Related topics

Lawsuit demands return of more than $16M from Ponzi scheme

October 7, 2018 GMT

JACKSON, Miss. (AP) — A lawyer trying to recover money in a collapsed Ponzi scheme is suing three people who sold the investments, demanding they return more than $16 million in sales commissions.

U.S. District Judge Carlton Reeves appointed Allyson Mills to collect assets to repay investors in the $100-million-plus Madison Timber Ponzi scheme. The scheme sold bogus rights to cut timber, promising returns of 11 percent or more, far above prevailing interest rates, to more than 250 investors in at least 14 states. Mills sued Michael D. Billings, Terry Wayne Kelly Jr., William B. McHenry Jr. and companies associated with each man in federal court last week in Jackson.


The principal in the Madison Timber scheme, Arthur Lamar Adams, pleaded guilty May 9 to federal wire fraud charges. Adams is scheduled to be sentenced Oct. 29. He faces up to 20 years in federal prison and a fine of $250,000. Prosecutors say they also want Adams to forfeit his gains and make restitution.

Billings and MBD Group received $3.5 million in commissions, Mills states. McHenry and First South Investments received $3.5 million she said. Kelly and Kelly Management received $9.7 million, Mills said, passing on $1.5 million in commissions to sub-recruiters.

Court documents show Kelly and McHenry have agreed to negotiate with Mills through Oct. 16 as part of a fast-track procedure. In a court filing, Mills said Billings has not agreed and asked Reeves to order Billings into the same type of summary judgment proceedings. Reeves has set a Tuesday status conference on the issue.

Mills said Billings became a recruiter of Madison Timber investors in 2012 after providing management advice while working for the business advisory arm of Mississippi law firm Butler Snow. She writes Billings, now a Dallas resident, left Butler Snow in 2013 to become a full-time recruiter for Madison Timber, describing him as a “standout” among recruiters, targeting large investors in Texas and California.

“Billings knew or should have known that Madison Timber was a Ponzi scheme,” Mills wrote. “At a bare minimum, in inducing persons to invest, Billings was reckless and indifferent as to the existence of the Ponzi scheme.”


Mills so far has recovered nearly $2.2 million, mostly from Madison Timber and Adams bank accounts, but also from life insurance refunds and a $2,200 refund for lawn services. Mills has also said she will seek to have a University of Mississippi athletic foundation return the $97,000 or more that Adams donated.

Adams also owned part of at least six real estate partnerships, including 1,170 acres (475 hectares) of farmland in Oktibbeha County, a small beachfront development in the Florida Panhandle, large hunting camps in Humphreys and Sunflower counties and a 2,300-acre (930-hectare) real estate development near Oxford. Mills said she’s trying to maximize the value of the real estate, in most cases by selling it.


Follow Jeff Amy on Twitter at . Read his work at .