Trustee In Jack Brown Ponzi Case Asks Hold On Property Claimed To Be Exempt From Bankruptcy

Monday, January 14, 2013

Trustee Jerry Farinash is asking that a hold be placed on a wide range of property claimed as exempt from bankruptcy by the Jack E. Brown family of Soddy Daisy.

Mr. Farinash says Brown needs to be required to answer a wide range of questions about some $12 million in missing investor funds before there is any exemption of property.

He said Jack Brown was the main director of a "Ponzi Scheme," but said his wife, Janet, and son, Jason, were involved, and their exempt property claims should not be honored.

Trustee Farinash said Brown's Tax Service was operated at 10838 Dayton Pike, Soddy Daisy, "for the purpose of allowing the debtor, and others, to gain access to the personal financial information of its clients. Once they had access to this personal financial information, Brown would solicit those clients with net worth to “invest” their money with him at a unreasonably higher rate of return than was possible through normal and legitimate investment opportunities.

"These investment opportunities offered by debtor were in reality a Ponzi Scheme perpetrated by the debtor and others in concert with the debtor.

"In furtherance of the Brown Ponzi Scheme, the debtor, and others, utilized form promissory notes (in most instances, but not all) to memorialize each person’s investment. The debtor’s son, Jason Brown, executed some promissory notes for investments made in the Brown Ponzi Scheme. The debtor’s wife, Janet Brown, routinely wrote and signed checks for payments in the Brown Ponzi Scheme.

"The money that the victims of the Brown Ponzi Scheme were investing with the debtor, and others, was misappropriated and used by the debtor and others, to acquire real and personal property of significant value for the benefit of the debtor, his immediate family and others.

"The precise nature, extent and whereabouts of all of the assets of the debtor is not yet fully known. Most, but not all, of the 'investments' received by the Brown Ponzi Scheme were deposited into the accounts of Brown’s Tax Service. Payments made to investors of the Brown Ponzi Scheme were made by check and in cash. The check payments were normally drawn on the accounts of Brown’s Tax Service. Investors would go to the business location of Brown’s Tax Service to pick up their checks and to receive cash. When checks were mailed to investors, they were mailed from the business address of Brown’s Tax Service. The assets of Brown’s Tax Service were used to help perpetrate the Brown Ponzi Scheme."

Trustee Farinash said, "To the extent any asset claimed by the debtor as exempt can be traced to the proceeds of the Brown Ponzi Scheme, the trustee objects to the debtor’s claims. To the extent ownership of any asset was maintained by the use of funds from the Brown Ponzi Scheme, the trustee objects to the debtor’s claims. To the extent the maintenance of any asset was funded from the proceeds of the Brown Ponzi Scheme, the trustee objects to the debtor’s claims. To the extent any asset claimed as exempt is claimed to be owned as tenants by the entireties, and such asset was obtained in whole or in part by the use of funds from the Brown Ponzi Scheme, the trustee objects to the debtor’s claims. 

"To the extent any asset claimed as exempt is claimed to be owned as tenants by the entireties, the trustee would show that Janet Brown, the debtor’s spouse knew or should have known about the fraud being perpetrated by the Brown Ponzi Scheme and that her ownership interest was obtained by fraud thus making a tenancy by the entireties inapplicable."

He said the property located at 198 Sabakewell Lane, Sale Creek, "was obtained, at least in part, by the use of funds from the Brown Ponzi Scheme. The trustee objects to the debtor’s claim of homestead exemption in property obtained by the use of funds from the Brown Ponzi Scheme."

The trustee said the Browns are claiming that the house should be exempt from the bankruptcy.

He also said there should be no exemption on funds in a Community National Bank account, ownership of a 2008 Chevrolet Avalanche truck,  ownership of a golf cart,  a trailer, a four-wheeler, a 2010 dirt bike, and computers.

Trustee Farinash said he is seeking to have Jack Brown "submit to an examination regarding the truth and sufficiency of his property claimed as exempt."

He said, "The trustee requests that the Court deny the debtor’s property claimed as exempt, allowing him to amend those exemptions after he has submitted himself to an examination and fully answer the questions posed to him."


Latest Hamilton County Jail Booking Report

Here is the latest jail booking report from Hamilton County: AVIU, ALDRIN  3881 RUFUS RD MASON,  Age at Arrest: 31 years old Arresting Agency: Chattanooga CRIMINAL IMPERSONATION --- BIRO, ANDREW  5916 THURMAN LN HIXSON, 37343  Age at Arrest: 26 years old Arresting Agency: Hamilton County VIOLATION OF PROBATION (DISORDERLY CONDUCT) VIOLATION ... (click for more)

Cleveland Honored By Environmental Health Association

The city of Cleveland has been chosen to receive the 2016 Community Partnership Award presented by the Tennessee Environmental Health Association, Mayor Tom Rowland said Monday. The award is given to an individual or organization that has made significant impact either on the profession of environmental health or the environmental health of the community. This is the first ... (click for more)

Make America Good Again - And Response

“No people can be great, who have ceased to be virtuous.”   Samuel Johnson (1709 – 1784) Last week I witnessed first hand the 2016 Republican National Convention in Cleveland, Ohio. As I observed the happenings within the Quicken Arena, the one theme that continued to pop up again and again, was  Make America Great Again .  Of course, that being ... (click for more)

Roy Exum: Keep Mike Carter’s Genius

Mike Carter, who has just been chosen as the “Best Overall” member of the Tennessee Legislature by a group known as the Tennessee Forum and “Legislator of the Year” by Citizens for Home Rule, is truly both. A lawyer and then a Sessions Court judge for 8 ½ years, he is overwhelmingly favored to win a third term during next Thursday’s election and rightly so. While it is laudable ... (click for more)

Dunbar Promoted To Head Wrestling Job At Ooltewah

J.D. Dunbar had been promoted to head wrestling coach at Ooltewah High School. Dunbar, an assistant with the Owls’ mat program since 2012, becomes a head coach for the first time at the high school level. He replaces Bryant Blackmon, who recently resigned. The 36-year-old Dunbar is also the school’s strength and conditioning coach and assistant head football coach on ... (click for more)

Another Big Week For Chattanooga Football Club

More than 10,000 fans gathered at Finley Stadium last Saturday to see a 5-3 penalty kick win over Miami United.   CFC keeper Gregga Hartley made a save and scored the winning penalty kick, helping his team to advance to the national semifinals on Saturday.  They will host Sonoma County Sol at 7:30 in the comfy confines of "Fort Finley"  Chattanooga is the top ... (click for more)