{N3823151.1}
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
ALYSSON MILLS, IN HER CAPACITY
AS RECEIVER FOR ARTHUR LAMAR
ADAMS AND MADISON TIMBER
PROPERTIES, LLC,
Plaintiff,
v.
BANKPLUS; BANKPLUS WEALTH
MANAGEMENT, LLC; GEE GEE
PATRIDGE, VICE PRESIDENT AND CHIEF
OPERATING OFFICER OF BANKPLUS;
STEWART PATRIDGE; JASON COWGILL;
MARTIN MURPHREE; MUTUAL OF
OMAHA INSURANCE COMPANY; and
MUTUAL OF OMAHA INVESTOR
SERVICES, INC.,
Defendants.
Case No. 3:19-cv-196 CWR-FKB
Arising out of Case No. 3:18-cv-252,
Securities and Exchange Commission v.
Arthur Lamar Adams and Madison Timber
Properties, LLC
Hon. Carlton W. Reeves, District Judge
ORAL ARGUMENT REQUESTED
BANKPLUS’ MOTION TO DISMISS
Defendants BankPlus and BankPlus Wealth Management, LLC move this Court under
Federal Rule of Civil Procedure 12(b)(6) to dismiss the action asserted by Plaintiff Allyson Mills,
in her capacity as Receiver for Arthur Lamar Adams and Madison Timber Properties, LLC. For
the reasons discussed in the attached memorandum, Plaintiff fails to state a claim and her action
should be dismissed with prejudice.
Wherefore, Defendants BankPlus and BankPlus Wealth Management, LLC pray that their
motion be granted and the Court enter a judgment dismissing the action asserted the Receiver with
prejudice.
Respectfully submitted,
________ /s/ Kaytie M. Pickett _______
Case 3:19-cv-00196-CWR-FKB Document 30 Filed 05/21/19 Page 1 of 2
{N3823151.1}
Kaytie M. Pickett (MS Bar 103202)
Stacey Moore Buchanan (MS Bar 103882)
JONES WALKER LLP
190 E. Capitol St., Ste. 800
Jackson, Mississippi 39205
Telephone: (601) 949-4900
Facsimile: (601) 949-4804
Attorneys for Defendants BankPlus & BankPlus
Wealth Management LLC
CERTIFICATE OF SERVICE
I hereby certify that a copy of the above and foregoing pleading has been served on all
parties and/or their counsel of record, by e-mail, by ECF, facsimile, by-hand, and/or by United
States mail.
Jackson, Mississippi, this 21st day of May, 2019.
________ /s/ Kaytie M. Pickett _______
Case 3:19-cv-00196-CWR-FKB Document 30 Filed 05/21/19 Page 2 of 2
{N3822713.1}
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
ALYSSON MILLS, IN HER CAPACITY
AS RECEIVER FOR ARTHUR LAMAR
ADAMS AND MADISON TIMBER
PROPERTIES, LLC,
Plaintiff,
v.
BANKPLUS; BANKPLUS WEALTH
MANAGEMENT, LLC; GEE GEE
PATRIDGE, VICE PRESIDENT AND CHIEF
OPERATING OFFICER OF BANKPLUS;
STEWART PATRIDGE; JASON COWGILL;
MARTIN MURPHREE; MUTUAL OF
OMAHA INSURANCE COMPANY; and
MUTUAL OF OMAHA INVESTOR
SERVICES, INC.,
Defendants.
Case No. 3:19-cv-196 CWR-FKB
Arising out of Case No. 3:18-cv-252,
Securities and Exchange Commission v.
Arthur Lamar Adams and Madison Timber
Properties, LLC
Hon. Carlton W. Reeves, District Judge
ORAL ARGUMENT REQUESTED
MEMORANDUM IN SUPPORT OF BANKPLUS’ MOTION TO DISMISS
Kaytie M. Pickett (MS Bar 103202)
Stacey Moore Buchanan (MS Bar 103882)
JONES WALKER LLP
190 E. Capitol St., Ste. 800
Jackson, Mississippi 39205
Telephone: (601) 949-4900
Facsimile: (601) 949-4804
Attorneys for Defendants BankPlus & BankPlus
Wealth Management LLC
Case 3:19-cv-00196-CWR-FKB Document 31 Filed 05/21/19 Page 1 of 39
{N3822713.1}
i
TABLE OF CONTENTS
Page
INTRODUCTION ...........................................................................................................................1
FACTUAL BACKGROUND ..........................................................................................................4
ARGUMENT ...................................................................................................................................6
I. THE COMPLAINT DOES NOT STATE A CLAIM OF CIVIL CONSPIRACY .............8
A. The Complaint Fails to Allege Agreement to Participate in the Fraud ....................9
B. The Complaint Fails to Allege Knowledge of the Fraud .........................................9
C. The Complaint Fails to Allege Proximate Causation ............................................13
II. THE COMPLAINT DOES NOT STATE AN AIDING AND ABETTING
CLAIM ...............................................................................................................................14
A. The Complaint Fails To Identify an Underlying Tort ............................................15
B. The Complaint Fails to Allege Knowledge ...........................................................15
C. The Complaint Does Not Allege Substantial Assistance .......................................16
III. THE COMPLAINT DOES NOT ALLEGE NEGLIGENCE OR NEGLIGENT
RETENTION/ SUPERVISION CLAIMS .........................................................................18
IV. THE COMPLAINT DOES NOT ALLEGE A CIVIL RACKETEERING CLAIM .........20
A. The Complaint Lacks Particulars Rule 9(b) Requires as Case Statement
Shows .....................................................................................................................20
B. The Complaint Fails to Allege Required Knowledge Element .............................22
C. The Complaint Does Not Allege Existence of Racketeering Enterprise,
Pattern ....................................................................................................................23
V. THE COURT SHOULD DISMISS THE CLAIMS AGAINST BANKPLUS ON
TWO OTHER INDEPENDENT GROUNDS ...................................................................25
A. The Fifth Circuit Does Not Recognize Deepening Insolvency .............................25
B. The Equitable Doctrine of In Pari Delicto Bars the Complaint’s Claims
Against BankPlus ...................................................................................................27
VI. THE BALANCE OF EQUITIES FAVORS DISMISSAL ................................................29
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CONCLUSION ..............................................................................................................................29
CERTIFICATE OF SERVICE ......................................................................................................30
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TABLE OF AUTHORITIES
Cases
Alexander v. Verizon Wireless Servs., L.L.C.,
875 F.3d 243 (5th Cir. 2017) ............................................................................................ 28
Amacker v. Renaissance Asset Mgmt. LLC,
657 F.3d 252 (5th Cir. 2011) ............................................................................................ 16
Ashcroft v. Iqbal,
556 U.S. 662 (2009) ...................................................................................................... 1, 10
Baker Donelson Bearman Caldwell & Berkowitz, P.C. v. Seay,
42 So. 3d 474 (Miss. 2010) ......................................................................................... 12, 18
Balestri v. Hunton & Williams, LLP (In re Hallwood Energy, L.P.),
2013 Bankr. LEXIS 5691 (Bankr. N.D. Tex. Nov. 18, 2013) .......................................... 26
Bane v. Sigmundr Expl. Corp.,
848 F.2d 579 (5th Cir. 1988) ............................................................................................ 17
Bell Atl. Corp. v. Twombly,
550 U.S. 544 (2007) ............................................................................................................ 1
Belmont v. MB Inv. Partners, Inc.,
708 F.3d 470 (3d Cir. 2013).............................................................................................. 18
Bradley v. Kelley Bros. Contractors, Inc.,
117 So. 3d 331 (Miss. App. 2013) ................................................................................ 9, 10
Brown v. State,
796 So. 2d 223 (Miss. 2001) ............................................................................................... 8
Cent. Bank, N.A. v. First Interstate Bank, N.A.,
511 U.S. 164 (1994) .......................................................................................................... 17
Chaney v. Dreyfus Serv. Corp.,
595 F. 3d 219 (5th Cir. 2010) ..................................................................................... 22, 23
Chemtex, LLC v. St. Anthony Enterprises, Inc.,
490 F. Supp. 2d 536 (S.D.N.Y. 2007) ............................................................................... 11
Collins v. Morgan Stanley Dean Witter,
224 F.3d 496 (5th Cir. 2000) .......................................................................................... 1, 2
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{N3822713.1}
iv
Dale v. Ala Acquisitions, Inc.,
203 F. Supp. 2d 694 (S.D. Miss. 2002)............................................................................. 14
Dickens v. A-1 Auto Parts & Repair, Inc.,
No. 1:18-cv-162-LG-RHW, 2018 WL 5726206 (S.D. Miss. Nov. 1, 2018) .................... 16
El Camino Res., LTD. v. Huntington Nat. Bank,
722 F. Supp. 2d 875 (W.D. Mich. 2010), aff'd, 712 F.3d 917 (6th Cir. 2013) ................. 16
Figueroa Ruiz v. Alegria,
896 F.2d 645 (1st Cir. 1990) ....................................................................................... 20, 21
Fikes v. Wal-Mart Stores, Inc.,
813 F. Supp. 2d 815 (N.D. Miss. 2015) ...................................................................... 14, 15
Gallagher Bassett Servs., Inc. v. Jeffcoat,
887 So. 2d 777 (Miss. 2004) ............................................................................................... 8
Glessner v. Kenny,
952 F.2d 702 (3d Cir.1991)............................................................................................... 10
H.J. Inc. v. Northwestern Bell Telephone, Co.,
492 U.S. 229 (1989) .................................................................................................... 23, 24
Hecht v. Commerce Clearing House, Inc.,
897 F.2d 21 (2d Cir.1990)................................................................................................. 10
Holmes v. Campbell Properties, Inc.,
47 So. 3d 721 (Miss. Ct. App. 2010) ................................................................................ 18
Honig v. Kornfeld,
339 F. Supp. 3d 1323 (S.D. Fla. 2018) ....................................................................... 10, 11
Hymel v. FDIC,
925 F.2d 881 (5th Cir. 1991) ............................................................................................ 27
In re Burlington Coat Factory Sec. Litig.,
114 F.3d 1410 (3d Cir. 1997)............................................................................................ 21
In re Depuy Orthopaedics, Inc., Pinnacle Hip Implant Prods. Liability Lit.,
888 F.3d 753 (5th Cir. 2018) ............................................................................................ 14
In re Evans,
467 B.R. 399 (Bankr. S.D. Miss. 2011) ............................................................................ 14
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In re Int’l Mgmt. Assocs., LLC,
563 B.R. 393 (Bankr. N.D. Ga. 2017) .............................................................................. 11
J. B. Hunt Transp., Inc. v. Forrest Gen. Hosp.,
34 So. 3d 1171 (Miss. 2010) ............................................................................................. 28
Janvey v. Brown,
767 F.3d 430 (5th Cir. 2014) .............................................................................................. 8
Janvey v. Democratic Senatorial Campaign Comm., Inc.,
712 F.3d 185 (5th Cir. 2013) ............................................................................................ 27
Jordan v. Maxfield & Oberton Holdings, LLC,
2016 U.S. Dist. LEXIS 135831 (S.D. Miss. Sep. 30, 2016) (Reeves, J.) ................... 24, 24
Katzman v. Victoria’s Secret Catalogue,
167 F.R.D. 649 (S.D.N.Y. 1996), judgment aff'd, 113 F.3d 1229 (2d Cir. 1997) ............ 21
Latham v. Johnson,
262 So. 3d 569 (Miss. App. 2018) .................................................................................... 28
Lerner v. Fleet Bank, NA.,
459 F.3d 273 (2d Cir. 2006).............................................................................................. 16
Levens v. Campbell,
733 So. 2d 753 (Miss. 1999) ..................................................................................................8
Limestone Dev. Corp. v. Vill. of Lemont,
520 F.3d 797 (7th Cir. 2008) ............................................................................................ 21
Litson-Gruenber v. JPMorgan Chase & Co.,
2009 WL 4884426 (N.D. Tex. Dec. 16, 2009) ................................................................. 10
Lone Star Ladies Inv. Club v. Schlotzsky's Inc.,
238 F.3d 363 (5th Cir. 2001) .............................................................................................. 7
Long Term Care, Inc. v. Jesco, Inc.,
560 So. 2d 717 (Miss. 1990) ............................................................................................. 28
Lovelace v. Software Spectrum Inc.,
78 F.3d 1015 (5th Cir. 1996) .............................................................................................. 5
Malvino v. Delluniversita,
840 F.3d 223 (5th Cir. 2016) ............................................................................................ 23
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Marriott Bros. v. Gage,
911 F.2d 1105 (5th Cir. 1990) .......................................................................................... 21
Midwest Feeders, Inc. v. Bank of Franklin,
886 F.3d 507 (5th Cir. 2018) ...................................................................................... 10, 19
Mills v. Billings, et al.,
No. 3:18-cv-679 (S.D. Miss.).............................................................................................. 5
Miranda v. Ponce Fed. Bank,
948 F.2d 41 (1st Cir.1991) ................................................................................................ 10
Myles v. Domino's Pizza, LLC,
No. 4:14-CV-00107-DMB, 2015 U.S. Dist. LEXIS 58623 (N.D. Miss. May 5, 2015) ... 15
Neilson v. Union Bank of California, N.A.,
2003 WL 27374137 (C.D. Cal. Feb. 20, 2003)................................................................. 10
Official Comm. of Unsecured Creditors of VarTec Telecomms., Inc. v. Rural Tel. Fin. Coop. (In
re VarTec Telecomms., Inc.),
335 B.R. 631 (Bankr. N.D. Tex. 2005) ............................................................................. 26
Official Comm. of Unsecured Creditors v. R.F. Lafferty & Co.,
267 F.3d 340 (3d Cir. 2001).............................................................................................. 25
Orr v. Morgan,
230 So. 3d 368 (Miss. Ct. App. 2017) ................................................................................ 8
Owens Corning v. R.J. Reynolds Tobacco Co.,
868 So. 2d 331 (Miss. 2004) ............................................................................................. 13
R2 Invs. LDC v. Phillips,
401 F.3d 638 (5th Cir. 2005) ............................................................................................ 22
Rezner v. Bayerische Hypo-Und Vereinsbank AG,
630 F.3d 866 (5th Cir. 2010) ............................................................................................ 20
Rosner v. Bank of China,
2008 WL 5416380 (S.D.N.Y. Dec. 18, 2008) .................................................................. 10
SEC v. Adams,
No. 3:18-cv-00252 (S.D. Miss.)........................................................................................ 27
SEC v. Blackburn,
2015 U.S. Dist. LEXIS 120747 (E.D. La. Sep. 10, 2015) .................................................. 8
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SEC v. Morris,
2005 U.S. Dist. LEXIS 42106 (S.D. Tex. Aug. 18, 2005)................................................ 17
Sedima, S.P.R.L. v. Imrex Co.,
473 U.S. 479 (1985) .......................................................................................................... 20
Shushany v. Allwaste, Inc.,
992 F.2d 517 (5th Cir. 1993) ........................................................................................ 7, 20
SI Restructuring, Inc. v. Faulkner (In re SI Restructuring, Inc.),
532 F.3d 355 (5th Cir. 2008) ............................................................................................ 26
Sommers Drug Stores Co. Emp. Profit Sharing Trust v. Corrigan,
883 F.2d 345 (5th Cir. 1989) .............................................................................................. 8
Southland Sec. Corp. v. Inspire Ins. Solutions, Inc.,
365 F.3d 353 (5th Cir. 2004) ............................................................................................ 22
Tellabs, Inc. v. Makor Issues & Rights, Ltd.,
551 U.S. 308 (2007) ............................................................................................................ 5
Tel-Phonic Servs., Inc. v. TBS Int’l, Inc.,
975 F.2d 1134 (5th Cir. 1992) .................................................................................... 10, 20
Tichenor v. Roman Catholic Church of Archdiocese of New Orleans,
32 F.3d 953 (5th Cir. 1994) .............................................................................................. 19
Troelstrup v. Index Futures Grp., Inc.,
130 F.3d 1274 (7th Cir. 1997) .......................................................................................... 27
Trout Point Lodge, Ltd. v. Handshoe,
729 F.3d 481 (5th Cir. 2013) .............................................................................................. 5
Tuchman v. DSC Commc'ns Corp.,
14 F.3d 1061 (5th Cir. 1994) .............................................................................................. 7
United States ex rel. Thompson v. Columbia/HCA Healthcare Corp.,
125 F.3d 899 (5th Cir. 1997) ........................................................................................ 7, 11
Whelan v. Winchester Prod. Co.,
319 F.3d 225 (5th Cir. 2003) ............................................................................................ 23
Williams v. WMX Technologies, Inc.,
112 F.3d 175 (5th Cir. 1997) .............................................................................................. 7
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Woodward v. Metro Bank of Dallas,
522 F.2d 84 (5th Cir. 1975) .............................................................................................. 17
Word of Faith World Outreach Ctr. Church, Inc. v. Sawyer,
90 F.3d 118 (5th Cir. 1996) .............................................................................................. 24
Statutes
18 U.S.C. 1343 .............................................................................................................................. 22
Miss. Code §97-19-83 ................................................................................................................... 22
Miss. Code §97-43-5(3) ......................................................................................................... passim
RICO Act, 18 U.S.C. §1961–1968 ............................................................................................... 20
Other Authorities
In Pari Delicto Doctrine, BLACK'S LAW DICTIONARY (10th ed. 2014) ........................................ 27
Rules
Fed. R. Civ. P. 9(b) ................................................................................................................ passim
L.U. Civ. R. 83.8 ..................................................................................................................... 21, 22
Treatises
Restatement (Second) of Torts § 876...................................................................................... 14, 15
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Defendants, BankPlus and BankPlus Wealth Management, LLC move to dismiss the
Receiver’s Complaint for failing to state a cause of action, with prejudice.
