Adams allegedly forged deeds and agreements that purportedly reflected the value of the timber on the land. The SEC also alleges that he paid early investors with later investors’ funds and convinced investors to roll over their investments. Further, the SEC’s complaint alleges that Adams used investors’ money for personal expenses and an unrelated real estate project.
“Investors should be wary anytime they are promised high or consistently positive returns,” Richard Best, director of the SEC’s Atlanta Regional Office, said. “We acted quickly, in this case, to protect the victims of the alleged Ponzi scheme by obtaining immediate injunctive relief and an asset freeze.”
The SEC’s complaint was filed on April 20 in federal court in Jackson, Mississippi. The complaint charges Adams and Madison Timber Properties with violating the antifraud provisions of the federal securities laws. The court granted the SEC’s request for an asset freeze. Adams and Madison Timber consented to the court order and agreed to permanent injunctions, an asset freeze, and expedited discovery.
The SEC’s investigation was supervised by Peter Diskin and conducted by Krysta Cannon and Justin Delfino in the Atlanta office.