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.


Latest Hamilton County Jail Booking Report

Here is the latest jail booking report from Hamilton County: ADAMS, CHRISTOPHER STEPHEN 6912 GLEN EARL WAY CHATTANOOGA, 37412 34 Collegedale Booked for Previous Charges or Other Reason(s) ALLEN, BRANDON TERELL 3010 PEGGY LANE CHATTANOOGA, 37404 30 Chattanooga Booked for Previous Charges or Other Reason(s) AYALA, JOSE 3938 ARKWRIGHT ST CHATTANOOGA, ... (click for more)

Corker Statement On President Obama Signing Ukraine Freedom Support Act Into Law

Senator Bob Corker on Thursday issued the following statement after President Obama signed the Ukraine Freedom Support Act into law: “I am pleased the president signed our bill into law, and I hope he will do the hard work to convince the Europeans to adopt similar measures and stand with Ukraine against the ongoing threat of Russian aggression. This legislation passed with ... (click for more)

Please Don't Close The Piccadilly Cafeteria At Hamilton Place

Oh, no. The Piccadilly Cafeteria at Hamilton Place is closing.  Its last day is Christmas Eve.  I will miss the great food they have there but most of all I will miss their servers, cashiers and waitresses.  They are all so friendly and accommodating.  They make it like it’s a home-style restaurant. I sure wish there was some way that Hamilton Place and ... (click for more)

Roy Exum: God Bless Cathy & Co.

The secret to the whole thing is not getting caught but somebody at the Toys R Us store in Framingham, Mass., had a camera when Cathy O’Grady was very quietly paying off all the layaway balances at the popular location last week. The picture snaked its way onto social media sites and her friends quickly recognized the area’s most famous “layaway angel.” Then somebody in nearby ... (click for more)

Lewis Leads Silverdale Girls Past Boyd-Buchanan

Thursday   was a day of celebration for the Silverdale Lady Seahawks and junior sharp-shooter Megan Lewis. It took an overtime period, but the home-standing Lady Seahawks pulled out a heart-stopping 45-44 victory over the Lady Bucs in a battle for first place in District 5-A.  Lewis scored the game winner with two seconds to play after scoring her 1,000th point on ... (click for more)

Cleveland Wrestlers Whip Tullahoma, Alcoa

The Cleveland Blue Raiders won a pair of dual meets at Walker Valley Thursday night with a 66-12 romp over Alcoa and a more-competitive 34-28 win over Tullahoma. Walker Valley split with the same two teams, the Mustangs beating Alcoa 42-33 before losing to Tullahoma, 54-18. CLEVELAND 34, TULLAHOMA 28 106 -- Jayce Mullin (C) major dec over Will Moran, 8-0; 113 -- Cody ... (click for more)