INTRODUCTION
At bottom, the Complaint alleges a group of BankPlus employees and former employees
knowingly assisted Lamar Adams’ Madison Timber Ponzi scheme. But the Complaint does not
meet the requirements of Fed. R. Civ. P. 9(b)—pleading fraud with particularity—and, in any
event, the well-pleaded allegations do not state claims upon which this Court can grant relief.
As the law requires, BankPlus accepts the Complaint’s allegations as true for the purpose
of this Motion, but fully intends to oppose these allegations should the case proceed. Ashcroft v.
Iqbal, 556 U.S. 662 (2009). Even in this context, though, the allegations of an initial pleading
must cross “the line from conceivable to plausible.” Id. at 680 (citing Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). Factual allegations must be more than “merely consistent” with
elements of a claim—they must “plausibly suggest” the satisfaction of those elements. Twombly,
550 U.S. at 557. As between allegations of “purposeful, invidious” conduct and an “obvious
alternative explanation” for that conduct, the former will be rejected as implausible. Iqbal, 556
U.S. 682 (citing Twombly, 550 U.S. at 567). Thus, inferences of intent and malice are not
plausible in the face of “more likely explanations” for the conduct described. Id. at 681.
Twombly and Iqbal reiterate that conclusory allegations “are not entitled to be assumed true.” Id.
The Complaint bases the majority of its claims on selected excerpts of communications
among Defendants. When a plaintiff fails to attach to the Complaint a document the Complaint
relies upon to state a claim, however, a defendant may introduce the document as an exhibit to a
motion to dismiss.1 Viewing these documents in their full context demonstrates the Complaint
does not cross the threshold from the conceivable to the plausible, requiring its dismissal.2
1 Documents that a defendant attaches to a motion to dismiss are considered part of the pleadings if they
are referred to in the plaintiff's complaint and are central to her claim. Collins v. Morgan Stanley Dean
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2
But even putting aside the Complaint’s selectively quoted documents, the Complaint
alleges facts that are more consistent with the Individual Defendants’ sincere belief in Madison
Timber’s legitimacy instead of fraudulent conduct. For instance, Stewart3 was a “childhood
friend and college roommate” of Mr. Kelly, who was also friends with Gee Gee. Compl. ¶¶ 29,
39. Conceivably from the Complaint, the Patridges maintained a longstanding relationship with
Mr. Kelly built on a foundation of shared greed and criminality, and so Madison Timber’s
association with Mr. Kelly alerted them to the fraud; more plausibly, the Patridges shared a
decades-long bond with Mr. Kelly built on love and trust, which provided Madison Timber a
credible veneer of legitimacy to the Patridges and allayed concerns. Further, the Complaint
alleges Mr. Murphree and Mr. Cowgill both believed Madison Timber retained well-known law
firms Butler Snow and Baker Donelson to handle its affairs, further legitimizing Mr. Adams and
those associated with him in their eyes.
The Complaint’s allegations regarding Stewart and Gee Gee suffer the same defects.
Sometime after leaving BankPlus employment, Stewart became “confused,” “unreliable,” and
stopped returning calls. Compl. ¶¶ 44, 48. Mr. Kelly “reached out to Gee Gee Patridge for
help.” Compl. ¶ 49. Stewart’s mother supposedly conducted an answering service to direct her
son’s Madison Timber business to Mr. Kelly. Id. Eventually, Stewart “rarely entered the bank”
and only did business at the bank’s drive-thru window. Compl. ¶ 51. Mr. Kelly approached his
friend’s mother for help again, and again Gee Gee helped her son by accepting checks for him
Witter, 224 F.3d 496, 498-99 (5th Cir. 2000) (quotations and citation omitted) (“In so attaching, the
defendant merely assists the plaintiff in establishing the basis of the suit, and the court in making the
elementary determination of whether a claim has been stated.”).
2 Defendant BankPlus submits Exs. A-D as part of this pleading.
3 For ease of reading, this Memorandum refers to the Patridges by their first names.
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when he could not. Compl. ¶ 53. Conceivably from the Complaint, Gee Gee helped Mr. Kelly
and her son to perpetrate the Madison Timber fraud; more plausibly, Gee Gee helped her son
because she is his mother.
Indeed, the full context of the selectively quoted documents reveals Stewart took an
indefinite leave of absence for medical reasons.4 Gee Gee’s alleged assistance by setting up a
call forwarding service for her son and providing Stewart’s customer contacts to Mr. Kelly is
more consistent with maternal love, not fraud.5
Similarly, the full context of Mr. Kelly’s communications with Gee Gee undermines the
Complaint’s suggestions of fraudulent conduct or knowledge by Gee Gee. The Complaint at
Paragraph 40 quotes a July 2013 email where Mr. Kelly asked Gee Gee to serve as a reference
for Madison Timber. The full text of Mr. Kelly’s request shows his reluctance in asking this of
Gee Gee: “Do you mind if he contacts you concerning Madison Timber investment. I know you
probably don't like this, but I'm getting close to having the right investors in place where we can
do what we want. If you don't want him contacting you I totally understand.”6 This deference
and courtesy hardly resemble the machinations of two conspirators striving to lure additional
investors to a Ponzi scheme.
The Complaint also cherry-picks a draft of a filing BankPlus submitted to the Federal
Government to alert it to potential fraud by Madison Timber. Compl. ¶ 65. Nearly every ellipsis
in Paragraph 65 omits information from the original document which undermines the
Complaint’s claims. For instance, the first sentence preceding the quoted material states, “One
4 Ex. A
5 Further, the Complaint provides no explanation why Gee Gee did not demand at least some
compensation for her alleged efforts in furthering the Madison Timber fraud.
6 Ex. B
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of the suspects listed on this … is an ex-employee of BankPlus, Jason Cowgill.”7 The next
omitted text discusses BankPlus’ efforts to investigate the possible fraud.8 After briefly omitting
bank account information, the Complaint next leaves out the disclosure that Madison Timber’s
account with BankPlus had “very minimal activity” since 2009.9
It then omits that BankPlus denied requests for accommodations related to Madison
Timber business—contrary to the Complaint’s characterization of the bank as a “de facto office”
of a Ponzi scheme. The report is instead more consistent with a financial institution acting in
good faith to detect and report fraud.10
The full context of each document lowers the plausibility of the Complaint’s allegations
and undermines the Complaint’s alleged connections, inferences, and motives. As a result, the
Complaint does not cross the threshold from the conceivable to the plausible. The unreconciled
inconsistencies in the pleadings, combined with a host of other legal defects, cause the claims to
fail.
FACTUAL BACKGROUND11
Lamar Adams operated a Ponzi scheme through fraudulent alter egos such as Madison
Timber Properties LLC beginning in “approximately 2004” until the scheme’s collapse in April
7 Ex. C. Due to federal regulations prohibiting disclosure of this document, BankPlus does not submit
this document as an exhibit. BankPlus will file a motion under seal with the Court seeking an order
allowing BankPlus to disclose documents like this one in this case, either by public filing or in camera
both because the Complaint cites to this document and because documents like this filed by BankPlus
with the government are crucial to its defense here.
8 Id.
9 Id.
10 Id.
11 Although required to accept the factual allegations of the Complaint as true for purposes of this Motion,
BankPlus does not accept them for any other purpose and reserves the right to contest them later.
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2018. Compl. ¶¶ 14, 21. The scheme paid commissions to individuals who recruited investors,
Compl. ¶ 31, ensnared hundreds of investors, involved multiple financial institutions, and had
501 outstanding promissory notes at collapse. Compl. ¶ 21. “As early as 2010,” Wayne Kelly
recruited “dozens” of investors and received commissions from Madison Timber, according to
the Mills v. Billings, et al. complaint Receiver cites here in Compl. ¶ 29. Mills v. Billings, et al.,
No. 3:18-cv-679 (S.D. Miss.).
Mr. Kelly was Stewart’s childhood friend and college roommate, and was also friends
with Gee Gee Patridge, Stewart’s mother.12 Gee Gee became the Chief Operations Officer for
BankPlus in 2012, leaving her role as its Chief Financial Officer, which she held since 1993.13
She was invested in Madison Timber from February 2011 until July 2015. Compl. ¶¶ 28-30.
The Complaint alleges Mr. Kelly asked Gee Gee to serve as a reference for a potential investor
in July 2013 and she agreed. Compl. ¶ 40. Mr. Kelly also asked Gee Gee for assistance
regarding wire transfers and bank records at various times. Compl. ¶¶ 68-69.
From May 2009 to August 2011,14 Stewart was a registered financial advisor and stock-
broker for the BankPlus wealth management group.15 The broker-dealer Linsco Private Ledger,
operating as LPL Financial LLC, held Stewart’s securities license during this time. Id.16
12 Mr. Kelly’s parents grew up with Gee Gee, going to nearly all of elementary and high school with her.
13 The Complaint at Paragraph 8 misidentifies Gee Gee as the Chief Operating Officer.
14 Ex. D, Stewart’s brokerage and advisor registrations filed with the SEC and FINRA. A court may also
consider “documents incorporated into the complaint by reference, and matters of which a court may take
judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). When deciding a
motion to dismiss in securities actions, “a court may consider the contents of relevant public disclosure
documents which (1) are required to be filed with the SEC, and (2) are actually filed with the SEC.”
Lovelace v. Software Spectrum Inc., 78 F.3d 1015, 1018 (5th Cir. 1996). See also Trout Point Lodge, Ltd.
v. Handshoe, 729 F.3d 481, 490 n.12 (5th Cir. 2013) (federal courts may take judicial notice of
government websites). See also Ex. E, Mr. Murphree’s brokerage and advisor registrations.
15 Although not germane to this Motion, the wealth management group was a division of the bank. It was
not the entity now known as BankPlus Wealth Management LLC and named as a defendant here. That
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After Stewart left BankPlus in August 2011, he became a broker for Mutual of Omaha.
Id. Through Mr. Kelly, he and fellow ex-BankPlus employee Martin Murphree recruited
investors to Madison Timber. Compl. ¶ 32. At various times, these two individuals contacted
BankPlus’ Southaven Branch Manager, Jason Cowgill, for assistance with investors’ wires and
deposits at the bank. Compl. ¶ 50.
Stewart left Mutual of Omaha for medical reasons in November 2013 after several
months of erratic behavior. The Complaint alleges Mr. Cowgill began administering Stewart’s
Madison Timber business around this time, while Gee Gee accepted his personal checks, sent his
Madison Timber materials to Mr. Kelly, and set up a call forwarding service directing anyone
with Madison Timber business to call Mr. Kelly. Compl. ¶¶ 49, 53. Mr. Cowgill left BankPlus
in February 2015. Compl. ¶ 55.
In January 2015, BankPlus began investigating Madison Timber in response to a
customer complaint. Compl. ¶ 60. By March, the bank concluded recent Madison Timber
activity appeared to be “some type of money laundering scam or scheme.” Compl. ¶ 65.
BankPlus reported its suspicions to the Federal Government on April 8, 2015. Id. The bank
continued to provide routine assistance to Mr. Kelly until the scheme’s collapse. Compl. ¶ 66.
ARGUMENT
In all its claims, the Complaint alleges that the Defendants participated in, assisted, or
benefited from the Madison Timber fraud. Because the claims against the Defendants involve
fraud, the Complaint must comply with the heightened pleading standard of Rule 9(b) of the
entity is not a broker-dealer. It is an investment advisor and did not become an operational BankPlus
subsidiary until 2014—long after Stewart left.
16 Again, while not germane to this Motion, LPL, not BankPlus, exercised supervisory authority over
Stewart (and Martin Murphree), pursuant to its contract with BankPlus.
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Federal Rules of Civil Procedure. That requires the Complaint to plead “the circumstances
constituting fraud. . . with particularity,” setting forth “the who, what, when, and where. . . before
access to the discovery process is granted.” Williams v. WMX Technologies, Inc., 112 F.3d 175,
178 (5th Cir. 1997). Anything less fails to provide defendants with adequate notice of the nature
and grounds of the claim. See Tuchman v. DSC Commc’ns Corp., 14 F.3d 1061 (5th Cir. 1994)
at 1067. This standard “stems from the obvious concerns that general, unsubstantiated charges
of fraud can do damage to a defendant’s reputation” and is designed “to preclude litigants from
filing baseless complaints and then attempting to discover unknown wrongs.” Shushany v.
Allwaste, Inc., 992 F.2d 517, 521 (5th Cir. 1993) (internal citations and quotations omitted).
Although Rule 9(b) allows that intent, knowledge, and other conditions of a person’s
mind (“scienter”) may be alleged generally, “case law amply demonstrates that pleading scienter
requires more than a simple allegation that a defendant had fraudulent intent. To plead scienter
adequately, a plaintiff must set forth specific facts that support an inference of fraud.” Tuchman,
14 F.3d at 1068. In addition, even where allegations are based on information and belief, the
complaint must state the factual basis for that belief. See United States ex rel. Thompson v.
Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997).
This same standard applies to all allegations of fraud and mental state “whether they are
part of a claim of fraud or not.” Lone Star Ladies Inv. Club v. Schlotzsky's Inc., 238 F.3d 363,
368 (5th Cir. 2001). Accordingly, any allegations of fraudulent conduct or mental state must still
satisfy the heightened pleading requirements of Rule 9(b) even when a complaint does not assert
fraud as an underlying cause of action. Id. Under Rule 9(b), the Court should disregard
insufficiently pleaded allegations of fraud or scienter. Id. The Court should then examine the
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allegations that remain and determine whether they state a claim. Id. See also SEC v.
Blackburn, 2015 U.S. Dist. LEXIS 120747, at *20-21 (E.D. La. Sep. 10, 2015).
The Complaint fails to meet these standards and for those reasons alone the Court should
dismiss it. That said, even if the Court finds the Complaint adequately pleaded any or all claims,
it should dismiss those claims because the Complaint pleads “deepening insolvency” as its
theory of damages for all claims. The Fifth Circuit rejects this concept. In addition, the doctrine
of in pari delicto bars the Receiver’s claims against BankPlus because she stands in the shoes of
Madison Timber, a party with unclean hands. For any or all of these reasons, the Court should
dismiss the Complaint in its entirety.
I. THE COMPLAINT DOES NOT STATE A CLAIM OF CIVIL CONSPIRACY
“To establish a civil conspiracy, the plaintiff must prove (1) an agreement between two or
more persons, (2) to accomplish an unlawful purpose or a lawful purpose unlawfully, (3) an
overt act in furtherance of the conspiracy, and (4) damages to the plaintiff as a proximate result.”
Orr v. Morgan, 230 So. 3d 368, 375 (Miss. Ct. App. 2017) (citations, brackets, and ellipsis
omitted).17 “Under Mississippi law, ‘[a] conspiracy is a combination of persons for the purpose
of accomplishing an unlawful purpose or a lawful purpose unlawfully.’” Gallagher Bassett
Servs., Inc. v. Jeffcoat, 887 So. 2d 777, 786 (Miss. 2004) (quoting Levens v. Campbell, 733 So.
2d 753, 761 (Miss. 1999)). Further, “[C]onspiracy requires an agreement between the co-
conspirators.” Id., (citing Brown v. State, 796 So. 2d 223, 226-27 (Miss. 2001) (“‘persons must
agree . . . for a conspiracy to exist’”)). An agreement may be explicit, or it may be implicit
17 Mississippi law applies to all of the Receiver’s claims. It is “well-settled” that the Receiver’s state law
claims at issue here “are governed by the forum state in which the federal court is sitting.” Janvey v.
Brown, 767 F.3d 430, 434 (5th Cir. 2014) (citing, among others, Sommers Drug Stores Co. Emp. Profit
Sharing Trust v. Corrigan, 883 F.2d 345, 353 (5th Cir. 1989) (“A federal court exercising pendent
jurisdiction over state law claims, must apply the substantive law of the state in which it sits.”).
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“based upon evidence of a course of conduct.” Bradley v. Kelley Bros. Contractors, Inc., 117
So. 3d 331, 339 (Miss. App. 2013).
The Complaint Fails to Allege Agreement to Participate in the Fraud
The Complaint does not allege facts with sufficient particularity to imply agreement
among the Individual Defendants to perpetuate the Madison Timber scheme. The Complaint
conclusorily states the existence of an agreement, but alleges none of its details: Who was party
to the agreement? When did the parties enter into the agreement? Did a single or multiple
agreements exist? To what exactly did the parties agree? Timing is especially important here
because the majority of allegations regarding Mr. Cowgill—and all the allegations regarding Mr.
Murphree, and perhaps all the allegations regarding Stewart—occurred after they left BankPlus
employment.
Instead, the Complaint insinuates an agreement existed without alleging the required
details: for instance, Mr. Cowgill “was led to believe” BankPlus “blessed the arrangement” to
provide Stewart and Mr. Murphree office space for investor meetings after they left BankPlus.
