U.S. Trustee Wants To Interview Jack Brown On Missing Millions; Brown Attorney Resists; Skiles Said Daughter Spotted Ponzi Scheme

Wednesday, February 06, 2013

Samuel K. Crocker of the U.S. Trustee's Office is asking to be able to interview Soddy Daisy tax advisor Jack E. Brown about an alleged $12 million Ponzi Scheme that left dozens of "investors" holding the bag.

Attorney Tom Ray, representing the ailing Brown, said he remains too sick to be able to answer questions. He said, "The Debtor’s health condition is such that it is unlikely that he is able to give testimony."

He added, "The Debtor has executed financial disclosure forms for the U.

S. Trustee to obtain his banks records and the chapter 7 trustee is in possession of all of his records."

Attorney Ray also said, "The Debtor intends on fully testifying if he is physically able, at the 341 meeting or at a time and place that is mutually convenient to the trustee which is consistent with his current health situation."

A hearing is set on the motion before Bankruptcy Court Judge John Cook.

Meanwhile, bankruptcy trustee Jerry Farinash said he has worked out a compromise with one of the Brown investors, B.A. Skiles.

He said the issue "relates to the amount of monies paid to Mr. Skiles by Jack Brown which must be returned to the Estate as the result of an avoidable transfer."

Trustee Farinahs said Mr. Skiles began doing business with Brown's Tax Service in 2006. He periodically would “invest” money with Mr. Brown and those monies would be returned to him. When those monies were returned to him, he was not paid the interest due on his investment.

In April of 2010, the amount of interest owed to Mr. Skiles was $133,432.81 as told to him by Mr. Brown. Mr. Skiles “invested” another $66,567.19 to round the number of his interest and investment to $200,000.

A Promissory Note made payable to Mr. Skiles and signed by Jack Brown in the amount of $200,000 was delivered to Mr. Skiles.

On behalf of his brother and sister, Mr. Skiles “invested” another $60,000 in separate investments.  On behalf of another individual, Mr. Skiles “invested” $2,504.23.

Trustee Farinash said in early 2011, Mr. Skiles' daughter viewed a program on television discussing Ponzi Schemes. She "became convinced that the Debtor was running a Ponzi Scheme and encouraged her father to withdraw all of his money from his investment with Mr. Brown."

The trustee said, "Mr. Skiles was initially reluctant but after continued prodding from his daughter, withdrew all monies with Mr. Brown. Even though he received his funds from the Debtor, Mr. Skiles continued to believe Mr. Brown was operating a legitimate investment business. It was not until late 2012 that Mr. Skiles came to grips with the fact the Debtor was operating a Ponzi Scheme."

The total interest paid to Mr. Skiles on the three investments was $163,883.54. The total investment returned to Mr. Skiles, individually, was $66,567.19.

The terms of the settlement are that Mr. Skiles will pay the trustee the sum of $197,167.13 in full and final settlement of any and all claims which the Trustee has against him. This amount represents the interest of $163,883.54 plus one half of the total investment returned to Mr. Skiles individually, the trustee said.

He added, "This settlement is fair, equitable and in the best interest of the Estate and its creditors in that it allows the Trustee to recover all of the interest paid to Mr. Skiles on his investment as well as one-half of the amount he actually invested. In the event the Trustee were to institute litigation against Mr. Skiles for the avoidance of the payment he received, it would be an all or nothing case.

"The repayment of one-half of the investment that he received is, in essence, a 50/50 compromise on the likelihood of success by either party. Mr. Skiles sought out the Trustee to negotiate this settlement. He voluntarily came forward to disclose" his part in the Brown investments.


Keith Carter Was Man Shot In Knee On W. 38th Street; Still Won't Cooperate With Police

The man shot at 262 West 38 th St., on Monday afternoon was 22-year-old Keith Carter. He continues to be uncooperative with Investigators. Carter was shot in the knee. The victim was transported to a local hospital where he received treatment for the non-life threatening injury.    Chattanooga Police ask anyone with information regarding this crime to call ... (click for more)

Audio Of County Commission Meeting 7/30/14

Thankful For Senators Alexander And Corker's Support Of The F-35 Joint Strike Fighter Fleet

America’s national security at home and abroad is important to all of us.  So it is very important to recognize and thank our leaders when they show strong support for our military. That’s why I am writing to thank Senators Alexander and Corker for their continued commitment to our great state, our nation, and especially to our military.  Their support ensures that ... (click for more)

Roy Exum: Scottsboro’s Pat Trammell

I got a warm feeling Tuesday when it was announced Pat Trammell will be among those in the inaugural class of the Jackson County (Ala.) Sports Hall of Fame. When the august group is enshrined at Scottsboro’s Goose Pond Civic Center on Nov. 1, most folks won’t even know who Pat Trammell was but I knew all about him in my very first year as a fledgling sports writer back in 1967 and, ... (click for more)

Recap of 17 Stop, Prep Football Tour

Starting at Soddy Daisy at 7:44 a.m. and leaving Silverdale 14 hours later ( 9:58 p.m.), the fifth annual Chattanoogan.com prep football tour made whistle stops at 17 schools covering 220 miles.   The Chattanooga Jamboree is Aug. 15-16 at Finley Stadium and the season openers are Thurs. Aug. 21   - Cleveland vs. McCallie (Finley Stadium) ... (click for more)

Stars Shutout Lookouts Tuesday, 2-0

Huntsville, AL-Huntsville native Jed Bradley did it all Tuesday night for the Huntsville Stars.  He pitched six shutout innings and also provided the only offense in a 2-0 win over the Chattanooga Lookouts at Joe Davis Stadium in Huntsville. Recap Bradley, broke up the scoreless game in the fifth as he was locked up in a terrific pitcher's duel with Chattanooga lefty ... (click for more)