BigLaw partner is charged with securities fraud in connection with alleged Ponzi scheme
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Baker, Donelson, Bearman, Caldwell & Berkowitz health care partner Jon Darrell Seawright has been charged along with a former lobbyist at the firm for their roles in an alleged Ponzi scheme involving fake timber purchases.
Seawright, 49, and former public policy adviser Ted Brent Alexander, 55, both of Jackson, Mississippi, were charged in a February 2020 indictment unsealed Thursday, Law360 reports.
Federal prosecutors allege that Seawright and Alexander solicited over $20 million from more than 50 investors in the scheme between early 2011 and late 2018. Both men pleaded not guilty Thursday.
The timber company, Madison Timber Properties, was owned by Arthur Lamar Adams, who is serving nearly 20 years in prison for defrauding investors.
Baker Donelson said the law firm had no involvement in the scheme, never represented any of the investment entities, and never represented Adams.
The indictment alleges that Seawright and Alexander misled investors to think they were the principal actors in a venture to lend money to a broker business that bought timber and marketed it to lumber mills.
Seawright and Alexander allegedly told investors that they would inspect the timber property and verify that the lumber mill agreements were valid.
“Alexander and Seawright failed to do any of those things,” the press release said.
Seawright and Alexander also are accused of representing to investors that they had their own money invested in the company, and the investors would be paid before Alexander and Seawright would receive fees. Actually, Seawright and Alexander received payments from the broker for recruiting investors, prosecutors said.
Alexander and Seawright are charged with one count of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, and four counts of wire fraud involving a scheme to defraud investors.
Seawright’s name was removed from Baker Donelson’s website when the indictment was unsealed, according to Law360. The law firm told Law360 that Seawright is on an indefinite leave of absence while he defends the case. Alexander left the law firm in early 2020, according to Law360.
Baker Donelson gave this statement to Law360: “These entities have no affiliation with Baker Donelson. Baker Donelson never represented Lamar Adams, Madison Timber Properties LLC or these Alexander Seawright entities,” the statement said. “The firm’s trust account was never used for any investment related to these entities, and Baker Donelson never profited in any way from Madison Timber or the Alexander Seawright entities.”
Alexander’s lawyer, J. Matthew Eichelberger, also spoke with Law360.
“We trust the court system to get this right,” Eichelberger said. “We’re placing our faith in the judge and the jury, and we look forward to trying his case in court and not in the media.”
Seawright filed a bankruptcy petition in November 2019 that said he has a net worth of $1.29 million but potentially owes creditors $166 million.
Seawright and Alexander said in civil litigation that they were never aware of the fraud. The extent of their involvement with the timber company consisted of coordinating loans in exchange for loan origination fees, they said.