Compl. ¶ 34. But the Complaint provides no basis for this belief. Similarly, the Complaint
offers portions of Gee Gee’s communications with Mr. Kelly to suggest existence of a criminal
agreement between these two individuals, but the full context of the communications belies the
Complaint’s portrayal.18 None of this amounts to agreement among the Defendants.
The Complaint Fails to Allege Knowledge of the Fraud
The Complaint does not adequately allege the required mental state, or “scienter” for civil
conspiracy. To state a claim for civil conspiracy, the Complaint must plead sufficient facts with
particularity to show that BankPlus knew Mr. Adams operated a fraudulent scheme and agreed to
18 Ex. B
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conspire with him to further the scheme unlawfully. “For a civil conspiracy to arise, the alleged
confederates must be aware of the fraud or wrongful conduct at the beginning of the agreement.”
Bradley, 117 So. 3d at 339 (citing 16 Am. Jur. 2d Conspiracy § 51); see also Midwest Feeders,
Inc. v. Bank of Franklin, 886 F.3d 507, 520 (5th Cir. 2018) (civil conspiracy requires proof that
conspirator “knew of [the] fraudulent scheme”).19 A bare assertion of knowledge is a legal
conclusion, and does not state a claim. See Iqbal, 556 U.S. at 678.
The Complaint alleges “red flags” to assert that Individual Defendants (and by extension
BankPlus) “knew or should have known” that Madison Timber was a Ponzi scheme. Compl. ¶¶
89, 98, and 131 (emphasis added). Yet, by hedging that claim (“or should have known”), the
Complaint suggests it cannot allege the required actual knowledge. See Litson-Gruenber v.
JPMorgan Chase & Co., 2009 WL 4884426, at *2 (N.D. Tex. Dec. 16, 2009) (dismissing claims
in a Ponzi-scheme case because “pleading based on an allegation the defendant ‘knew or should
have known’ is insufficient” for actual knowledge); Neilson v. Union Bank of California, N.A.,
2003 WL 27374137, at *10 (C.D. Cal. Feb. 20, 2003) (collecting authorities).
“Red flags” do not support an allegation of actual knowledge. See, e.g., Rosner v. Bank
of China, 2008 WL 5416380, at *6 (S.D.N.Y. Dec. 18, 2008) (“courts overwhelmingly
recognize” that “actual knowledge of a fraud” is not established “based on allegations of . . .
ignorance of obvious ‘red flags’”), aff’d, 349 F. App’x 637 (2d Cir. 2009); Honig v. Kornfeld,
19 The same is true for the Complaint’s racketeering claims. “[B]ecause the core of a RICO civil
conspiracy is an agreement to commit predicate acts, a RICO civil conspiracy complaint, at the very least,
must allege specifically such an agreement. . . Accordingly, because the complaints fail to plead
specifically any agreement to commit predicate acts of racketeering, the RICO conspiracy claim was also
properly dismissed.” Tel-Phonic Servs., Inc. v. TBS Int'l, Inc., 975 F.2d 1134, 1140-41 (5th Cir. 1992),
citing Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 25 (2d Cir.1990); Glessner v. Kenny, 952
F.2d 702, 714 (3d Cir.1991) (civil RICO conspiracy claim must plead agreement to commit predicate acts
and knowledge that the acts were part of a pattern of racketeering activity); and Miranda v. Ponce Fed.
Bank, 948 F.2d 41, 47 (1st Cir.1991) (civil RICO conspiracy claim must charge that defendants
knowingly entered into an agreement to commit two or more predicate crimes).
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339 F. Supp. 3d 1323, 1344 (S.D. Fla. 2018) (“red flags fail to establish actual knowledge”);
Chemtex, LLC v. St. Anthony Enterprises, Inc., 490 F. Supp. 2d 536, 547 (S.D.N.Y. 2007) (“even
alleged ignorance of obvious warning signs of fraud will not suffice to adequately allege actual
knowledge”); In re Int’l Mgmt. Assocs., LLC, 563 B.R. 393, 420 (Bankr. N.D. Ga. 2017)
(“allegations of ‘red flags’ were insufficient to establish the bank’s actual knowledge of
existence of the Ponzi scheme”).
The Complaint alleges Defendants ignored red flags. The Complaint’s allegations of red
flags belie Defendants’ knowledge when the Complaint asserts the Individual Defendants did not
confirm the validity of the underlying investments and so “ignored” red flags. Compl. ¶¶ 57-58.
The red flags cited in the Complaint—also available to all investors—are insufficient to assign
knowledge of the Madison Timber fraud to the Individual Defendants and then to BankPlus.
The Complaint’s allegations regarding the March 2009 “Kite Suspect Report” (emphasis
added) are likewise insufficient. From the first sentence of its allegations regarding BankPlus’
knowledge, the Complaint fails to meet the particularity requirement because it hedges: “[A]s
early as 2009, and no later than 2015, others in BankPlus suspected, and eventually confirmed,
that Madison Timber was a fraud.” Compl. ¶ 59. Instead of a date, the Complaint gives a range.
Instead of knowledge, the Complaint alleges suspicions.
The Complaint continues its insufficient allegations when it claims BankPlus “had a
conversation” with Mr. Adams but did not require him to close the Madison Timber account.
Compl. ¶ 60. In addition to not providing a basis for this allegation other than “information and
belief” (which it cannot do, see United States ex rel. Thompson v. Columbia/HCA Healthcare
Corp., 125 F.3d 899, 903 (5th Cir. 1997)), the Complaint provides no details regarding the
alleged conversation. Who at BankPlus had the conversation with Mr. Adams? What was
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discussed? When? Furthermore, the Complaint states Madison Timber’s BankPlus account was
open until its collapse, but omits that the account had “very minimal activity” during that time.20
But even if the Complaint alleged that the Individual Defendants had sufficient
knowledge to support causes of action against them, it does not allege facts to impute that
knowledge to BankPlus because the Individual Defendants’ alleged actions are outside their
scope of employment.
Under Mississippi law, employers are not liable for the actions of their employees beyond
the scope of their employment. Baker Donelson Bearman Caldwell & Berkowitz, P.C. v. Seay,
42 So. 3d 474 (Miss. 2010). Some actions are “so clearly beyond an employee’s course and
scope of employment” that they cannot, as a matter of law, form a basis for an employer’s
vicarious liability. Id. at 488. “Conduct of a servant is not within the scope of employment if it
is different in kind from that authorized, far beyond the authorized time or space limits, or too
little actuated by a purpose to serve the master.” Id. (emphasis in original).
Here, the pleadings allege Mr. Murphree left BankPlus on December 3, 2009, while
Stewart left on August 9, 2011.21 These two individuals’ knowledge or actions outside the
timeframes of their employments cannot be imputed to BankPlus as a matter of law because the
scopes of their employments with BankPlus terminated on their respective departures. Despite
its claim Stewart and Mr. Murphree relied on BankPlus to perpetuate their alleged scheme, the
Complaint prefaces its BankPlus accusations by conceding “Stewart and Murphree were agents
of Mutual of Omaha.” Compl. ¶ 33. Similarly, the Complaint describes Mr. Cowgill as a former
loan officer and manager of BankPlus’ Southaven branch office; brokerage and investment
20 Ex C, see note 7.
21 Exs. D and E
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advice fall outside the scope of duties for those positions. And—above all else—the Complaint
does not identify a single fraudulent act committed by an employee of BankPlus at the time of
his or her employment. Thus, even if the Complaint were to have alleged adequately the
Individual Defendants’ knowledge of the Madison Timber fraud, that knowledge cannot be
imputed to the bank.
The Complaint Fails to Allege Proximate Causation
The civil conspiracy claim also fails because it does not adequately allege Defendants’
actions proximately caused Madison Timber’s/Mr. Adams’ claimed injuries. Under Mississippi
law, the question of proximate causation is “generally a matter of law” properly decided by the
courts. Owens Corning v. R.J. Reynolds Tobacco Co., 868 So. 2d 331, 341 (Miss. 2004)
(asbestos manufacturers not proximately injured by tobacco companies where asbestos-exposed
workers also smoked). “Proximate cause of an injury is that cause which in natural and
continuous sequence unbroken by any efficient intervening cause produces the injury and
without which the result would not have occurred.” Id. Mississippi proximate causation further
requires direct injury to the party asserting the claim: where a plaintiff derives her claim from a
third-party’s injury, proximate cause does not exist under the “remoteness doctrine.” Id.
Here, the Complaint fails to meet Mississippi’s standard for proximate causation because
the Receiver stands in the shoes of Madison Timber, not its investors who suffered direct injury.
The Complaint does not—cannot—articulate an injury to Madison Timber distinct from the
injuries to its investors. In each cause of action, the Complaint concedes Madison Timber’s
“liabilities” exist only as a function of investor activity: “Defendants contributed to Madison
Timber’s success over time, and therefore to the Receivership Estate’s liabilities today.” Compl.
¶¶ 92, 101, 111, 126, and 135. In other words, the Receivership Estate’s liabilities are remote
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injuries, merely investor losses restated as Madison Timber “liabilities.” See Section V.A infra
(Deepening Insolvency).
Because the Complaint does not sufficiently allege agreement, knowledge, or damages as
a proximate result, the Court should dismiss its Civil Conspiracy claims with prejudice.
II. THE COMPLAINT DOES NOT STATE AN AIDING AND ABETTING CLAIM
The Complaint cannot assert a state law tort claim for aiding and abetting in Mississippi.
“No Mississippi court has ever recognized any of the subsections of the Restatement (Second) of
Torts § 876 as viable causes of action.” In re Evans, 467 B.R. 399, 409 (Bankr. S.D. Miss.
2011). “Additionally, no Mississippi court has recognized a claim for civil aiding and abetting,
whether under § 876(b) or § 876(c).” Id. The “Mississippi Supreme Court has not expressly
recognized the tort of aiding and abetting fraud.” Dale v. Ala Acquisitions, Inc., 203 F. Supp. 2d
694, 700-01 (S.D. Miss. 2002). “When sitting in diversity, a federal court exceeds the bounds of
its legitimacy in fashioning novel causes of action not yet recognized by the state courts.” In re
Depuy Orthopaedics, Inc., Pinnacle Hip Implant Prods. Liability Lit., 888 F.3d 753, 781-782
(5th Cir. 2018) (reversing multi-million dollar jury verdict because, among other things, district
court recognized aiding-and-abetting claim under Restatement § 876(b) when Texas supreme
court had not yet recognized claim).22 For this reason alone, the Court should dismiss the
Complaint’s aiding and abetting claim.
22 The Dale court made an Erie guess that such a claim would be viable under Mississippi law, reasoning
that a majority of other jurisdictions have recognized such a claim and that Mississippi recognizes the
analogous tort of civil conspiracy. Dale, 203 F. Supp. 2d at 701; In re Evans, 467 B.R. at 409. To date,
however, the Mississippi Supreme Court has not recognized the tort as viable, and therefore, this Court
should follow In re Depuy Orthopaedics, which restrains the Court from recognizing the “novel” aiding
and abetting cause of action under § 876(b) of the Restatement (Second) of Torts. 888 F.3d at 781; see
also Fikes, 813 F. Supp. 2d at 822-23 (finding “Mississippi Supreme Court has never recognized aiding
and abetting as a civil cause of action” but declining to make an Erie guess because plaintiff failed to
allege separate underlying tort and thus failed to state claims for conspiracy and aiding and abetting).
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Even if Mississippi law recognized that claim, the Complaint fails to plead one. When
recognized, an aiding and abetting civil cause of action requires that “(1) a primary tortfeasor
committed a tort against a plaintiff, (2) the defendant knew that the primary tortfeasor’s conduct
was a breach of duty, and (3) the defendant substantially assisted or encouraged the primary
tortfeasor in committing the tort.” Myles v. Domino's Pizza, LLC, No. 4:14-CV-00107-DMB,
2015 U.S. Dist. LEXIS 58623, at *4 (N.D. Miss. May 5, 2015) (citing 74 Am. Jur. 2d Torts §
61). See also Fikes v. Wal-Mart Stores, Inc., 813 F. Supp. 2d 815, 822 (N.D. Miss.
2015) (recognizing tort requires knowledge “that the others' conduct constitutes a breach of duty
and. . . substantial assistance or encouragement to the other so to conduct himself”)
(citing Restatement (Second) of Torts § 876(b) (1979)). The Complaint fails to plead each
element.
The Complaint Fails To Identify an Underlying Tort
Similar to its civil conspiracy claims, the Complaint does not specify the primary
violation(s)—an underlying tort or torts—as required in aiding and abetting causes of action, but
instead claims all Defendants “aided and abetted Adams and Kelly in committing breaches of
duties owed by them to Madison Timber and in other tortious conduct alleged in this complaint.”
Compl. ¶ 97. Without identifying the “breaches of duties” or “other tortious conduct,” the
Complaint fails to state a cause of action for aiding and abetting and should be dismissed.
The Complaint Fails to Allege Knowledge
Aiding and abetting requires a defendant to have knowledge he is helping the primary
violator breach a duty: “a defendant is liable [under a claim of aiding and abetting] if he ‘knows
that the other’s conduct constitutes a breach of duty . . . .’” Compl. ¶ 96 (emphasis added)
(quoting Restatement (Second) of Torts § 876(b) (1979)). The Complaint fails to allege facts
regarding Defendants’ knowledge sufficient to state a cause of action.
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Allegations that a defendant “should have known about the dangers” of an alleged
confederate’s conduct fall short of establishing that the defendant “knew about conduct
constituting a conspiracy[.]” Dickens v. A-1 Auto Parts & Repair, Inc., No. 1:18-cv-162-LG-
RHW, 2018 WL 5726206, at *3 (S.D. Miss. Nov. 1, 2018). Courts in jurisdictions that recognize
civil liability for aiding and abetting routinely dismiss claims based on “red flags” as the
Complaint alleges here. El Camino Res., LTD. v. Huntington Nat. Bank, 722 F. Supp. 2d 875,
907-08 (W.D. Mich. 2010) (collecting authority), aff'd, 712 F.3d 917 (6th Cir. 2013). Consistent
with the “universal rule in this country,” “banks, lawyers, brokerage houses, [or] accountants”
are not liable for aiding and abetting based on “red flags, smoke, and other irregularities[.]” Id.;
Lerner v. Fleet Bank, NA., 459 F.3d 273, 294 (2d Cir. 2006) (“red flags” were “insufficient to
establish a claim for aiding and abetting fraud”).
Thus, just as with its civil conspiracy claims, the Complaint’s failure to allege actual
knowledge of the Madison Timber fraud is fatal to its aiding and abetting claims. The red flags
the Complaint cites do not provide the particularity allegations of actual knowledge require, and
the acts of the Individual Defendants it cites are unattributable to BankPlus anyway as outside
the scopes of their employment. See Section I.B supra.
The Complaint Does Not Allege Substantial Assistance
The Complaint also does not allege any Defendant provided substantial assistance to a
primary violator. Although Mississippi has not considered substantial assistance in this context,
in the Fifth Circuit ordinary business constituting the “daily grist of the mill,” such as routine
banking and trading activities, do not constitute substantial assistance for aiding and abetting
securities fraud. Amacker v. Renaissance Asset Mgmt. LLC, 657 F.3d 252, 257 (5th Cir. 2011)
(analyzing aiding-and-abetting substantial assistance under Commodities Exchange Act by
comparison to the Securities Exchange Act of 1934, and noting “The routine execution of trades
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does not amount to substantial assistance.”); Bane v. Sigmundr Expl. Corp., 848 F.2d 579, 582
(5th Cir. 1988) (examining substantial assistance in Rule 10b-5 action and holding “routine
[extension and] solicitation of a loan and obtaining financial and credit information for a loan is
not substantial assistance”); Woodward v. Metro Bank of Dallas, 522 F.2d 84, 98 (5th Cir. 1975)
(in Rule 10b-5 action, paying checks drawn on account bank knew to be unprofitable and
“plagued by NSF occurrences” not substantial assistance and noting “evidence that the NSF
checks were always covered by transfers from other banks tends to negate the possibility that
[the bank] was aware of its role in improper activity and was knowingly rendering substantial
assistance.”).23
The Complaint’s claims of substantial assistance depend on Gee Gee and Mr. Cowgill,
because the Complaint does not allege Stewart or Mr. Murphree recruited investors or otherwise
assisted Madison Timber while they were employees of BankPlus. Mr. Cowgill’s alleged
assistance was providing office space to conduct meetings and eventually “administering”
Stewart’s Madison Timber business by verifying wires and commissions and investor deposits.
Compl. ¶¶ 34, 47. Gee Gee’s alleged assistance, meanwhile, was facilitating wire transfers,
forwarding Stewart’s Madison Timber business during his illness, providing Mr. Kelly with his
bank statements, and serving as a reference to a Madison Timber investor. Compl. ¶¶ 40-41, 49,
68, and 69. With the exception of serving as a reference to an investor, all these activities
constitute the type of routine business transactions the Fifth Circuit does not recognize as
23 While still relevant to consideration of “substantial assistance,” the Supreme Court after Bane and
Woodward ruled that no private civil cause of action exists for aiding and abetting a Rule 10b-5 violation.
Cent. Bank, N.A. v. First Interstate Bank, N.A., 511 U.S. 164, 190 (1994). Those decisions remain
relevant because they articulate general rules that still apply today. SEC v. Morris, 2005 U.S. Dist.
LEXIS 42106, at *27 (S.D. Tex. Aug. 18, 2005) (concluding Woodward “is still applicable law”
regarding knowledge requirements required to state a claim for securities violations).
