Fraud Affected Hundreds of Victims Across Multiple States
Jackson, Miss. – William B. McHenry, 71, of Canton, has been
indicted by a federal grand jury for his role in a multi-million dollar Ponzi
scheme that adversely affected hundreds of victims across multiple states over
a number of years, announced U.S. Attorney Mike Hurst and Special Agent in
Charge Christopher Freeze with the Federal Bureau of Investigation in
Mississippi.
McHenry appeared before U.S. Magistrate Judge Linda R.
Anderson today for his initial appearance and arraignment on the Indictment.
The case is currently scheduled for trial on April 15, 2019, before U.S.
District Judge Carlton W. Reeves in Jackson.
"Those who prey upon and steal from others will soon
find themselves on the wrong side of the law. We will continue to investigate
this massive scheme wherever the evidence may take us and will vigorously
pursue and bring to justice any other wrongdoers who were involved," said
U.S. Attorney Hurst.
McHenry is charged with one count of securities fraud and
two counts of wire fraud involving a scheme to defraud investors, all in
connection with a Ponzi scheme using Madison Timber Properties, LLC, a company
wholly owned by Arthur Lamar Adams. Adams has previously been convicted and
sentenced for his role in the Ponzi scheme.
As charged in the Indictment, beginning as early as 2008 and
continuing through April 2018, McHenry assisted in a scheme to defraud investors
by soliciting millions of dollars of funds for Adams under false pretenses,
failing to use the investors’ funds as promised, and converting investors’
funds to McHenry’s and Adams’s own benefit without the knowledge of the
investors. Instead of investing McHenry’s clients’ money, Adams used the
invested funds for
his own personal benefit and for purposes other than those
represented to investors, which also included making payments due and owing to
other investors, thus perpetuating the Ponzi scheme. During the fraudulent
scheme, McHenry recruited investors, and fraudulently obtained well in excess
of $18,000,000 from more than 25 investors located in multiple states.
As alleged in the Indictment, as part of the fraudulent
scheme, McHenry falsely represented to investors that Madison Timber Properties
was in the business of buying timber rights from landowners and then selling
the timber rights to lumber mills at a higher price. The object of the scheme
was to cause individuals to invest in loans that purportedly were for the
purpose of financing contracts for the purchase of timber rights to be sold to
lumber mills at a higher price. However, neither McHenry, Adams nor Madison
Timber Properties had such timber rights or contracts with lumber mills, except
in only a few instances.
McHenry and Adams entered into fraudulent investment
contracts with investors, most often in the form of promissory notes on behalf
of Madison Timber Properties. The loans typically guaranteed investors an
interest rate of 12-13%, with the interest to be repaid to investors over the
course of 12-13 months. The monthly payments due on these promissory notes were
typically due on either the first or the fifteenth of the month.
McHenry and Adams created false documents causing investors
to believe that their investments were secured by sufficient collateral from
which they could recover all or part of their investment in the event that
Madison Timber Properties defaulted on the loans. Specifically, Adams created
false timber deeds purporting to be contracts conveying timber rights from
landowners to Madison Timber Properties. Adams forged the signatures of
landowners and also created false timber deeds purporting to convey timber
rights from Madison Timber Properties to the investors.
To further lull investors, Adams had many of the documents
notarized to make the investments appear legitimate. McHenry and Adams also
required the investors to agree not to record their timber deeds unless Madison
Timber Properties defaulted on the loan agreement by failing to make a payment.
McHenry misled his investors to think that McHenry was a
principal officer of Madison Timber Properties and was personally invested with
his own funds in the enterprise. Instead, McHenry in fact only received a ten
percent commission on all the investments he recruited, which McHenry failed to
disclose.
Following the 2018 criminal prosecution of Arthur Lamar
Adams, the United States District Court appointed a receiver, who is actively
seeking to recover and maximize assets for restitution to investor victims.
Information regarding the Receiver’s activities can be found at the receiver’s
website, madisontimberreceiver.com.
The case is being investigated by the Federal Bureau of
Investigation and the Securities and Exchange Commission. The criminal case is
being prosecuted by Assistant United States Attorney Theodore Cooperstein.
The public is reminded that an indictment is merely a charge
and should not be considered as evidence of guilt. The defendant is presumed
innocent unless and until proven guilty in a court of law.
No comments:
Post a Comment