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.


Upcoming City Council Agendas

Here are upcoming City Council agendas: Tuesday: I. Call to Order. II. Pledge of Allegiance/Invocation (Chairman Henderson). III. Minute Approval. IV. Special Presentation. “Proclamation – East Hamilton Middle-High School student Madison Hayes, 12 year old Major League Baseball’s Pitch, Hit and Run National Competition” By Councilman ... (click for more)

2 Students Arrested At Bradley County High School After Routine Drug Search

A routine drug search was conducted Friday at Bradley Central High School. The search was coordinated by Lieutenant Julie Quinn of the Bradley County Sheriff’s Department. Assistance was provided by the McMinn County Sheriff’s Department and the 10 th  Judicial Drug Task Force. Five canines were used in the search.  “I appreciate the cooperation from Sheriff Watson ... (click for more)

Don't Allow Us To Be Overrun By People Who Do Not Belong Here - And Response (2)

Thank you, Senator Corker, for your clear, concise evaluation of the president's attempt to bypass Congress and personally and independently establish national policy that violates our current immigration laws.   Our long-standing failure to enforce our laws to control illegal immigration across our southern border has made this country less safe and ... (click for more)

Roy Exum: Quick! Arm Our Guards

When I learned last Wednesday that Chattanooga’s leading hospital, in a ridiculous attempt to be more “family friendly,” planned to disarm its security guards. I was aghast but decided to wait for the proper “incident” to illustrate how stupid members of our “free thought society” can sometimes be. It took exactly one week. A bit after midnight on Thursday morning a gunman appeared ... (click for more)

Baylor Must Contend With MBA's Chandler In DII-AA Semis

If there is one thing different about Friday’s TSSAA Division II-AA semifinal playoff game between Baylor and Montgomery Bell Academy at Tommy Owen Stadium in Nashville from the teams’ regular-season matchup, Red Raiders coach Phil Massey knows exactly what it is. Or, well, who it is. It’s Ty Chandler. Chandler, a 6-foot, 180-pound sophomore running back, has added ... (click for more)

McCallie's Gordon Connell - a New Wrestling Venture

Saturday morning in Cleveland when five rookie wrestling officials from the Chattanooga area take to the mats to call matches for the season opening middle school tournament at Ocoee Middle School, it will be easy to pick out the one who, at first observation, doesn't belong. Or does he? With lots of gray hair and years of coaching experience, former ... (click for more)