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substantial assistance. And Gee Gee’s alleged service as a reference cannot be imputed to the
bank because it was outside the scope of her employment. See Section I.B supra.
The Complaint does not allege any of the Individual Defendants knew Madison Timber
was a Ponzi scheme or that their actions were fraudulent. The red flags the Complaint waves are
insufficient to assign knowledge to the Individual Defendants, either at the outset of the scheme
or during its course. The law does not impute knowledge to them on these grounds, and to do so
here is especially inappropriate because the same red flags were available to all investors and
financial institutions.
III. THE COMPLAINT DOES NOT ALLEGE NEGLIGENCE OR NEGLIGENT
RETENTION/ SUPERVISION CLAIMS
Any claim for negligence against BankPlus fails for one fundamental reason—the
Complaint fails to identify any duty that BankPlus owed to anyone in relation to Madison
Timber. Under Mississippi law, “employers do not have a duty to supervise their employees
when the employees are off-duty or not working… [nor] a duty to uncover [] employees’
concealed, clandestine, personal activities,” especially where the employer gains no “corporate
benefit therefrom.” Seay, 42 So.3d at 489 (emphasis in original) (internal quotation marks
omitted). Because the Individual Defendants’ investment activities were outside their scopes of
employment, the bank was under no duty to supervise them. See also Belmont v. MB Inv.
Partners, Inc., 708 F.3d 470, 491 (3d Cir. 2013) (dismissing negligent supervision claim where
employee operated a Ponzi scheme; employer has no duty “to discover, at its peril, the fraudulent
machinations in which [employee] was involved outside the scope of his employment”); Holmes
v. Campbell Properties, Inc., 47 So. 3d 721, 729 (Miss. Ct. App. 2010) (misconduct itself is
insufficient; plaintiff must show “specific evidence” to support employer’s knowledge that
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misconduct was likely); and Tichenor v. Roman Catholic Church of Archdiocese of New
Orleans, 32 F.3d 953 (5th Cir. 1994) (applying Mississippi law).
Whether or not the Complaint sufficiently alleges that the Individual Defendants engaged
in misconduct, and it does not, the Complaint does not allege “specific evidence” that BankPlus
knew any misconduct occurred. The Complaint alleges conduct that either falls outside of the
scope of the Individual Defendants’ employment at BankPlus or, in the case of Gee Gee and Mr.
Cowgill, conduct that is routine, without alleging any facts (as explained in section I.B, supra) to
suggest that Gee Gee or Mr. Cowgill, much less BankPlus, knew they were assisting a fraudulent
scheme.
Second, the Complaint cannot allege that BankPlus owes a duty to non-customers with
respect to Madison Timber. As a general proposition, banks do not owe any duties to non-
customers. Midwest Feeders, Inc. v. Bank of Franklin, 886 F.3d 507 (5th Cir. 2018). The
Complaint alleges nothing to suggest that this rule does not apply.
As to its customers who invested in Madison Timber, BankPlus only owes customers
duties concurrent with the services the bank has agreed to perform for the customers. The
Complaint does not, and cannot, allege anything to suggest that BankPlus owes a duty to its
customers in relation to customers’ investments unless those customers made investments on the
advice of the bank. The Complaint alleges nothing of the sort. Rather, the Complaint alleges
routine activity by the bank related to servicing the customers’ accounts. That those accounts
contained funds invested in Madison Timber is not relevant.
In sum, the Complaint does not allege a cognizable duty BankPlus owed to any Madison
Timber investor in relation to that investment, and accordingly does not state a claim for
negligence or negligent supervision against BankPlus.
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IV. THE COMPLAINT DOES NOT ALLEGE A CIVIL RACKETEERING CLAIM
The Complaint’s racketeering allegations fail for many reasons, any one of which alone
defeats the claim. Chiefly, the Complaint (1) fails to furnish Rule 9(b)’s required particulars, (2)
lacks allegations of scienter, and (3) fails to allege adequately a RICO enterprise or pattern.
The Complaint Lacks Particulars Rule 9(b) Requires as Case Statement Shows
Despite a lack of case law and legislative history, Mississippi’s RICO Act is based upon
the federal RICO Act, 18 U.S.C. §1961–1968, so federal RICO cases should generally guide this
Court’s analysis of the Complaint’s state racketeering claims. RICO requires a plaintiff to show
“‘(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.’” Rezner v.
Bayerische Hypo-Und Vereinsbank AG, 630 F.3d 866, 873 (5th Cir. 2010) (citing Sedima,
S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985)).24
Federal Rule of Civil Procedure 9(b) requires particularity in pleading fraud—this applies
to “the pleading of fraud as a predicate act in a RICO claim[.]” Tel-Phonic Servs., Inc. v. TBS
Int’l, Inc., 975 F.2d 1134, 1138–39 (5th Cir. 1992). To this end, allegations of mail and wire
fraud must, “[a]t a minimum,” describe the “[1] time, [2] place, and [3] contents of [each of] the
false representations, as well as [4] the identity of the person making the misrepresentation and
[5] what he obtained thereby.” Id. This requirement serves two of Rule 9(b)’s primary purposes,
providing fair notice of claim and safeguarding defendants’ reputations—an especially important
consideration where a community bank faces racketeering allegations. See Shushany v. Allwaste,
Inc., 992 F.2d 517 (5th Cir. 1993).25 The Complaint does not provide these particulars, however.
24 Mississippi’s RICO has a lower standard for the first requirement (prohibiting “participation” in the
enterprise generally, see Miss. Code §97-43-5(3)), while the Federal statute prohibits participation “in the
conduct of such enterprise’s affairs,” implying a degree of direction. 18 U.S.C. §1962(c).
25 Many jurisdictions recognize the “stigmatizing effect” of RICO claims has an in terrorem effect which
can cause defendants to settle quickly otherwise defensible claims. See Figueroa Ruiz v. Alegria, 896
Case 3:19-cv-00196-CWR-FKB Document 31 Filed 05/21/19 Page 29 of 39
{N3822713.1}
21
To assist plaintiffs in fulfilling this heightened standard, many federal courts (including
this Court) require filing of federal RICO Case Statements. L.U. Civ. R. 83.8. RICO Case
Statements are essentially guides in how to plead racketeering violations with the level of detail
required by the law. These statements require plaintiffs to include all of the particulars of the
time, place, or manner of specific actions giving rise to their claims. The Fifth Circuit has called
the RICO Case Statement “a useful, sometimes indispensable, means to understand the nature of
the claims asserted and how the allegations satisfy the RICO statute.” Marriott Bros. v. Gage,
911 F.2d 1105, 1107 (5th Cir. 1990).
Among other requirements, this jurisdiction’s RICO Case Statement obliges plaintiffs to
list each defendant and state his or her alleged misconduct and basis for liability; provide dates,
participants, and descriptions for alleged predicate acts and how they form a pattern; describe the
alleged RICO enterprise in detail, including its structure, purpose, and course of conduct; and
identify the direct causal relationship between the alleged injury and violation of the statute.
L.U. Civ. R. 83.8. In fact, 83.8(5)(C) singles out wire and securities fraud as requiring even
greater levels of detail in accordance with Fed. R. Civ. P. 9(b): “Identify the time, place, and
contents of the alleged misrepresentations, and the identity of persons to whom and by whom the
alleged misrepresentations were made.”
F.2d 645, 650 (1st Cir. 1990) (recognizing that mere assertion of RICO claims may have stigmatizing
effect on named defendants); Katzman v. Victoria’s Secret Catalogue, 167 F.R.D. 649, 660 (S.D.N.Y.
1996) (same, quoting Figueroa), judgment aff’d, 113 F.3d 1229 (2d Cir. 1997) (unpublished table
decision); In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1418 (3d Cir. 1997) (recognizing that
fraud claims pose threat to business’ reputation); Limestone Dev. Corp. v. Vill. of Lemont, 520 F.3d 797,
803 (7th Cir. 2008) (affirming dismissal of RICO claim and warning against permitting a plaintiff “with a
largely groundless claim to simply take up the time of a number of other people, with the right to do so
representing an in terrorem increment of the settlement value, rather than a reasonably founded hope that
the [discovery] process will reveal relevant evidence”).
Case 3:19-cv-00196-CWR-FKB Document 31 Filed 05/21/19 Page 30 of 39
{N3822713.1}
22
Comparing the Complaint’s allegations against this Court’s RICO Case Statement
requirements underscores its failure to state a racketeering claim: the Complaint does not identify
any predicate acts with the required particularity. The Complaint does not identify BankPlus’
basis of liability. The Complaint does not specify misrepresentations or omissions that constitute
the fraud or tie those alleged lies to BankPlus, but instead burdens BankPlus with this inquiry.
Although Mississippi does not have its own RICO Case Statement requirement, if the Court
permits amendment of the Complaint, it should require a RICO Case Statement to comply with
L.U. Civ. R. 83.8 and provide Defendants adequate notice of the nature and grounds of the RICO
claims.
The Complaint Fails to Allege Required Knowledge Element
The Complaint’s lack of alleged knowledge also defeats its racketeering claim under state
law. The Complaint alleges Individual Defendants committed wire fraud as the required
predicate acts for Mississippi racketeering liability, but does not allege anything with
particularity to suggest that BankPlus, the only party against which the Complaint levels RICO
claims, knew of the alleged wire fraud or any illegal activity. The Mississippi statute (like its
federal corollary) requires defendants to have knowledge their actions are unlawful. See 18
U.S.C. 1343, Miss. Code §97-19-83. The Complaint therefore fails to state a cause of action for
racketeering because it never alleges BankPlus’ actual knowledge of any fraudulent conduct (See
Sections I.B, II.B supra).26 The Complaint’s “red flags” are insufficient to plead knowledge of
unlawful actions, as required in properly pleaded RICO claims. See Chaney v. Dreyfus Serv.
26 Additionally, the Complaint must (but does not) allege facts sufficient to raise a strong inference of
scienter with respect to BankPlus. See R2 Invs. LDC v. Phillips, 401 F.3d 638, 643 (5th Cir. 2005)
quoting Southland Sec. Corp. v. Inspire Ins. Solutions, Inc., 365 F.3d 353, 362 (5th Cir. 2004) (holding
plaintiffs claiming securities fraud against multiple defendants must “distinguish among those they sue
and enlighten each defendant as to his or her particular part in the alleged fraud”) (emphasis in the
original).
Case 3:19-cv-00196-CWR-FKB Document 31 Filed 05/21/19 Page 31 of 39
{N3822713.1}
23
Corp., 595 F. 3d 219, 239-240 (5th Cir. 2010) (assertion of purported red flags and insinuations
that defendants “should have known” is not enough to maintain RICO conspiracy claim). The
Court should dismiss Count V with prejudice, therefore.
The Complaint Does Not Allege Existence of Racketeering Enterprise, Pattern
The Mississippi RICO Act, broadly stated, prohibits persons from financing, controlling,
or operating (or from conspiring to finance, control, or operate) an enterprise through a pattern of
racketeering activity. See Miss. Code §§ 97-43-3, 97-43-5.
An “enterprise” is “any individual, sole proprietorship, partnership, corporation, union or
other legal entity, or any association or group of individuals associated in fact although not a
legal entity.” Id. § 97-43-3(c). A “plaintiff alleging an association-in-fact enterprise must
adduce evidence demonstrating an ongoing organization, formal or informal, and . . . evidence
that the various associates function as a continuing unit.” Whelan v. Winchester Prod. Co., 319
F.3d 225, 229 (5th Cir. 2003) (internal quotation omitted).
The third RICO element—a pattern—requires “both [1] a relationship between the
predicate offenses… and [2] the threat of continuing activity.” Malvino v. Delluniversita, 840
F.3d 223, 231 (5th Cir. 2016). Predicate crimes are “related” if they have the “same or similar
purposes, results, participants, victims, or methods of commission, or otherwise are interrelated
by distinguishing characteristics and are not isolated events”; and they are “continuous” if they
occurred over a “substantial period of time” or establish that the defendant is “operating as part
of a long-term association that exists for criminal purposes.” H.J. Inc. v. Northwestern Bell
Telephone, Co. 492 U.S. 229, 240–43 (1989) (emphasis added).27 As the Fifth Circuit has held,
27 See Miss. Code § 97-43-3(d) (offenses must have “same or similar intents, results, accomplices,
victims, or methods of commission or otherwise are interrelated by distinguishing characteristics and are
not isolated incidents.”).
Case 3:19-cv-00196-CWR-FKB Document 31 Filed 05/21/19 Page 32 of 39
{N3822713.1}
24
“[t]o establish a pattern of racketeering activity” a plaintiff must not only allege that the
defendant engaged in at least two predicate criminal acts, but also “show that the racketeering
predicates are related, and that they amount to or pose a threat of continued criminal activity.”
Word of Faith World Outreach Ctr. Church, Inc. v. Sawyer, 90 F.3d 118, 122 (5th Cir. 1996)
(quoting H.J. Inc., 492 U.S. at 239). But the Complaint does no more than identify Madison
Timber as the fraud enterprise which engaged in a pattern of racketeering without any of the
particulars required by Rule 9(b); simply applying a label is insufficient.
The Complaint claims BankPlus participated in a “fraud enterprise” through a pattern of
racketeering activity, but does not identify predicate acts or describe how it participated in that
enterprise. The Complaint suggests wire fraud as predicates, but does not identify either the
individual wire frauds or the portions of the communications that were misrepresentations or
omissions. Thus BankPlus—the only Defendant named in the RICO Cause of Action—is left
guessing which acts the Complaint describes evidence enterprise. The same is true for pattern:
the Complaint does not identify BankPlus’ alleged acts of racketeering and how they constitute a
pattern, but instead leaves BankPlus to guess the basis for the Complaint’s allegations or, worse
still, forces BankPlus to use some of its limited discovery opportunities to ferret out this
information. Rule 9(b) exists so defendants do not have to divine or waste limited discovery to
get to the heart of the basis for a plaintiff’s fraud allegations from the complaint, but the
Complaint here forces BankPlus to do just that.
Further, as this Court has previously ruled, wire fraud can only serve as a predicate act
under Mississippi’s anti-racketeering laws if the alleged wire fraud occurred after July 1, 2014.
Jordan v. Maxfield & Oberton Holdings, LLC, 2016 U.S. Dist. LEXIS 135831 (S.D. Miss. Sep.
Case 3:19-cv-00196-CWR-FKB Document 31 Filed 05/21/19 Page 33 of 39
{N3822713.1}
25
30, 2016) (Reeves, J.).28 The Complaint identifies no wire fraud(s) after July 1, 2014, and
provides no particulars for its conclusory allegations before that date. The Court should dismiss
Count V, therefore.
Because the Complaint fails to provide particulars, lacks allegations of knowledge, and
grounds its racketeering arguments in conclusory allegations of wire fraud, this Court should
dismiss Count V with prejudice.29 In the alternative, BankPlus asserts these statutes are
unconstitutionally vague.
V. THE COURT SHOULD DISMISS THE CLAIMS AGAINST BANKPLUS ON
TWO OTHER INDEPENDENT GROUNDS
Even if the Complaint adequately pleaded any claims against BankPlus (it does not), the
Court can dismiss the claims on two other independent grounds. First, the Receiver, though
unacknowledged in the Complaint, relies on the theory of “deepening insolvency” to establish
damages.30 The Fifth Circuit soundly rejects this theory. Second, the equitable doctrine of in
pari delicto, or unclean hands, bars all of the claims made against BankPlus.
The Fifth Circuit Does Not Recognize Deepening Insolvency
Deepening insolvency is a supposed injury to corporate debtors from the fraudulent
expansion of corporate debt and prolongation of corporate life. Official Comm. of Unsecured
28 “Assuming that mail and wire fraud are now incidents of racketeering conduct—the new law lists
them as predicate acts for an ‘organized theft or fraud enterprise’—they were not incidents of
racketeering conduct before July 1, 2014.” Jordan, 2016 U.S. Dist. LEXIS 135831 at 7-8 (emphasis
added) (suggesting that because underlying criminal conduct necessary for civil RICO claims must stem
from “pattern of racketeering activity” (see § 97-43-5), wire fraud alone cannot support criminal RICO
culpability and by extension civil cause of action).
29 Additionally, parties may only seek triple damages against defendants who have already been convicted
of racketeering conduct, §97-43-9(6), but no BankPlus employee or ex-employee has ever been charged
with a crime related to Madison Timber, much less convicted.
30 Compl. ¶¶ 92, 101, 111, 118, 126, and 135. Although a new question of law for Mississippi, the state
would likely join other jurisdictions in rejecting the theory, both as a tort and as a theory of damages.
Case 3:19-cv-00196-CWR-FKB Document 31 Filed 05/21/19 Page 34 of 39
{N3822713.1}
26
Creditors v. R.F. Lafferty & Co., 267 F.3d 340 (3d Cir. 2001). The Fifth Circuit, interpreting
Delaware law, rejected deepening insolvency as a theory of damages and cast significant doubt
on its status as an independent tort in SI Restructuring, Inc. v. Faulkner (In re SI Restructuring,
Inc.), 532 F.3d 355 (5th Cir. 2008). There, the court rejected a trustee’s equitable subordination
of directors’ secured claims and overruled a bankruptcy judge who found directors’ eleventh-
hour loan transactions effectively released them as guarantors on corporate debt at expense of the
corporation and its unsecured creditors, undermining the financial health of the corporation and
pushing it deeper into the “zone” of insolvency. The law of subordination required presence of
“actual harm,” but the court disagreed with the bankruptcy judge and held “deepening
insolvency” is invalid as a theory of damages. The court noted the concept had been widely
criticized and rejected by many courts, including the circuit which chiefly developed the concept.
