Mississippi senator confirms he lost money in fraud scheme
JACKSON, Miss. (AP) — U.S. Sen. Roger Wicker said Thursday that he is among the victims of a Mississippi-based fraud that officials say involved more than $100 million.
Wicker, a Republican from Tupelo, told The Associated Press that he had invested money in what was supposed to be the rights to cut timber. Federal prosecutors charge it was a Ponzi scheme, though, with a Jackson man named Arthur Lamar Adams using cash from later investors to pay off high-interest loans he received from earlier ones.
“My wife and I are victims of this apparent fraud,” Wicker said in a statement Thursday. “Like many others who stand to lose money in this scheme, we are very surprised and disappointed. We are learning of this through news reports like everyone else.”
Wicker didn’t immediately say how much money he has at risk.
The AP discovered Wicker’s investment listed in U.S. Senate disclosures while researching Adams’ dealings. Adams told investors he was buying timber cheaply from private land and reselling it at a higher price to sawmills, offering them the chance to loan him money and promising to repay it in 12 to 15 months at a rate of 12 percent to 15 percent annual interest.
Wicker bought into the scheme through what’s called the Alexander Seawright Timber Fund I LLC. That company was incorporated in 2010 by Jackson lobbyist Brent Alexander and lawyer Jon Seawright. Alexander, long one of Mississippi’s most highly paid lobbyists, was active when Wicker served in the state Senate before being elected to Congress.
Senate disclosures show Wicker began buying into the Alexander Seawright fund in 2015, putting in between $48,000 and $195,000, based on the asset ranges disclosed. He got back between $5,000 and $15,000 in interest, plus $37,666.67 that appears to be repayment of principal. In 2016, Wicker invested between $63,000 and $245,000. He got back between $5,000 and $15,000 in interest, plus $127,979.16 in principal. Disclosures for 2017 haven’t been filed yet.
Alexander and Seawright haven’t responded to requests for comment. The criminal charge against Adams says he paid commissions to recruiters, with one unnamed recruiter getting $2.4 million in 2017 alone and another one getting $1.6 million. It’s unclear if the recruiters could face criminal charges. They could also face civil lawsuits from investors or securities regulators.
Adams is cooperating with federal prosecutors and plans to plead guilty Wednesday in Jackson to wire and bank fraud charges. His lawyer declined comment Tuesday when asked if Adams was giving evidence against anyone else. Adams could face up to 70 years in prison and up to $1.5 million in fines. He’s currently confined at home on $25,000 bail.
Wicker is far from alone. Prosecutors say more than 250 investors in 14 states invested with Adams from as early as 2004. They says 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.
Although prosecutors say “well in excess” of $100 million was invested, it’s unclear how much of that was lost. Rumors have swept affluent Mississippi circles in recent days, with some people denying involvement. D. Patrick Franklin, the chief operating officer of investment advisory firm Pinnacle Trust, says that company had some clients who had loaned money to Adams and his Madison Timber companies more than seven years ago, but that Pinnacle stopped doing business with Adams.
“After doing our due diligence, we severed our ties with them,” Franklin said.
Prosecutors said Adams presented notarized deeds and documents assessing the value of timber, but said they were forgeries, and that Adams actually did very little timber business. Instead, prosecutors say Adams relied on new or continuing contributions to pay off older investors, using some money to pay his personal expenses and buy real estate in his own name.
After the U.S. Securities and Exchange Commission intervened, a federal judge on April 20 secretly ordered a freeze of all assets belonging to Adams, Madison Timber Properties and related entities.
Johanna Burkett, a spokeswoman for the law firm Baker Donelson, said Alexander and Seawright are both still employed there. Their investment entities typically listed the law firm as their business address, but Burkett said their activity is “personal business of employees of our firm, and is not a firm matter.” Alexander, though a lobbyist, is not a lawyer.
“We are reviewing it and their involvement further,” Burkett said. “The firm did not represent Mr. Adams or his companies.”
Burkett said Baker Donelson, based in Nashville, Tennessee, couldn’t comment further because prosecutors are involved.