BigLaw partner lists $166M in liabilities in Chapter 7 filing that would halt suit alleging Ponzi scheme aid
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A Baker Donelson partner has filed a petition for Chapter 7 bankruptcy that would pause litigation contending that he aided a Ponzi schemer who was sentenced to 19.5 years in prison.
The partner, Jon Darrell Seawright, said in the Nov. 3 filing that he has a net worth of $1.29 million but potentially owes creditors $166 million, Law360 reports.
The filing lists $165 million in disputed and contingent debt as a result of a suit filed by a receiver for timber investment companies owned by convicted Ponzi schemer Arthur Lamar Adams. Adams had told investors that they were buying shares of timber tracts that, in reality, did not exist.
The receiver has sued the law firms Butler Snow and Baker Donelson, along with Seawright and Baker Donelson lobbyist Brent Alexander, for allegedly aiding and abetting the scheme. The litigation continues.
In a motion to dismiss filed March 6, Seawright and Alexander said 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, the motion says.
Baker Donelson contends that the investment activities by Seawright and Alexander were outside their employment with the law firm. The law firm never represented Adams or his timber company, and it owed them no lawyer-client duties, the law firm said in a Feb. 21 motion to dismiss.
Butler Snow is seeking arbitration of the case and is appealing a Sept. 12 ruling denying its request.
Butler Snow’s Jan. 24 motion to dismiss says it drafted a limited liability company agreement and a private placement memorandum for a proposed timber company fund that never collected any investments. A law firm subsidiary, Butler Snow Advisory Services, provided business advice and introduced Adams to potential business partners for various projects, which it thought was legitimate, the firm says.
Seawright did not immediately respond to an email requesting comment.