Id. at n. 48. Similarly, a Bankruptcy Court making a Texas-Erie guess rejected deepening
insolvency as a separate tort in Official Comm. of Unsecured Creditors of VarTec Telecomms.,
Inc. v. Rural Tel. Fin. Coop. (In re VarTec Telecomms., Inc.), 335 B.R. 631 (Bankr. N.D. Tex.
2005).31
Courts have also rejected attempts to backdoor deepening insolvency claims by referring
to the concept under a different name. “Without a specific transaction being implicated, arguing
‘diminution in value’ is virtually the same as arguing a theory of deepening insolvency as a cause
of action or other basis of damages.” Balestri v. Hunton & Williams, LLP (In re Hallwood
Energy, L.P.), 2013 Bankr. LEXIS 5691, at *30 (Bankr. N.D. Tex. Nov. 18, 2013). In that legal
malpractice case, the court found that even though defendant lawyers in fact owed a duty of care
31 Where the court reasoned deepening insolvency is not a tort under Texas law without the presence of a
special duty, and further noted “Much like the little old lady in the fast food commercials, the Court looks
at the bottom of the deepening insolvency hamburger bun and is forced to ask ‘where's the tort?’” Id. at
644.
Case 3:19-cv-00196-CWR-FKB Document 31 Filed 05/21/19 Page 35 of 39
{N3822713.1}
27
to the bankrupt entity, and even though the trustee pleaded facts which raised a plausible claim
for breach of that duty, dismissal was appropriate because the trustee could not articulate any
damages except to the defunct entity’s “business enterprise value.”
The Complaint’s allegations here require dismissal because the Receiver claims no injury
to Madison Timber except increases in the Receivership Estate’s “liabilities.” An increase in
liabilities is no more distinct from deepening insolvency than “diminution in value” and this
Court should dismiss all causes of action against BankPlus on these grounds.
The Equitable Doctrine of In Pari Delicto Bars the Complaint’s Claims
Against BankPlus
The Court need not reach the merits of the claims because the equitable doctrine of in
pari delicto (“IPD”) bars them. The Receiver stands in the shoes of Madison Timber and the
Adams estate. See Hymel v. FDIC, 925 F.2d 881 (5th Cir. 1991); Order Appointing Receiver,
D.I. 33, SEC v. Adams, No. 3:18-cv-00252 (S.D. Miss.). She has standing to assert the claims of
the entities in receivership, but “not the claims of the entities’ investor-creditors.” Janvey v.
Democratic Senatorial Campaign Comm., Inc., 712 F.3d 185, 190 (5th Cir. 2013); see also
Troelstrup v. Index Futures Grp., Inc., 130 F.3d 1274, 1276 (7th Cir. 1997) (receiver appointed
for wrongdoer’s estate “has no possible claim against [a third-party brokerage], or on behalf of
the investors, the victims of the fraud, because he was not their receiver”).
The IPD doctrine applied to the face of the Complaint bars its claims because the
Receiver stands in the shoes of parties with unclean hands, Madison Timber and Mr. Adams.
The IPD doctrine enforces the longstanding equitable principle that a plaintiff “who has
participated in wrongdoing may not recover damages resulting from the wrongdoing.” In Pari
Delicto Doctrine, BLACK'S LAW DICTIONARY (10th ed. 2014). The doctrine “applies where [i]
the plaintiff is equally or more culpable than the defendant or [ii] acts with the same or greater
Case 3:19-cv-00196-CWR-FKB Document 31 Filed 05/21/19 Page 36 of 39
{N3822713.1}
28
knowledge as to the illegality or wrongfulness of the transaction.” Latham v. Johnson, 262 So.
3d 569, 582 (Miss. App. 2018) (citing 27A Am. Jur. 2d, Equity § 103, p. 641 (2008)), reh'g
denied (Oct. 9, 2018); see also J. B. Hunt Transp., Inc. v. Forrest Gen. Hosp., 34 So. 3d 1171,
1174 (Miss. 2010) (joint tortfeasor may recover against others “only when [she] is liable merely
because of passive negligence”). At the motion to dismiss stage, an affirmative defense like IPD
bars recovery where the defense is established on the face of the complaint. Alexander v.
Verizon Wireless Servs., L.L.C., 875 F.3d 243 (5th Cir. 2017).
The Complaint concedes Madison Timber’s and Mr. Adams’ unclean hands. Compl. ¶¶
22, 117. Their admitted culpability as perpetrators of a Ponzi scheme equals or surpasses the
culpability the Complaint ascribes to BankPlus. Mr. Adams’ crimes through Madison Timber
defrauded their investors; BankPlus’ alleged torts, on the other hand, amount to inaction or
passivity—really negligence or silence. Compl. ¶72-74, 104-113. Where two parties share
responsibility for a tort, the “active wrongdoer” is more at fault than the “passive wrongdoer.”
Long Term Care, Inc. v. Jesco, Inc., 560 So. 2d 717, 721 (Miss. 1990). On the face of the
Complaint, therefore, IPD bars its claims because Mr. Adams and Madison Timber share (at
least) equal fault with BankPlus.
In addition, applying IPD here to bar the Complaint’s claims serves public policy in
several ways. For instance, allowing a receiver to bring tort claims strains judicial notions of
standing past their breaking points. Further, permitting receiver suits can subject parties to
multiple liabilities for the same acts if investors may also bring their own actions. Conversely, if
res judicata applies after receivers’ suits to bar some or all investor claims, the investors risk
losing their ability to plead harm specific to their circumstances.
Case 3:19-cv-00196-CWR-FKB Document 31 Filed 05/21/19 Page 37 of 39
{N3822713.1}
29
VI. THE BALANCE OF EQUITIES FAVORS DISMISSAL
The balance of equities in this case favors dismissal. First, the Complaint seeks damages
sustained in a Ponzi scheme from a bank which never promoted the scheme or received payment
from it. And contrary to its allegations that BankPlus “did nothing to curb Madison Timber’s
reliance” on it, the Complaint concedes BankPlus reported suspicious Madison Timber
transactions to the Federal Government on April 8, 2015. More generally, the Complaint’s
theories of recovery ask this Court to stretch judicial notions of standing, causation, and injury
past their breaking points. Accordingly, equity favors dismissal.
CONCLUSION
For the foregoing reasons, The Complaint fails to state a claim and should be dismissed
with prejudice.
Respectively submitted:
/s/ Kaytie M. Pickett
Kaytie M. Pickett (MS Bar 103202)
Stacey Moore Buchanan (MS Bar 103882)
JONES WALKER LLP
190 E. Capitol St., Ste. 800
Jackson, Mississippi 39205
Telephone: (601) 949-4900
Facsimile: (601) 949-4804
Attorneys for Defendants BankPlus & BankPlus
Wealth Management LLC
Case 3:19-cv-00196-CWR-FKB Document 31 Filed 05/21/19 Page 38 of 39
{N3822713.1}
30
CERTIFICATE OF SERVICE
I hereby certify that a copy of the above and foregoing pleading has been served on all
parties and/or their counsel of record, by e-mail, by ECF, facsimile, by-hand, and/or by United
States mail.
Jackson, Mississippi, this 21st day of May, 2019.
/s/ Kaytie M. Pickett
Case 3:19-cv-00196-CWR-FKB Document 31 Filed 05/21/19 Page 39 of 39
Case 3:19-cv-00196-CWR-FKB Document 31-1 Filed 05/21/19 Page 1 of 3
Froin: [email protected]
Sent: Thursday, November 14, 2013 6:01 PM
To: Gee Gee Patridge <[email protected]>
Subject: Re: Answerphone
Sounds good to me
Thanks
Bailey Patridge Office: 662-895-4100 Cell: 662-801-2448 [email protected]
> On Nov 14, 2013, at 5:56 PM, "Gee Gee Patridge" <[email protected]> wrote:
> Bailey, > I talked with Kevin and also Jerry Jordan with this service. They are out of Oxford. I told them my son was going to be out of the office for several weeks or more. > Seem very professional and affordable. Look over this.
> Thinking scripts > SP will be out of the office several weeks for medical ~
> If you have a Madison Timber please contact Wayne Kelly telephone # or I will be happy to have Wayne give you a return call.
> If you have an investment question, you may contact the number on your i~iwt icccnt stateiiie~it ur I will liavc a representative call you.
> ?~~
> This is 24/7 and they will send emails to Wayne and whoever? MOIS, etc.
> Thoughts. > Mom
> Gee Gee Patridge > Senior Executive Vice President &Chief Operations Officer > 1068 Highland Colony Pkwy Ridgeland, MS 39157 > Office: (601)898-4981 > Internal: 490-3781 > Cell: (662)392-9300 > Fax: (601)898-0330
> -----Original Message-----> From: Kevin Shawn [mailto:kevinna,netvoiceinc.com] > Sent: Thursday, November 14, 2013 2:20 PM > To: Gee Gee Patridge > Subject: Answerphone
> Ms. Gee Gee,
> I want to take the time to tell you thank you for taking the time to > talk with me about our service and how we can help your son out. Per our > conversation you will find a brochure about our company and the service > agreement. Please review and call me with any questions. If you decide > to go with our service please sign the agreement and fax back to at the
Case 3:19-cv-00196-CWR-FKB Document 31-1 Filed 05/21/19 Page 2 of 3
> number below. Also, I have attached the Answerphone Checklist. This is > a form you will need to fax back with the agreement. This form tells us > everything about your business and how you want us to handle your > calls. If you have any questions feel free to call me with any questions.
> Thank you and have a great day! !
> --> Kevin Shawn > Director of Sales and Marketing > NetVoice Inc. > 501 Heritage Drive > Oxford, MS. 38655 > Phone: 800-944-2797 > Fax: 662-234-3333 > [email protected]
> <Answerphone Brochure 10-17-13.pdf> > <Answering Service Agreement 10-21-13.doc> > <Answerphone Check List 10-21-13.doc>
Case 3:19-cv-00196-CWR-FKB Document 31-1 Filed 05/21/19 Page 3 of 3
Case 3:19-cv-00196-CWR-FKB Document 31-2 Filed 05/21/19 Page 1 of 2
From: Madison Timber <[email protected]>
Sent: Tuesday, July 9, 2013 7:12 PM To: Gee Gee Patridge <[email protected]>
Subject: Re: Referral
You're the BESTEST!! Thanks
Sent from my iPhone
On Jul 9, 2013, at 6:56 PM, Gee Gee Patridge <[email protected]> wrote:
> I will be glad for him to call. I know both Blake and Adair. GG
> On Ju19, 2013, at 6:26 PM, "Wayne Kelly" <[email protected]> wrote:
» Gee Gee, » They group I spoke to you about last week will not be call you. I had a meeting with the Doctor(Adiar Blackledge) today that handled my nose surgery and he had his financial advisor with hiin (Blake Headley) who used to work for Bank Plus. Do you mind if he contacts you concerning Madison Timber investment. I know you probably don't like this, but I'm getting close to having the right investors in place where we cau do what we want. If you don't want him contacting you I totally understand.
» Thanks, » Wayne
> Gee Gee Patridge > Senior Executive Vice President &Chief Operations Officer > 1068 Highland Colony Pkwy Ridgeland, MS 39157 > Office: (601)898-4981 > Internal: 490-3781 > Cell: (662)392-9300 > Fax: (601)898-0330
Case 3:19-cv-00196-CWR-FKB Document 31-2 Filed 05/21/19 Page 2 of 2
PROPOSED
EXHIBIT
C
Case 3:19-cv-00196-CWR-FKB Document 31-3 Filed 05/21/19 Page 1 of 1
Case 3:19-cv-00196-CWR-FKB Document 31-4 Filed 05/21/19 Page 1 of 36
—~
FI' ~i ~~
BrokerCheck Report
STEWART DIBRELL PATRIDGE CRD# 3095012
Section Title Pa e s
Report Summary
Broker Qualifications 2 - 3
Registration and Employment History 4 - 5
Disclosure Events
Case 3:19-cv-00196-CWR-FKB Document 31-4 Filed 05/21/19 Page 2 of 36
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www.t~nra.orq/proKerchecK user vuiaance
STEWART D. PATRIDGE
CRD# 3095012
This broker is not currently registered.
Report Summary for this Broker
This report summary provides an overview of the broker's professional background and conduct. Additional information can be found in the detailed report.
Broker Qualifications
This broker is not currently registered. Disclosure Events
This broker has passed:
. 0 Principal/Supervisory Exams
. 1 General Industry/Product Exam
. 1 State Securities Law E~;am
Registration History
This broker was previously registered with the following securities firm(s):
INVESTORS CAPITAL CORP. CRD# 30613 SOUTHAVEN, MS 08/2013 - 05/2014
MUTUAL OF OMAHA INVESTOR SERVICES, INC. CRD# 611 SOUTHAVEN, MS 08/2011 - 08/2013
LPL FINANCIAL LLC CRD# 6413 OLIVE BRANCH, MS 06/2009 - 08/2011
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Are there events disclosed about this broker? Yes
The following types of disclosures have been reported: Type Count Regulatory Event 1
Customer Dispute 1
Investment Adviser Representative Information
The information below represents the individual's record as a broker. For details on this individual's record as an investment adviser representative, visit the SEC's Investment Adviser Public Disclosure website at
https://www.adviserinfo.sec.gov
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W W W.1Iflf8.O~q/b~OKBfCh2CK User Guidance
Broker Qualifications
Registrations This section provides the self-regulatory organizations (SROs) and U.S. states/territories the broker is currently registered and licensed with, the category of each license, and the date on which it became effective. This section also provides, for every brokerage firm with which the broker is currently employed, the address of each branch where the broker works. This broker is not currently registered.
~nra
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Broker Qualifications
Industry Exams this Broker has Passed This section includes ail securities industry exams that the broker has passed. Under limited circumstances, a broker may attain a registration after receiving an exam waiver based on exams the broker has passed and/or qualifying work experience. Any exam waivers that the broker has received are not included belo~rv.
This individual has passed 0 principal/supervisory exams, 1 general industry/product exam, and 1 state securities law exam.
Principal/Supervisory Exams Exam Category Date
No information reported.
General Industry/Product Exams Exam Category Date
General Securities Representative Examination Series 7 05/27/2008
State Securities Law Exams Exam Category Date
Uniform Combined State Law Examination Series 66 06/27/2008
Additional information about the above exams or other exams FINRA administers to brokers and other securities professionals can be found at www.finra.org/brokerqualifications/registeredrep/.
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Registration and Employment History
Registration History
The broker previously was registered with the following firms:
Registration Dates Firm Name
08/2013 - 05/2014 INVESTORS CAPITAL CORP.
08/2011 - 08/2013 MUTUAL OF OMAHA INVESTOR SERVICES, INC.
06/2009 - 08/2011 LPL FINANCIAL LLC
05/2008 - 05/2009 SUNTRUST INVESTMENT SERVICES, INC
03/2000 - 01/2001 PFIC SECURITIES CORPORATION
CRD#
30613
611
6413
17499
34941
09/1998 - 02/1999 MERRILL LYNCH, PIERCE, FENNER &SMITH 7691 INCORPORATED
Employment History
Branch Location
SOUTHAVEN, MS
SOUTHAVEN, MS
OLIVE BRANCH, MS
CORDOVA,TN
FRANKLIN, TN
NEW YORK, NY
This section provides up to 10 years of an individual broker's employment history as reported by the individual broker on the most recently filed Form U4.
Please note that the broker is required to provide this information only while registered with FINRA or a national securities exchange and the information is not updated via Form U4 after the broker ceases to be registered. Therefore, an employment end date of "Present" may not reflect the broker's current employment status.
Employment Dates Employer Name Employer Location
08/2013 -Present INVESTORS CAPITAL CORP. LYNNFIELD, MA
12/2012 -Present GREEN ENERGY SOLUTIONS SOUTHAVEN, MS
09/2011 -Present PATRIDGE CAPITAL MANAGEMENT SOUTHAVEN, MS
08/2011 - 08/2013 MUTUAL OF OMAHA INVESTOR SERVICES, INC OMAHA, NE
07/2011 - 08/2013 MUTUAL OF OMAHA MEMPHIS, TN
06/2009 - 08/2011 LPL FINANCIAL CHARLOTTE, NC
05/2009 - 08/2011 BANKPLUS SOUTHAVEN, MS
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Registration and Employment History
Other Business Activities
This section includes information, if any, as provided by the broker regarding other business activities the broker is currently engaged in either as a proprietor, partner, officer, director, employee, trustee, agent or otherwise. This section does not include non-investment related activity that is exclusively charitable, civic, re igious or fraternal and is recognized as tax exempt.
DBA-PATRIDGE CAPITAL MANAGEMENT 5740 GETWELL RD, BLDG 10C SOUTHAVEN, MS 38672. OBA-GREEN ENERGY SOLUTIONS (NOT INVESTMENT RELATED) AT 5740 GETWELL RD BLDG 10C SOUTHAVEN, MS 38672 MINOR PARTNER, GREEN ENERGY CONSULTANT SINCE 12/2012, APPROX 4 HRS MO AND 0 HRS DURING TRADING.
