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 - And Mug Shots

Here is the latest jail booking report from Hamilton County: BAILEY, ALBERT LEON 816 ROANOKE AVE CHATTANOOGA, 37404 73 Chattanooga DOMESTIC ASSAULT BARNES, WESLEY SAMUEL 306 UPSHAW DR CHICKAMAUGA, 30707 38 Chattanooga POSSESSION OF LEGEND DRUGS W/O PRESCRIPTION POSSESSION OF CONTROLLED SUBSTANCE DRIVING ON REVOKED, SUSPENDED OR CANCELLED LICENSE ... (click for more)

PHOTOS: Funeral Of Luther Masingill

For video by Ben Cagle click here , here and here . (click for more)

Tom Dugan Was A Good Man

Tom was my boss for most of my 36 years at Carta.  At the ceremony where I was awarded my 30-year service award, Tom said, "Don disagrees with 85% of my decisions, but I wish I had 80 more employees just like him." This kind of indicates our relationship. When I asked him to help with my plans for a reunion for the group of Veterans that I served with in Vietnam, he quickly ... (click for more)

Roy Exum: More Sunday Funnies

On the last Sunday before Daylight Savings Time disappears next week, let’s go to my jokes back for some grins and giggles: * * * An old gentleman was on the operating table awaiting surgery and he insisted that his son-in-law, a renowned surgeon, perform the operation.  As he was about to get the anesthesia, he asked to speak to his son-in-law. “Yes, Dad, what is ... (click for more)

Alabama Wins 34-20, But Vols Find A Can-Do QB In Dobbs

KNOXVILLE, Tenn. – Tennessee now has renewed hope for success down the home stretch of the 2014 football season. Maybe a bowl game is more a reality now than it was a week ago. Why? Quarterback Joshua Dobbs got on the field. Dobbs, who hadn’t taken a snap all season, rallied the Vols from a 27-0 deficit and turned in a sterling performance to threaten fourth-ranked ... (click for more)

Notre Dame edges Boyd Buc, 1-0 in Girls Soccer

Notre Dame senior Liz Ciabattone scored in the fifth minute and then the Irish held off a battling Boyd Buchanan team for the next 85 minutes for a 1-0 triumph in an A-AA sectional match. The victorious Irish along with Chattanooga Christian (2-0 winner against Grace) advance to the state quarters next Wednesday in Murfreesboro. “It’s good to get the win and advance to the ... (click for more)