Mississippi man pleads guilty in timber fraud scheme
JACKSON, Miss. (AP) — A Mississippi man pleaded guilty Wednesday to a fraud scheme that prosecutors say took in well over $100 million and victimized more than 300 people, including U.S. Sen. Roger Wicker.
Arthur Lamar Adams pleaded guilty to one count of wire fraud in federal court in Jackson in an agreement with prosecutors after earlier waiving indictment.
The U.S. Securities and Exchange Commission, which is pursuing a separate civil suit against Adams, says he began defrauding investors as early as 2004. Authorities say the 58-year-old Jackson resident persuaded investors to loan him money, promising interest rates of 12 percent to 15 percent a year and repayment over 12 to 15 months. Adams told investors he was buying rights to cut timber cheaply and then selling them for higher prices to sawmills.
U.S. District Judge Carlton Reeves set sentencing for Aug. 21. Adams 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. He remains confined at home.
As the hearing began, Adams told Reeves, “I’m here to plead guilty.” He said little after that, answering Reeves’ questions about whether he understood what he was doing with “Yes, sir,” and “No, sir.” Adams didn’t comment to reporters afterward.
Assistant U.S. Attorney Dave Fulcher told Reeves that Adams confessed to FBI agents. Fulcher said that “except in a few instances,” Adams had no timber rights, and knew that he would use some of the money to repay investors and keep the fraud going in a classic Ponzi scheme. Federal officials say Adams skimmed some of the money to pay personal expenses and used some to begin real estate developments near the Mississippi towns of Oxford and Starkville.
Adams offered notarized deeds to cut timber as collateral, but as one of the first lawsuits filed in state court shows, those deeds were bogus. A plaintiff named Sherri Hughes says Adams and a salesman for the scheme persuaded her to loan Madison Timber Properties nearly $170,000, but when she tried to cash her monthly check after the SEC froze Adams’ accounts, she was turned away by a bank. Hughes’ company, Highway 22 LLC, then tried to file its deed for a purported 400-plus-acres (160-plus-hectares) of timber rights in Monroe County, only to be told by courthouse workers that no such parcel or landowner existed in county records.
Although prosecutors say “well in excess” of $100 million was invested, it’s unclear how much was lost. Rumors have swept affluent Mississippi circles in recent days. The original federal judge recused himself, saying a number of friends are among purported victims.
Adams used some of investors’ money to pay commissions to other people who solicited new investments. Wicker, for example, bought his interest through an entity controlled by Jackson lobbyist Brent Alexander — to whose children Wicker is godfather — and Jackson lawyer Jon Seawright. The Associated Press discovered Wicker’s investment listed in U.S. Senate disclosures. A lawyer for Alexander and Seawright says they were conned too.
The criminal charge against Adams says one unnamed recruiter got $2.4 million in commissions in 2017 and another one got $1.6 million.
Those salesmen and their employers could be sued by disgruntled investors. They could also face lawsuits from securities officials or even criminal charges. Adams’ lawyer, John Colette, has declined to say whether Adams is providing evidence against others.
“This criminal conduct will not be tolerated in our state, and if others were involved, we will continue to dig until all those responsible have been brought to justice,” Mike Hurst, U.S. attorney for southern Mississippi, said in a statement.
Follow Jeff Amy at http://twitter.com/jeffamy . Read his work at https://www.apnews.com/search/By%20Jeff%20Amy .