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Disclosure Events
What you should know about reported disclosure events:
1. All individuals registered to sell securities or provide investment advice are required to disclose customer complaints and arbitrations, regulatory actions, employment terminations. bankruptcy filings, and criminal or civil judicial proceedings.
2. Certain thresholds must be met before an event is reported to CRD, for example: o A law enforcement agency must file formal charges before a broker is required to disclose a particular
criminal event. o A customer dispute must involve allegations that a broker engaged in activity that violates certain rules
or conduct governing the industry and that the activity resulted in damages of at least $5,000. 0
3. Disclosure events in BrokerCheck reports come from different sources: o As mentioned at the beginning of this report, information contained in BrokerCheck comes from brokers,
brokerage firms and regulators. When more than one of these sources reports information for the same disclosure event, all versions of the event will appear in the BrokerCheck report. The different versions will be separated by a solid line with the reporting source labeled.
0 4. There are different statuses and dispositions for disclosure events:
o A disclosure event may have a status of pending, on appeal, or final. § A "pending" event involves allegations that have not been proven or formally adjudicated. § An event that is "on appeal" involves allegations that have been adjudicated but are currently
being appealed. § A "final" event has been concluded and its resolution is rot subject to change.
o A final event generally has a disposition of adjudicated, settled or otherwise resolved. § An "adjudicated" matter includes a disposition by (1) a court of law in a criminal or civil matter, or
(2) an administrative panel in an action brought by a regulator that is contested by the party charged with some alleged wrongdoing.
§ A "settled" matter generally involves an agreement by the parties to resolve the matter. Please note that brokers and brokerage firms may choose to settle customer disputes or regulatory matters for business or other reasons.
§ A "resolved" matter usually involves no payment to the customer and no finding of wrongdoing on the part of the individual broker. Such matters generally involve customer disputes.
For your convenience, below is a matrix of the number and status of disclosure events involving this broker. Further information regarding these events can be found in the subsequent pages of this report. You also may wish to contact the broker to obtain further information regarding these events.
Regulatory Event
Pending Final On Appeal
0 1 0
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Customer Dispute N/A
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Disclosure Event Details When evaluating this information, please keep in mind that a discloure event may be pending or involve allegations that are contested and have not been resolved or proven. The matter may, in the end, be withdrawn, dismissed, resolved in favor of the broker, or concluded through a negotiated settlement for certain business reasons (e.g., to maintain customer relationships or to limit the litigation costs associated with disputing the allegations) with no admission or finding of wrongdoing.
This report provides the information exactly as it was reported to CRD and therefore some of the specific data fields contained in the report may be blank if the information was not provided to CRD.
This type of disclosure event may involve (1) a final, formal proceeding initiated by a regulatory authority (e.g., a state securities agency, self-regulatory organization, federal regulatory such as the Securities and Exchange Commission, foreign financial regulatory body) for a violation of investment-related rules or regulations; or (2) a revocation or suspension of a broker's authority to act as an attorney, accountant, or federal contractor. Disclosure 1 of 1
Reporting Source:
Regulatory Action Initiated By: Sanctions) Sought:
Date Initiated:
DockeUCase Number:
Regulator
FINRA
Suspension
06/27/2014
2014040562301
Employing firm when activity N/A occurred which led to the regulatory action:
Product Type: No Product
Allegations: RESPONDENT PATRIDGE FAILED TO RESPOND TO FINRA REQUEST FOR INFORMATION.
Current Status: Final
Resolution: LETTER
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Does the order constitute a final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct?
Resolution Date:
Sanctions Ordered
If the regulator is the SEC, CFTC, or an SRO, did the action result in a finding of a willful violation or failure to supervise?
(1) willfully violated any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, the Commodity Exchange Act, or any rule or regulation under any of such Acts, or any of the rules of the Municipal Securities Rulemaking Board, or to have been unable to comply with any provision of such Act, rule or regulation?
VC
09/30/2014
Bar (Permanent)
No
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~~
Fnra (2) willfully aided, abetted, counseled, commanded, induced, or procured the violation by any person of any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, the Commodity Exchange Act, or any rule or regulation under any of such Acts, or any of the rules of the Municipal Securities Rulemaking Board? or
(3) failed reasonably to supervise another person subject to your supervision, with a view to preventing the violation by such person of any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, the Commodity Exchange Act, or any rule or regulation under any such Acts, or any of the rules of the Municipal Securities Rulemaking Board?
Sanction 1 of 2
Sanction Type: Bar (Permanent)
Capacities Affected: All Capacities
Duration: Indefinite
Start Date: 09/30/2014
End Date:
Sanction 2 of 2
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Sanction Type:
Capacities Affected
Duration:
Start Date:
End Date:
Suspension
ANY CAPACITY
f~//,1
07/21 /2014
09/29/2014
Regulator Statement PURSUANT TO FINRA RULE 9552(H) AND IN ACCORDANCE WITH FINRA'S NOTICE OF SUSPENSION AND SUSPENSION FROM ASSOCIATION LETTERS DATED JUNE 27, 2014 AND JULY 22, 2014, RESPECTIVELY, ON SEPTEMBER 30, 2014 PATRIDGE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY. PATRIDGE FAILED TO REQUEST TERMINATION OF HIS SUSPENSION WITHIN THREE MONTHS OF THE DATE OF THE NOTICE OF SUSPENSION; THEREFORE, HE IS AUTOMATICALLY BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY.
.....................................................................................................................................
Reporting Source:
Regulatory Action Initiated BY=
Sanctions) Sought:
Date Initiated:
Docket/Case Number
Employing firm when activity occurred which led to the regulatory action:
Firm
FINRA
Suspension
06/27/2014
2014040562301
MUTUAL OF OMAHA INVESTOR SERVICES, INC.
Product Type: No Product
Allegations: RESPONDENT PATRIDGE FAILED TO RESPOND TO FINRA REQUEST FOR INFORMATION.
Current Status: Final
Resolution: LETTER
Resolution Date: 09/30/2014
Sanctions Ordered: Bar (Permanent)
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Ffll~~ If the regulator is the SEC, No CFTC, or an SRO, did the action result in a finding of a willful violation or failure to supervise?
(1) willfully violated any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, the Commodity Exchange Act, or any rule or regulation under any of such Acts, or any of the rules of the Municipal Securities Rulemaking Board, or to have been unable to comply with any provision of such Act, rule or regulation?
(2) willfully aided, abetted, counseled, commanded, induced, or procured the violation by any person of any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, the Commodity Exchange Act, or any rule or regulation under any of such Acts, or any of the rules of the Municipal Securities Rulemaking Board? or
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(3) failed reasonably to supervise another person subject to your supervision, with a view to preventing the violation by such person of any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, the Commodity Exchange Act, or any rule or regulation under any such Acts, or any of the rules of the Municipal Securities Rulemaking Board?
Sanction 1 of 2
Sanction Type: Bar (Permanent)
Capacities Affected: ANY CAPACITY
Duration: PERMANENT
Start Date: 09/30/2014
End Date:
Sanction 2 of 2
Sanction Type: Suspension
Capacities Affected: ANY CAPACITY
Duration: N/A
Start Date: 07/21/2014
End Date: 09/29/2014
Firm Statement PURSUANT TO FINRA RULE 9552(H) AND IN ACCORDANCE WITH FINRA'S NOTICE OF SUSPENSION AND SUSPENSION FROM ASSOCIATION LETTERS DATED JUNE 27, 2014 AND JULY 22, 2014, RESPECTIVELY, ON SEPTEMBER 30, 2014 PATRIDGE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY. PATRIDGE FAILED TO REQUEST TERMINATION OF HIS SUSPENSION WITHIN THREE MONTHS OF THE DATE OF THE NOTICE OF SUSPENSION; THEREFORE, HE IS AUTOMATICALLY BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY.
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F~~1
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This type of disclosure event involves (1) a pending consumer-initiated, investment-related arbitration or civil suit that contains allegations of sales practice violations against the broker; or (2) a pending, consumer-initiated, investment-related written complaint containing allegations that the broker engaged in, sales practice violations resulting in compensatory damages of at least $5,000, forgery, theft, or misappropriation, or conversion of funds or securities. Disclosure 1 of 1
Reporting Source:
Employing firm when activities occurred which led to the complaint:
Allegations:
Product Type:
Alleged Damages:
Alleged Damages Amount Explanation (if amount not exact):
Is this an oral complaint?
Is this a written complaint?
Is this an arbitration/CFTC reparation or civil litigation?
Firm
MUTUAL OF OMAHA INVESTOR SERVICES, INC
CLIENT ALLEGES SETUP IN WRONG PLAN, AND THAT THEY WOULD BE ABLE TO TAKE LOANS FROM ACCOUNT.
No Product
$5,000.00
NO EXACT DAMAGES ALLEGED.
No
Yes
No
Customer Complaint Information
Date Complaint Received: 03/17/2014
Complaint Pending? Yes
Settlement Amount:
Individual Contribution Amount: .....................................................................................................................................
Reporting Source: Firm
Employing firm when MUTUAL OF OMAHA INVESTOR SERVICES, INS activities occurred which led to the complaint:
Allegations: CLIENT ALLEGES SET UP IN WRONG PLAN, AND THAT THEY WOULD BE
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Product Type:
Alleged Damages:
Alleged Damages Amount Explanation (if amount not exact):
Is this an oral complaint?
Is this a written complaint?
Is this an arbitration/CFTC reparation or civil litigation?
ABLE TO TAKE LOANS FROM ACCOUNT.
No Product
$5,000.00
NO EXACT DAMAGES ALLEGED.
No
Yes
Customer Complaint Information
Date Complaint Received: 02/12/2014
Complaint Pending? Yes
Settlement Amount:
Individual Contribution Amount: .....................................................................................................................................
Reporting Source:
Employing firm when activities occurred which led to the complaint:
Allegations:
Product Type:
Alleged Damages:
Alleged Damages Amount Explanation (if amount not exact):
Is this an oral complaint?
Is this a written complaint?
Broker
MUTUAL OF OMAHA INVESTOR SERVICES, INC
CLIENT ALLEGES SET UP IN WRONG PLAN, AND THAT THEY WOULD BE ABLE TO TAKE LOANS FROM ACCOUNT.
No Product
$5,000.00
NO EXACT DAMAGES ALLEGED.
No
Yes
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~rnra Is this an arbitration/CFTC No reparation or civil litigation?
Customer Complaint Information
Date Complaint Received: 03/17/2014
Complaint Pending? Yes
Settlement Amount:
Individual Contribution Amount:
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~inra
This page is intentionally left blank.
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User Guidance
www.adv i seri nfo.sec.caov
Investment Adviser Representative Public Disclosure Report
STEWART DIBRELL PATRIDGE CRD# 3095012 Report #46767-36392, data current as of Thursday, April 25, 2019.
Section Title Pa e s
Report Summary 1
Qualifications 2 - 3
Registration and Employment History 4
Disclosure Information 5
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User Guidance ;~ ~1 j ~r
i 1
~`, V , ', www.adviserinfo.sec.gov
IAPD Information about Investment Adviser Representatives
IAPD offers information on all current-and many former-Investment Adviser Representatives. Investors are strongly encouraged to use IAPD to check the background of Investment Adviser Representatives before deciding to conduct, or continue to conduct, business with them.
• What is included in a IAPD report? • IAPD reports for individual Investment Adviser Representatives include information such as
employment history, professional qualifications, disciplinary actions, criminal convictions, civil judgments and arbitration awards.
• It is important to note that the information contained in an IAPD report may include pending actions or allegations that may be contested, unresolved or unproven. In the end, these actions or allegations may be resolved in favor of the Investment Adviser Representative, or concluded through a negotiated settlement with no admission or finding of wrongdoing.
• Where did this information come from? • The information contained in IAPD comes from the Investment Adviser Registration Depository
(IARD) and FINRA's Central Registration Depository, or CRDO, (see more on CRD below) and is a combination of:
o information the states require Investment Adviser Representatives and firms to submit as part of the registration and licensing process, and
o information that state regulators report regarding disciplinary actions or allegations against Investment Adviser Representatives.
How current is this information? • Generally, Investment Adviser Representatives'are required to update their professional and
disciplinary information in IARD within 30 days.
• Need help interpreting this report? • For help understanding how to read this report, please consult NASAA's IAPD Tips page
http://www.nasaa.orq/IAPD/IARReports.cfm.
• What if I want to check the background of an Individual Broker or Brokerage firm? • To check the background of an Individual Broker or Brokerage firm, you can search for the firm or
individual in IAPD. If your search is successful, click on the link provided to view the available licensing and registration information in FINRA's BrokerCheck website.
• Are there other resources I can use to check the background of investment professionals? • It is recommended that you learn as much as possible about an individual Investment Adviser
Representative or Investment Adviser firm before deciding to work with them. Your state securities regulator can help you research individuals and certain firms doing business in your state. The contact information for state securities regulators can be found on the website of the North American Securities Administrators Association http://www.nasaa.ora.
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User Guidance
www.advi seri nfo.sec.gov
Investment Adviser Representative Report Summary
The report summary provides an overview of the Investment Adviser Representative's professional background and conduct. The information contained in this report has been provided by the Investment Adviser Representative, investment adviser and/or securities firms, and/or securities regulators as part of the states' investment adviser registration and licensing process. The information contained in this report was last updated by the Investment Adviser Representative, aprevious employing firm, or a securities regulator on 10/06/2014.
CURRENT EMPLOYERS
This individual is not currently registered as an Investment Adviser Representative.
QUALIFICATIONS This individual is not currently registered as an Investment Adviser Representative.
Note: Not all jurisdictions require IAR registration or may have an exemption from registration. Additional information including this individual's qualification examinations and professional designations is available in the Detailed Report.
REGISTRATION HISTORY
This Investment Adviser Representative was previously registered with the following Investment Adviser firms:
FIRM (IARD#) -LOCATION REGISTRATION DATES
INVESTORS CAPITAL ADVISORY (InRDtf 30613) - SOUTHAVEN, MS 08/12/2013 - 05/23/2014
MUTUAL OF OMAHA INVESTOR SERVICES, INC. (IARD# 611) - SOUTHAVEN, MS 08/26/2011 - 08/12/2013
LPL FINANCIAL LLC (IARD# 6413) -OLIVE BRANCH, MS 06/08/2009 - 08/09/2011
For additional registration and employment history details as reported by the individual, refer to the Registration and Employment History section of the Detailed Report.
DISCLOSURE INFORMATION
Disclosure events include certain criminal charges and convictions, formal investigations and disciplinary actions initiated by regulators, customer disputes and arbitrations, and financial disclosures such as bankruptcies and unpaid judgments or liens.
Are there events disclosed about this Investment Adviser Representative? Yes
The following types of events are disclosed about this Investment Adviser Representative:
Type Count
Regulatory Event 1 Customer Dispute 1
02019 FINRA. All rights reserved. Report# 46767-36392 requested on Thursday, April 25, 2019 about STEWART DIBRELL PATRIDGE.
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Investment Adviser Representative Qualifications
REGISTRATIONS
User Guidance
www.adviseri nfo.sec.gov
This section provides the states and U.S. territories in which the Investment Adviser Representative is currently registered and licensed, the category of each registration, and the date on which the registration became effective. This section also provides, for each firm with which the Investment Adviser Representative is currently employed, the address of each location where the Investment Adviser Representative works.
This individual is not currently registered as an Investment Adviser Representative.
002019 FINRA. All rights reserved. Reporl# 46767-36392 requested on Thursday, April 25, 2019 about STEWART DIBRELL PATRIDGE.
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User Guidance
www.adviseri nfo.sec.gov
Investment Adviser Representative Qualifications
PASSED INDUSTRY EXAMS
This section includes all required state securities exams that the Investment Adviser Representative has passed. Under limited circumstances, an Investment Adviser Representative may attain registration after receiving an exam waiver based on a combination of exams the Investment Adviser Representative has passed and qualifying work experience. Likewise, a new exam requirement may be grandfathered based on an Investment Adviser Representative's specific qualifying work experience. Exam waivers and grandfathering are not included below.
This individual has passed the following exams:
Exam Category Date
Uniform Combined State Law Examination (S66) Series 66 06/27/2008
PROFESSIONAL DESIGNATIONS
This section details that the Investment Adviser Representative has reported 0 professional designation(s).
No information reported.
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Investment Adviser Representative Registration and Employment History
PREVIOUSLY REGISTERED WITH THE FOLLOWING INVESTMENT ADVISER FIRMS This section indicates that state registration records show this Investment Adviser Representative previously held registrations with the following firms:
Registration Dates Firm Name IARD# Branch Location
08/12/2013 - 05/23/2014 INVESTORS CAPITAL ADVISORY 30613 SOUTHAVEN, MS
08/26/2011 - 08/12/2013 MUTUAL OF OMAHA INVESTOR SERVICES, INC. 611 SOUTHAVEN, MS
06/08/2009 - 08/09/2011 LPL FINANCIAL LLC 6413 OLIVE BRANCH, MS
06/30/2008 - 05/28/2009 SUNTRUST INVESTMENT SERVICES, INC. 17499 CORDOVA, TN
EMPLOYMENT HISTORY
Below is the Investment Adviser Representative's employment history for up to the last 10 years.
Please note that the Investment Adviser Representative is required to provide this information only while registered and the information is not updated after the Investment Adviser Representative ceases to be registered, with a state regulator. Therefore, an employment end date of "Present" may not reflect the Investment Adviser Representative's current employment status.
