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

Wednesday, February 6, 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.


Get Emailed Headlines From Chattanoogan.com; Like Us On Facebook, Twitter For Instant News

We send out headlines each day of the latest Chattanooga news. Our news headlines have links that take you to the stories with a click. We also send out special emails if there is a highly significant local news story breaking so you will be aware of it quickly. To be added to the email headline list, just email us at news@chattanoogan.com In addition, like us on Facebook ... (click for more)

Fire Causes #32,000 In Damage To Ooltewah Home

Tri-Community Volunteer Fire Department (VFD) battled a house fire at 4137 E. Freemond Circle (Ooltewah) early Saturday afternoon. At  12:52 p.m. , a 911 call was made reporting a fire in the basement of her home. Tri-Community VFD responded and arrived on the scene reporting heavy smoke coming from the basement of the home. Firefighters worked quickly to contained ... (click for more)

Do Something To Protect Our Children

It is unconscionable in this day and age that these children had to exist in such deplorable conditions and that an innocent baby suffered and died alone in a locked car.  Yes, there is blame and accountability considering this family had child neglect charges filed a few years ago (that were apparently dropped and expunged) and a large part of the responsibility should ... (click for more)

Roy Exum: The Saturday Funnies

Every week I get emails full of inspiration and funny stories. This summer I have gathered a sampling of my weekly harvest and presented the collection as a reminder we ought to cherish laughter with those we love and the weekend. I am not only amazed how popular my ‘Summer Saturdays’ have become but this week I have gotten funnies from California, Texas and Arizona, to mention ... (click for more)

Thompson, Bell Win Scenic City Scorcher Race

Saturday was another record-breaking day for runners in Chattanooga and we aren’t talking about the heat and humidity. It was the third-annual Scenic City Scorcher two-mile race held in flat and fast Heritage Landing where 48 of the 120 participants broke a Tennessee state record for their particular age. Christian Thompson was the overall winner for the second-straight year ... (click for more)

Complete Results From 2017 Scenic City Scorcher

**** OVERALL FEMALE **** Place Name                     Ag Div   Hometown             Guntime Pace      ===== ======================== == ===== ==================== ======= ===== ... (click for more)