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$85M Ponzi Scam Allegedly Defrauded at Least 150 Investors

The US Securities and Exchange Commission has filed fraud charges in an alleged $85M Ponzi scam that may have defrauded at least 150 investors. The defendants in the civil case are Arthur Lamar Adams and his Madison Timber Properties, LLC. Prosecutors have brought a parallel criminal case against Adams charging him with two counts of wire fraud. They contend that Adams’ fraud ran from 2011 through last month and his Ponzi scam involved fraudulently securing over $100M from over 250 investors in at least 14 states.

Adams Allegedly Provided False Information to Investors in the Ponzi scam involving his business Madison Timber Properties.

According to the regulator’s complaint, Adams lied when he told investors that their funds would go toward obtaining and harvesting timber from different land owners. He also promised 12-15% yearly returns. In truth, contends the SEC, Adam’s company did not have harvesting rights and Adams allegedly forged documents, deeds, and cutting agreements. The regulator is accusing Adams and Madison Timber Properties of violating the federal securities laws’ antifraud provisions, making untrue statements and omissions, and committing fraud through their business actions. A court has approved the regulator’s request for an asset freeze

The Commission said that the defendants started raising investor money through promissory note investment sales as far back as at least 2004, with the sales continuing through April 19, 2018. Investors thought that when the harvested timber was sold, they would make returns on their money. Many of them were also allegedly told that no one else could harvest the timber on the designated pieces of land. Instead, contends the regulator, Adams would promise the land tracts to a number of parties even though he didn’t have the right to make such promises.  Also, in the majority of instances, the designated land tracks did not possess the harvestable timber as touted, or, if it had timber then the value wasn’t as much as he claimed.

Adams is accused of using investors’ funds to pay his own expenses and for a different real estate project. He also allegedly paid earlier investors with money brought in by later investors, as well as persuaded some investors to “roll over their investments.”

At Shepherd Smith Edwards and Kantas, LTD LLP, our investor lawyers represent retail investors, high net worth individual investors, and institutional investors that have been defrauded by Ponzi scams like the one Madison Timber Properties was involved in throughout the US. Contact our securities fraud law firm today.

Read the Complaint (PDF)

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