Employment Dates Employer Name Employer Location
OE3/2013 -Present INVCSTORS CAPITAL CORE . LYNNFIELD, MA
12/2012 -Present GREEN ENERGY SOLUTIONS SOUTHAVEN, MS
09/2011 -Present PATRIDGE CAPITAL MANAGEMENT SOUTHAVEN, MS 08/2011 - 08/2013 MUTUAL OF OMAHA INVESTOR SERVICES, INC OMAHA, NE 07/2011 - 08/2013 MUTUAL OF OMAHA MEMPHIS, TN
06/2009 - 08/2011 LPL FINANCIAL CHARLOTTE, NC 05/2009 - 08/2011 BANKPLUS SOUTHAVEN, MS 04/2008 - 05/2009 SUNTRUST INVESTMENT SERVICES MEMPHIS, TN
OTHER BUSINESS ACTIVITIES
This section includes information, if any, as provided by the Investment Adviser Representative regarding other business activities the Investment Adviser Representative is currently engaged in either as a proprietor, partner, officer, director, employee, trustee, agent, or otherwise. This section does not include non-investment related activity that is exclusively charitable, civic, religious, or fraternal and is recognized as tax exempt.
DBA-PATRIDGE CAPITAL MANAGEMENT 5740 GETWELL RD, BLDG 10C SOUTHAVEN, MS 38672. OBA-GREEN ENERGY SOLUTIONS (NOT INVESTMENT RELATED) AT 5740 GETWELL RD BLDG 10C SOUTHAVEN, MS 38672 MINOR PARTNER, GREEN ENERGY CONSULTANT SINCE 12/2012, APPROX 4 HRS MO AND 0 HRS DURING TRADING.
002019 FINRA. All rights reserved. Report# 46767-36392 requested on Thursday, April 25, 2019 about STEWART DIBRELL PATRIDGE.
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User Guidance
www. advi serinfo.sec.gov
Investment Adviser Representative Disclosure Summary
Disclosure Information
What you should know about reported disclosure events:
(1) Certain thresholds must be met before an event is reported to IARD, for example:
• A law enforcement agency must file formal charges before an Investment Adviser Representative is required to report a particular criminal event.;
• A customer dispute must involve allegations that an Investment Adviser Representative engaged in activity that violates certain rules or conduct governing the industry and that the activity resulted in damages of at least $5,000.
(2) Disclosure events in IAPD reports come from different sources:
As mentioned in the "About IAPD" section on page 1 of this report, information contained in IAPD comes from Investment Adviser Representatives, firms and regulators. When more than one of these sources reports information for the same disclosure event, all versions of the event will appear in the IAPD report. The different versions will be separated by a solid line with the reporting source labeled.
(3) There are different statuses and dispositions for disclosure events:
• A disclosure event may have a status of pending, on appeal, or final.
o A "pending" disclosure event involves allegations that have not been proven or formally adjudicated.
o A disrincure event that is "nn appeal" involves allegations that have been adjudicated but are currently being appealed.
o A "final" disclosure event has been concluded and its resolution is not subject to change.
• A final disclosure event generally has a disposition of adjudicated, settled or otherwise resolved.
o An "adjudicated" matter includes a disposition by (1) a court of law in a criminal or civil matter, or (2) an administrative panel in an action brought by a regulator that is contested by the party charged with some alleged wrongdoing.
o A "settled" matter generally represents a disposition wherein the parties involved in a dispute reach an agreement to resolve the matter. Please note that Investment Adviser Representatives and firms may choose to settle customer disputes or regulatory matters for business or other reasons.
o A "resolved" matter usually includes a disposition wherein no payment is made to the customer or there is no finding of wrongdoing on the part of the Investment Adviser Representative. Such matters generally involve customer disputes.
(4) You may wish to contact the Investment Adviser Representatives to obtain further information regarding any of the disclosure events contained in this IAPD report.
002019 FINRA. All rights reserved. Report# 46767-36392 requested on Thursday, April 25, 2019 about STEWART DIBRELL PATRIDGE.
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User Guidance
~~ I AV '~
www,adviserf nfo.sec.gov
DISCLOSURE EVENT DETAILS
When evaluating this information, please keep in mind that some items may involve pending actions or allegations that may be contested and have not been resolved or proven. The event may, in the end, be withdrawn, dismissed, resolved in favor of the Investment Adviser Representative, or concluded through a negotiated settlement with no admission or finding of wrongdoing.
This report provides the information exactly as it was reported to the Investment Adviser Registration Depository. Some of the specific data fields contained in the report may be blank if the information was not provided.
The following types of events are disclosed about this Investment Adviser Representative:
Type Count
Regulatory Event 1
Customer Dispute 1
Regulatory Event
This disclosure event may include a final, formal proceeding initiated by a regulatory authority (e.g., a state securities agency, a federal regulator such as the Securities and Exchange Commission or the Commodities Futures Trading Commission, or a foreign financial regulatory body) for a violation of investment-related rules or regulations. This disclosure event may also include a revocation or suspension of an Investment Adviser Representative's authority to act as an attorney, accountant or federal contractor. Disclosure 1 of 1
Reporting Source:
Regulatory Action Initiated By: Sanctions) Sought:
Date Initiated:
Docket/Case Number:
Employing firm when activity occurred which led to the regulatory action:
Product Type:
Allegations:
Current Status:
Resolution:
Does the order constitute a final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct?
Resolution Date:
Sanctions Ordered:
Regulator
FINRA
Suspension
06/27/2014
2014040562301
N/A
No Product
RESPONDENT PATRIDGE FAILED TO RESPOND TO FINRA REQUEST FOR INFORMATION.
Final
LETTER
No
09/30/2014
Bar (Permanent)
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User Guidance
www.advi serf nfo.sec.gov
If the regulator is the SEC, No CFTC, or an SRO, did the action result in a finding of a willful violation or failure to supervise?
(1) willfully violated any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, the Commodity Exchange Act, or any rule or regulation under any of such Acts, or any of the rules of the Municipal Securities Rulemaking Board, or to have been unable to comply with any provision of such Act, rule or regulation?
(2) willfully aided, abetted, counseled, commanded, induced, or procured the violation by any person of any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, the Commodity Exchange Act, or any rule or regulation under any of such Acts, or any of the rules of the Municipal Securities Rulemaking Board? or
(3) failed reasonably to supervise another person subject to your supervision, with a view to preventing the violation by such person of any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, the Commodity Exchange Act, or any rule or regulation under any such Acts, or any of the rules of the Municipal Securities Rulemaking Board?
002019 FINRA. All rights reserved. Report# 46767-36392 requested on Thursday, April 25, 2019 about STEWART DIBRELL PATRIDGE.
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User Guidance
www.adviserinfo.sec.aov
Sanction 1 of 2
Sanction Type: Bar (Permanent)
Capacities Affected: All Capacities
Duration: Indefinite
Start Date: 09/30/2014
End Date: Sanction 2 of 2
Sanction Type: Suspension
Capacities Affected: ANY CAPACITY
Duration: N/A
Start Date: 07/21/2014
End Date: 09/29/2014
Regulator Statement PURSUANT TO FINRA RULE 9552(H) AND IN ACCORDANCE WITH FINRA'S NOTICE OF SUSPENSION AND SUSPENSION FROM ASSOCIATION LETTERS DATED JUNE 27, 2014 AND JULY 22, 2014, RESPECTIVELY, ON SEPTEMBER 30, 2014 PATRIDGE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY. PATRIDGE FAILED TO REQUEST TERMINATION OF HIS SUSPENSION WITHIN THREE MONTHS OF THE DATE OF THE NOTICE OF SUSPENSION; THEREFORE, HE IS AUTOMATICALLY BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY.
.....................................................................................................................................
Reporting Source:
Regulatory Action Initiated By: Sanctions) Sought:
Date Initiated:
DockeUCase Number:
Employing firm when activity occurred which led to the regulatory action:
Product Type:
Allegations:
Current Status:
Resolution:
Resolution Date:
Sanctions Ordered:
Firm
FINRA
Suspension
06/27/2014
2014040562301
MUTUAL OF OMAHA INVESTOR SERVICES, INC.
No Product
RESPONDENT PATRIDGE FAILED TO RESPOND TO FINRA REQUEST FOR INFORMATION.
Final
LETTER
09/30/2014
Bar (Permanent)
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User Guidance
www.adviseri nfo.sec.gov
If the regulator is the SEC, No CFTC, or an SRO, did the action result in a finding of a willful violation or failure to supervise?
(1) willfully violated any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, the Commodity Exchange Act, or any rule or regulation under any of such Acts, or any of the rules of the Municipal Securities Rulemaking Board, or to have been unable to comply with any provision of such Act, rule or regulation?
(2) willfully aided, abetted, counseled, commanded, induced, or procured the violation by any person of any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, the Commodity Exchange Act, or any rule or regulation under any of such Acts, or any of the rules of the Municipal Securities Rulemaking Board? or
(3) failed reasonably to supervise another person subject to your supervision, with a view to preventing the violation by such person of any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, the Commodity Exchange Act, or any rule or regulation under any such Acts, or any of the rules of the Municipal Securities Rulemaking Board?
002019 FINRA. All rights reserved. Report# 46767-36392 requested on Thursday, April 25, 2019 about STEWART DIBRELL PATRIDGE.
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User Guidance
www.adviserinfo.sec.gov
Sanction 1 of 2
Sanction Type: Bar (Permanent)
Capacities Affected: ANY CAPACITY
Duration: PERMANENT
Start Date: 09/30/2014
End Date:
Sanction 2 of 2
Sanction Type: Suspension
Capacities Affected: ANY CAPACITY
Duration: N/A
Start Date: 07/21/2014
End Date: 09/29/2014
Firm Statement PURSUANT TO FINRA RULE 9552(H) AND IN ACCORDANCE WITH FINRA'S NOTICE OF SUSPENSION AND SUSPENSION FROM ASSOCIATION LETTERS DATED JUNE 27, 2014 AND JULY 22, 2014, RESPECTIVELY, ON SEPTEMBER 30, 2014 PATRIDGE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY. PATRIDGE FAILED TO REQUEST TERMINATION OF HIS SUSPENSION WITHIN THREE MONTHS OF THE DATE OF THE NOTICE OF SUSPENSION; THEREFORE, HE IS AUTOMATICALLY BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY.
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User Guidance
www, adviseri nfo.sec.gov
Customer Dispute
This section provides information regarding a customer dispute that was reported to the Investment Adviser Registration Depository (IARD) by the Investment Adviser Representative (IAR), an investment adviser and/or securities firm, and/or a securities regulator. The event may include aconsumer-initiated, investment-related complaint, arbitration proceeding or civil suit that contains allegations of sales practice violations against the individual.
The customer dispute may be pending or may have resulted in a civil judgment, arbitration award, monetary settlement, closure without action, withdrawal, dismissal, denial, or other outcome.
Disclosure 1 of 1
Reporting Source: Firm
Employing firm when activities occurred which led to the complaint:
Allegations:
Product Type:
Alleged Damages:
Alleged Damages Amount Explanation (if amount not exact):
Is this an oral complaint?
Is this a written complaint?
Is this an arbitration/CFTC reparation or civil litigation?
MUTUAL OF OMAHA INVESTOR SERVICES, INC
CLIENT ALLEGES SET UP IN WRONG PLAN, AND THAT THEY WOULD BE ABLE TO TAKE LOANS FROM ACCOUNT.
No Product
$5,000.00
NO EXACT DAMAGES ALLEGED.
No
Yes
No
Customer Complaint Information
Date Complaint Received: 03/17/2014
Complaint Pending? Yes
Settlement Amount:
Individual Contribution Amount: .....................................................................................................................................
Reporting Source:
Employing firm when activities occurred which led to the complaint:
Allegations:
Product Type:
Alleged Damages:
Alleged Damages Amount Explanation (if amount not exact):
Is this an oral complaint?
Is this a written complaint?
Firm
MUTUAL OF OMAHA INVESTOR SERVICES, INC
CLIENT ALLEGES SET UP IN WRONG PLAN, AND THAT THEY WOULD BE ABLE TO TAKE LOANS FROM ACCOUNT.
No Product
$5,000.00
NO EXACT DAMAGES ALLEGED.
No
Yes
02019 FINRA. All rights reserved. Report# 46767-36392 requested on Thursday, April 25, 2019 about STEWART DIBRELL PATRIDGE. m
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User Guidance
www.adviseri nfo.sec.gov
Is this an arbitration/CFTC No reparation or civil litigation?
Customer Complaint Information
Date Complaint Received: 02/12/2014
Complaint Pending? Yes
Settlement Amount:
Individual Contribution Amount: .....................................................................................................................................
Reporting Source: Individual
Employing firm when MUTUAL OF OMAHA INVESTOR SERVICES, INC activities occurred which led to the complaint:
Allegations: CLIENT ALLEGES SET UP IN WRONG PLAN, AND THAT THEY WOULD BE ABLE TO TAKE LOANS FROM ACCOUNT.
Product Type: No Product
Alleged Damages: $5,000.00
Alleged Damages Amount NO EXACT DAMAGES ALLEGED. Explanation (if amount not exact):
Is this an oral complaint? No
Is this a written complaint? Yes
Is this an arbitration/CFTC No reparation or civil litigation?
Customer Complaint Information
Date Complaint Received: 03/17/2014
Complaint Pending? Yes
Settlement Amount:
Individual Contribution Amount:
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User Guidance
www.adviserinfo.sec.gov
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BrokerCheck Report
THOMAS MARTIN MURPHREE CRD# 3228405
Section Title Pa e s
Report Summary
Broker Qualifications 2 - 3
Registration and Employment History 4 - 5
Case 3:19-cv-00196-CWR-FKB Document 31-5 Filed 05/21/19 Page 2 of 16
About BrokerCheckO
BrokerCheck offers information on all current, and many former, registered securities brokers, and all current and former registered securities firms. FINRA strongly encourages investors to use BrokerCheck to check the background of securities brokers and brokerage firms before deciding to conduct, or continue to conduct, business with them.
• What is included in a BrokerCheck report? • BrokerCheck reports for individual brokers include information such as employment history, professional
qualifications, disciplinary actions, criminal convictions, civil judgments and arbitration awards. BrokerCheck reports for brokerage firms include information on a firm's profile, history, and operations, as well as many of the same disclosure events mentioned above.
• Please note that the information contained in a BrokerCheck report may include pending actions or allegations that may be contested, unresolved or unproven. In the end, these actions or allegations may be resolved in favor of the broker or brokerage firm, or concluded through a negotiated settlement with no admission or finding of wrongdoing.
• Where did this information come from? • The information contained in BrokerCheck comes from FINRA's Central Registration Depository, or
CRDO and is a combination of: o information FINRA and/or the Securities and Exchange Commission (SEC) require brokers and
brokerage firms to submit as part of the registration and licensing process, and o information that regulators report regarding disciplinary actions or allegations against firms or brokers.
• How current is this information? • Generally, active brokerage firms and brokers are required to update their professional and disciplinary
information in CRD within 30 days. Under most circumstances, information reported by brokerage firms, brokers and regulators is available in BrokerCheck the next business day. What if I want to check the background of an investment adviser firm or investment adviser representative?
• To check the background of an investment adviser firm or representative, you can search for the firm or individual in BrokerCheck. If your search is successful, click on the link provided to view the available licensing and registration information in the SEC's Investment Adviser Public Disclosure (IAPD) website at https://www.adviserinfo.sec.gov. In the alternative, you may search the IAPD website directly or contact your state securities regulator at http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/P455414.
• Are there other resources I can use to check the background of investment professionals? • FINRA recommends that you learn as much as possible about an investment professional before deciding
to work with them. Your state securities regulator can help you research brokers and investment adviser representatives doing business in your state.
Thank you for using FINRA BrokerCheck.
i
~~nra
Using this site/information means that you accept the FINRA BrokerCheck Terms and Conditions. A complete list of Terms and Conditions can be found at brokercheck.finra.ora
~~
For additional information about the contents of this report, please refer to the User Guidance or www.finra.org/brokercheck. It provides a glossary of terms and a list of frequently asked questions, as well as additional resources. For more information about FINRA, visit www.finra.orq.
Case 3:19-cv-00196-CWR-FKB Document 31-5 Filed 05/21/19 Page 3 of 16
www.tmra. orgiproKercnecK user Vuidance
THOMAS M. MURPHREE
CRD# 3228405
This broker is not currently registered.
Report Summary for this Broker
This report summary provides an overview of the broker's professional background and conduct. Additional information can be found in the detailed report.
Broker Qualifications
This broker is not currently registered. DISCIOSUI'e EVe11tS
This broker has passed:
. 1 Principal/Supervisory Exam
. 3 General Industry/Product Exams
. 2 State Securities Law Exams
Registration History
This broker was previously registered with the following securities firm(s):
MUTUAL OF OMAHA INVESTOR SERVICES, INC. CRD# 611 MEMPHIS, TN 09/2010 - 10/2014
UVEST FINANCIAL SERVICES GROUP, INC. CRD# 13787 SOUTHHAVEN,MS 01 /2010 - 07/2010
LPL FINANCIAL CORPORATION CRD# 6413 OLIVE BRANCH, MS 06/2009 - 12/2009
All individuals registered to sell securities or provide investment advice are required to disclose customer complaints and arbitrations, regulatory actions, employment terminations, bankruptcy filings, and criminal or civil judicial proceedings.
