Mills v. Trustmark National Bank, et al. was filed in the Southern District of Mississippi on August 19, 2021 by a receiver appointed on behalf of companies engaged in a scheme to defraud investors by producing false deeds for the purchase and sale of timber.
Plaintiff Alysson Mills (“Plaintiff”) is the Receiver for Arthur Adams (“Adams”) and his company turned Ponzi scheme Madison Timber Properties, LLC (“Madison Timber”). The defendants are Trustmark Corporation d/b/a Trustmark National Bank (“Trustmark”), Southern Bancorp Bank (“Southern”), Riverhills Bank (“Riverhills”), Bennie Butts (“Butts”), and Jud Watkins (“Watkins”) (collectively, “Defendants”). Butts and Watkins were employees of Trustmark and Riverhills during the alleged Ponzi scheme.
According to the complaint, Adams operated a Ponzi scheme through his company Madison Timber for more than ten years whereby Adams enticed investors by telling them he would use their money to purchase timber from Mississippi landowners and then sell that timber to Mississippi lumber mills at a higher price. The investors would then, according to Adams, receive a return of their principal with interest from the proceeds of that transaction.
However, Adams and Madison Timber were not purchasing timber at all. Instead, Adams allegedly used subsequent investors’ investments to pay prior investors, in a classic Ponzi fashion. In the final year of the scheme, Madison Timber received more than $164 million in investments, according to the complaint. The scheme collapsed on April 19, 2018 when Adams surrendered to federal authorities after an investigation by the FBI and United States Attorneys’ Office for the Southern District of Mississippi.
The complaint alleges that the Defendants were financial institutions where Adams and Madison Timber held accounts that knew, or should have known, Adams was using his accounts to perpetrate a Ponzi scheme due to the volume of suspicious transactions over the course of years. Despite this, according to Plaintiff, Defendants did nothing to prevent the fraud and instead ignored and/or supported the scheme.
Plaintiff seeks to recover the debts of the Receivership Estate owed to the investors in an amount greater than $85 million, plus attorneys’ fees. The complaint alleges: (1) civil conspiracy, (2) aiding and abetting, (3) recklessness, gross negligence, and at a minimum negligence, (4) negligent retention and supervision (against the entity defendants), (5) violations of Mississippi’s Fraudulent Transfer Act, and (6) violations of Mississippi’s Racketeer Influenced and Corrupt Organization Act.