Are there events disclosed about this broker? No
Investment Adviser Representative Information
The information below represents the individual's record as a broker. For details on this individual's record as an investment adviser representative, visit the SEC's Investment Adviser Public Disclosure website at
https://www. advise ri nfo. sec. q ov
02019 FINRA. All rights reserved. Report about THOMAS M. MURPHREE.
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Broker Qualifications
Registrations This section provides the self-regulatory organizations (SROs) and U.S. states/territories the broker is currently registered and licensed with, the category of each license, and the date on which it became effective. This section also provides, for every brokerage firm with which the broker is currently employed, the address of each branch where the broker works. This broker is not currently registered.
02019 FINRA. All rights reserved. Report about THOMAS M. MURPHREE.
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Broker Qualifications
Industry Exams this Broker has Passed This section includes all securities industry exams that the broker has passed. Under limited circumstances, a broker may attain a registration after receiving an exam waiver based on exams the broker has passed and/or qualifying work experience. Any exam waivers that the broker has received are not included below.
This individual has passed 1 principal/supervisory exam, 3 general industry/product exams, and 2 state securities law exams.
Principal/Supervisory Exams Exam Category Date
Investment Company Products/Variable Contracts Principal Examination Series 26 05/01/2006
General Industry/Product Exams Exam Category Date
Securities Industry Essentials Examination SIE 10/20/2014
General Securities Representative Examination Series 7 02/17/2001
Investment Company Products/Variable Contracts Representative Examination Series 6 06/08/1999
State Securities Law Exams
Exam Category Date
Uniform Investment Adviser Law Examination Series 65 08/17/2005
Uniform Securities Agent State Law Examination Series 63 06/18/1999
Additional information about the above exams or other exams FINRA administers to brokers and other securities professionals can be found at www.finra.org/brokerqualifications/registeredrep/.
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Registration and Employment History
~~nra Registration History
The broker previously was registered with the following firms:
Registration Dates Firm Name CRD# Branch Location
09/2010 - 10/2014 MUTUAL OF OMAHA INVESTOR SERVICES, 611 MEMPHIS, TN INC.
01/2010 - 07/2010 UVEST FINANCIAL SERVICES GROUP, INC. 13787 SOUTHHAVEN, MS
06/2009 - 12/2009 LPL FINANCIAL CORPORATION 6413 OLIVE BRANCH, MS
01/2005 - 05/2009 SUNTRUST INVESTMENT SERVICES, INC. 17499 MEMPHIS, TN
09/2002 - 01/2005 NCF FINANCIAL SERVICES, INC. 120471 DURHAM, NC
05/2002 - 09/2002 INVEST FINANCIAL CORPORATION 12984 APPLETON, WI
01/2002 - 04/2002 PFIC SECURITIES CORPORATION 34941 FRANKLIN, TN
02/2001 - 12/2001 AMSOUTH INVESTMENT SERVICES, INC. 15692 BIRMINGHAM, AL
06/1999 - 07/1999 FIRST TENNESSEE BROKERAGE, INC. 17117 MEMPHIS, TN
Employment History
This section provides up to 10 years of an individual broker's employment history as reported by the individual broker on the most recently filed Form U4.
Please note that the broker is required to provide this information only while registered with FINRA or a national securities exchange and the information is not updated via Form U4 after the broker ceases to be registered. Therefore, an employment end date of "Present" may not reflect the broker's current employment status.
Employment Dates Employer Name
09/2010 -Present MUTUAL OF OMAHA INVESTOR SERVICES, INC
08/2010 -Present MUTUAL OF OMAHA
06/2010 - 08/2010 SENIOR HEALTHCARE
01/2010 - 06/2010 TRUSTMARK
01/2010 - 06/2010 UVEST FINANCIAL SERVICES GROUP, INC.
11/2009 - 12/2009 UNEMPLOYED
06/2009 - 11/2009 LPL FINANCIAL
05/2009 - 11/2009 BANKPLUS
Employer Location
OMAHA, NE
MEMPHIS, TN
DALLAS, TX
SOUTHHAVEN,MS
CHARLOTTE, NC
SENATOBIA, MS
CHARLOTTE, NC
SOUTHAVEN, MS
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Registration and Employment History
Other Business Activities
This section includes information, if any, as provided by the broker regarding other business activities the broker is currently engaged in either as a proprietor, partner, officer, director, employee, trustee, agent or otherwise. This section does not include non-investment related activity that is exclusively charitable, civic, religious or fraternal and is recognized as tax exempt.
1. I RECEIVE $800 PER MONTH FOR A RENTAL HOUSE AT 216 ALEXANDER MEMPHIS TN. IT TAKES LESS THAN 1 PERCENT OF MY TIME.I DO NOT SOLICIT SECURITIES BUSINESS FROM TENANTS. 2. NATURAL GAS ROYALITIES - $2000 (ONE TIME PMT). 3.LINCOLN FINANCIAL, NOT SECURITIES RELATED, 5740 GETWELL RD #10-C SOUTHAVEN MS 38672, APPOINTED THROUGH MOMCO/BCH 2/1/2011 AS AN AGENT TO SELL FIXED INDEXED ANNUITIES, LESS THAN 1 HR/MO, LESS THAN 1 HR/MO DURING SECURITIES TRADING HOURS (TOTAL 4-5 HOURS PER YEAR, INSURANCE SALES. 4. AMERICAN NATIONAL LIFE, NOT SECURITIES RELATED, 5740 GETWELL RD #10-C SOUTHAVEN MS 38672, APPOINTED THROUGH MOMCO/BCH 2/18/2011 AS AN AGENT TO SELL FIXED ANNUITIES, LESS THAN 1 HR/MO, LESS THAN 1 HR/MO DURING SECURITIES TRADING HOURS (TOTAL 4-5 HOURS PER YEAR, INSURANCE SALES. 5.NORTH AMERICAN LIFE, NOT SECURITIES RELATED, 5740 GETWELL RD #10-C SOUTHAVEN MS 38672, APPOINTED AS AN AGENT 4/24/2011 TO SELL FIXED UNIVERSAL LIFE, LESS THAN 1 HR/MO, LESS THAN 1 HR/MO DURING SECURITIES TRADING HOURS (TOTAL 4-5 HOURS PER YEAR, INSURANCE SALES.
02019 FINRA. All rights reserved. Report about THOMAS M. MURPHREE.
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End of Report
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User Guidance
www.adviseri nfo.sec.gov
Investment Adviser Representative Public Disclosure Report
THOMAS MARTIN MURPHREE CRD# 3228405 Report #17104-83575, data current as of Thursday, April 25, 2019.
Section Title Pa e s
Report Summary 1
Qualifications 2 - 3
Registration and Employment History 4
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User Guidance ~1
i t
i i
~~_ www.adviserinfosec.gov
IAPD Information about Investment Adviser Representatives
IAPD offers information on all current-and many former-Investment Adviser Representatives. Investors are strongly encouraged to use IAPD to check the background of Investment Adviser Representatives before deciding to conduct, or continue to conduct, business with them.
• What is included in a IAPD report? • IAPD reports for individual Investment Adviser Representatives include information such as
employment history, professional qualifications, disciplinary actions, criminal convictions, civil judgments and arbitration awards.
• It is important to note that the information contained in an IAPD report may include pending actions or allegations that may be contested, unresolved or unproven. In the end, these actions or allegations may be resolved in favor of the Investment Adviser Representative, or concluded through a negotiated settlement with no admission or finding of wrongdoing.
• Where did this information come from? • The information contained in IAPD comes from the Investment Adviser Registration Depository
(IARD) and FINRA's Central Registration Depository, or CRDO, (see more on CRD below) and is a combination of:
o information the states require Investment Adviser Representatives and firms to submit as part of the registration and licensing process, and
o information that state regulators report regarding disciplinary actions or allegations against Investment Adviser Representatives.
0
How current is this information? • Generally, Investment Adviser Representatives are required to update their professional and
disciplinary information in IARD within 30 days.
• Need help interpreting this report? • For help understanding how to read this report, please consult NASAA's IAPD Tips page
http://www.nasaa.orca/IAPD/IARReports.cfm.
• What if I want to check the background of an Individual Broker or Brokerage firm? • To check the background of an Individual Broker or Brokerage firm, you can search for the firm or
individual in IAPD. If your search is successful, click on the link provided to view the available licensing and registration information in FINRA's BrokerCheck website.
• Are there other resources I can use to check the background of investment professionals? • It is recommended that you learn as much as possible about an individual Investment Adviser
Representative or Investment Adviser firm before deciding to work with them. Your state securities regulator can help you research individuals and certain firms doing business in your state. The contact information for state securities regulators can be found on the website of the North American Securities Administrators Association http://www.nasaa.orq.
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~~:'
User Guidance
Investment Adviser Representative Report Summary
www.adviserf nfo.sec.gov
The report summary provides an overview of the Investment Adviser Representative's professional background and conduct. The information contained in this report has been provided by the Investment Adviser Representative, investment adviser and/or securities firms, and/or securities regulators as part of the states' investment adviser registration and licensing process. The information contained in this report was last updated by the Investment Adviser Representative, aprevious employing firm, or a securities regulator on 10120/2014.
CURRENT EMPLOYERS
This individual is not currently registered as an Investment Adviser Representative.
QUALIFICATIONS This individual is not currently registered as an Investment Adviser Representative.
Note: Not all jurisdictions require IAR registration or may have an exemption from registration. Additional information including this individual's qualification examinations and professional designations is available in the Detailed Report.
REGISTRATION HISTORY
This Investment Adviser Representative was previously registered with the following Investment Adviser firms:
FIRM (IARD#) -LOCATION REGISTRATION DATES UVEST FINANCIAL SERVICES GROUP, INC. (IARD# 13787) - SOUTHHAVEN, MS 01/27/2010 - 07/13/2010 LPL FINANCIAL CORPORATION (IARD# 6413) -OLIVE BRANCH, MS 06/08/2009 - 12/03/2009 SUNTRUST INVESTMENT SERVICES, INC. (IARD# 17499) -MEMPHIS, TN 01/03/2005 - 05/28/2009
For additional registration and employment history details as reported by the individual, refer to the Registration and Employment History section of the Detailed Report.
DISCLOSURE INFORMATION
Disclosure events include certain criminal charges and convictions, formal investigations and disciplinary actions initiated by regulators, customer disputes and arbitrations, and financial disclosures such as bankruptcies and unpaid judgments or liens.
Are there events disclosed about this Investment Adviser Representative? No
02019 FINRA. All rights reserved. Report# 17104-83575 requested on Thursday, April 25, 2019 about THOMAS MARTIN MURPHREE.
Case 3:19-cv-00196-CWR-FKB Document 31-5 Filed 05/21/19 Page 12 of 16
Investment Adviser Representative Qualifications
REGISTRATIONS
User Guidance
www.adviseri nfo.sec.gov
This section provides the states and U.S. territories in which the Investment Adviser Representative is currently registered and licensed, the category of each registration, and the date on which the registration became effective. This section also provides, for each firm with which the Investment Adviser Representative is currently employed, the address of each location where the Investment Adviser Representative works.
This individual is not currently registered as an Investment Adviser Representative.
02019 FINRA. All rights reserved. Report# 17104-83575 requested on Thursday, April 25, 2019 about THOMAS MARTIN MURPHREE.
Case 3:19-cv-00196-CWR-FKB Document 31-5 Filed 05/21/19 Page 13 of 16
User Guidance
www.advi seri nfo.sec.gov
Investment Adviser Representative Qualifications
PASSED INDUSTRY EXAMS
This section includes all required state securities exams that the Investment Adviser Representative has passed. Under limited circumstances, an Investment Adviser Representative may attain registration after receiving an exam waiver based on a combination of exams the Investment Adviser Representative has passed and qualifying work experience. Likewise, a new exam requirement may be grandfathered based on an Investment Adviser Representative's specific qualifying work experience. Exam waivers and grandfathering are not included below.
This individual has passed the following exams:
Exam Category Date
Uniform Securities Agent State Law Examination (S63) Series 63 06/18/1999 Uniform Investment Adviser Law Examination (S65) Series 65 08/17/2005
PROFESSIONAL DESIGNATIONS
This section details that the Investment Adviser Representative has reported 0 professional designation(s).
No information reported.
02019 FINRA. All rights reserved. Report# 17104-83575 requested on Thursday, April 25, 2019 about THOMAS MARTIN MURPHREE.
Case 3:19-cv-00196-CWR-FKB Document 31-5 Filed 05/21/19 Page 14 of 16
User Guidance
www.adviserinfo.sec.gov
Investment Adviser Representative Registration and Employment History
PREVIOUSLY REGISTERED WITH THE FOLLOWING INVESTMENT ADVISER FIRMS This section indicates that state registration records show this Investment Adviser Representative previously held registrations with the following firms:
Registration Dates Firm Name IARD# Branch Location
01/27/2010 - 07/13/2010 UVEST FINANCIAL SERVICES GROUP, INC. 13787 SOUTHHAVEN, MS
06/08/2009 - 12/03/2009 LPL FINANCIAL CORPORATION 6413 OLIVE BRANCH, MS
01/03/2005 - 05/28/2009 SUNTRUST INVESTMENT SERVICES, INC. 17499 MEMPHIS, TN
01/21/2004 - 01/03/2005 NCF FINANCIAL SERVICES, INC. 120471 W MEMPHIS, AR
EMPLOYMENT HISTORY
Below is the Investment Adviser Representative's employment history for up to the last 10 years.
Please note that the Investment Adviser Representative is required to provide this information only while registered and the information is not updated after the Investment Adviser Representative ceases to be registered, with a state regulator. Therefore, an employment end date of "Present" may not reflect the Investment Adviser Representative's current employment status.
Employment Dates Employer Name Employer Location
09/2010 -Present MUTUAL OF OMAHA INVESTOR SERVICES, INC OMAHA, NE
08/2010 -Present MUTUAL OF OMAHA MEMPHIS, TN
06/2010 - 08/2010 SENIOR HEALTHCARE DALLAS, TX 01/2010 - 06/2010 TRUSTMARK SOUTHHAVEN, MS
01/2010 - 06/2010 UVEST FINANCIAL SERVICES GROUP, INC. CHARLOTTE, NC
11/2009 - 12/2009 UNEMPLOYED SENATOBIA, MS
06/2009 - 11/2009 LPL FINANCIAL CHARLOTTE, NC
05/2009 - 11/2009 BANKPLUS SOUTHAVEN, MS
01/2005 - 05/2009 SUNTRUST INVESTMENT SERVICES, INA. ATLANTA, GA
OTHER BUSINESS ACTIVITIES
This section includes information, if any, as provided by the Investment Adviser Representative regarding other business activities the Investment Adviser Representative is currently engaged in either as a proprietor, partner, officer, director, employee, trustee, agent, or otherwise. This section does not include non-investment related activity that is exclusively charitable, civic, religious, or fraternal and is recognized as tax exempt.
1. I RECEIVE $800 PER MONTH FOR A RENTAL HOUSE AT 216 ALEXANDER MEMPHIS TN. IT TAKES LESS THAN 1 PERCENT OF MY TIME.I DO NOT SOLICIT SECURITIES BUSINESS FROM TENANTS. 2. NATURAL GAS ROYALITIES - $2000 (ONE TIME PMT). 3.LINCOLN FINANCIAL, NOT SECURITIES RELATED, 5740 GETWELL RD #10-C SOUTHAVEN MS 38672, APPOINTED THROUGH MOMCO/BCH 2/1/2011 AS AN AGENT TO SELL FIXED INDEXED ANNUITIES, LESS THAN 1 HR/MO, LESS THAN 1 HR/MO DURING SECURITIES TRADING HOURS (TOTAL 4-5 HOURS PER YEAR, INSURANCE SALES. 4. AMERICAN NATIONAL LIFE, NOT SECURITIES RELATED, 5740 GETWELL RD #10-C SOUTHAVEN MS 38672, APPOINTED THROUGH MOMCO/BCH 2/18/2011 AS AN AGENT TO SELL FIXED ANNUITIES, LESS THAN 1 HR/MO, LESS THAN 1 HR/MO DURING SECURITIES TRADING HOURS (TOTAL 4-5 HOURS PER YEAR, INSURANCE SALES. 5.NORTH AMERICAN LIFE, NOT SECURITIES RELATED, 5740 GETWELL RD #10-C SOUTHAVEN MS 38672, APPOINTED AS AN AGENT 4/24/2011 TO SELL FIXED UNIVERSAL LIFE, LESS THAN 1 HR/MO, LESS THAN 1 HR/MO DURING SECURITIES TRADING HOURS (TOTAL 4-5 HOURS PER YEAR, INSURANCE SALES.
02019 FINRA. All rights reserved. Report# 17104-83575 requested on Thursday, April 25, 2019 about THOMAS MARTIN MURPHREE.
Case 3:19-cv-00196-CWR-FKB Document 31-5 Filed 05/21/19 Page 15 of 16
User Guidance
www. adviseri nfo. sec.gov
End of Report
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02019 FINRA. All rights reserved. Report# 17104-83575 requested on Thursday, April 25, 2019 about THOMAS MARTIN MURPHREE.
Case 3:19-cv-00196-CWR-FKB Document 31-5 Filed 05/21/19 Page 16 of 16