united states district court southern district of … · 21-05-2019 · {n3823151.1} united states...

{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 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

[email protected]

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 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



JONES WALKER LLP



Telephone: (601) 949-4900

Facsimile: (601) 949-4804

[email protected]

[email protected]



Case 3:19-cv-00196-CWR-FKB Document 31 Filed 05/21/19 Page 1 of 39

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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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ii

CONCLUSION ..............................................................................................................................29

CERTIFICATE OF SERVICE ......................................................................................................30


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iii

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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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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v

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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vi

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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vii

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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6

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.


{N3822713.1}

7

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


{N3822713.1}

8

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.”).


{N3822713.1}

9

“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


{N3822713.1}

10

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).


{N3822713.1}

11

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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12

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


{N3822713.1}

13

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


{N3822713.1}

14

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).


{N3822713.1}

15

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.


{N3822713.1}

16

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


{N3822713.1}

17

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).


{N3822713.1}

18

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


{N3822713.1}

19

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.


{N3822713.1}

20

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


{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”).


{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).


{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.”).


{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.


{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.


{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.


{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


{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.


{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



JONES WALKER LLP



Telephone: (601) 949-4900

Facsimile: (601) 949-4804

[email protected]

[email protected]




{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 31-1 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


> 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>


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


PROPOSED

EXHIBIT

C


—~

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


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.

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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.

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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?

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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

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? 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

02019 FINRA. All rights reserved. Report about STEWART D. PATRIDGE.


W W W.1Iflf8.O~q/b~OKBfCh2CK User Guidance


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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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/.

02019 FINRA. All rights reserved. Report about STEWART D. PATRIDGE. 3


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Registration and Employment 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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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



www.t~ n ra. orq~oroKercn ecK user vuidance

Customer Dispute N/A



www. ti n ra. orgi n ro Ke rcn ecK user guidance

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



www.ti n ra. orq! proKe rcnecK user vuiaance

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



www.tinra.orginroKercnecK user vuiaance

~~

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



www. r i n ra . o rq i o ro K e rc n e c K user vuidance

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.


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)



www.nnra.orgiproKercnecK user vwdance

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?


(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

02019 FINRA. All rights reserved. Report about STEWART D. PATRIDGE. ~2


www. r~ n ra. orq/ broKerch ecK user Vuidance


Sanction 1 of 2


Capacities Affected: ANY CAPACITY

Duration: PERMANENT


End Date:

Sanction 2 of 2

Sanction Type: Suspension


Duration: N/A


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.



www.tinra.orgieroKercnecK User guidance

F~~1



www.tm ra. orgioroKercn ecK user vuidance

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



www. ti n ra. o rqi d ro Ke rcn ec k user vuidance

Product Type:

Alleged Damages:





ABLE TO TAKE LOANS FROM ACCOUNT.

No Product

$5,000.00


No

Yes




Settlement Amount:


Reporting Source:


Allegations:

Product Type:

Alleged Damages:




Broker


CLIENT ALLEGES SET UP IN WRONG PLAN, AND THAT THEY WOULD BE ABLE TO TAKE LOANS FROM ACCOUNT.

No Product

$5,000.00


No

Yes



www.nnra.orcvbroKercnecK user Vuidance

~rnra Is this an arbitration/CFTC No reparation or civil litigation?




Settlement Amount:

Individual Contribution Amount:



www.nnra.orgitiroKercnecK user vwdance

End of Report

~inra

This page is intentionally left blank.



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.


Report Summary 1

Qualifications 2 - 3

Registration and Employment History 4

Disclosure Information 5


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.


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.


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.


002019 FINRA. All rights reserved. Reporl# 46767-36392 requested on Thursday, April 25, 2019 about STEWART DIBRELL PATRIDGE.


User Guidance



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).




User Guidance

s '~ www. advi serinfo.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

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.


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.



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.



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:


Date Initiated:

Docket/Case Number:


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)



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?






User Guidance

www.adviserinfo.sec.aov

Sanction 1 of 2


Capacities Affected: All Capacities

Duration: Indefinite


End Date: Sanction 2 of 2



Duration: N/A


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:


Date Initiated:

DockeUCase Number:


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)

02019 FINRA. All rights reserved. Report# 46767-36392 requested on Thursday, April 25, 2019 about STEWART DIBRELL PATRIDGE. 8


User Guidance


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?






User Guidance

www.adviserinfo.sec.gov

Sanction 1 of 2



Duration: PERMANENT


End Date:

Sanction 2 of 2



Duration: N/A


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.



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


Allegations:

Product Type:

Alleged Damages:







No Product

$5,000.00


No

Yes

No




Settlement Amount:


Reporting Source:


Allegations:

Product Type:

Alleged Damages:




Firm



No Product

$5,000.00


No

Yes

02019 FINRA. All rights reserved. Report# 46767-36392 requested on Thursday, April 25, 2019 about STEWART DIBRELL PATRIDGE. m


User Guidance


Is this an arbitration/CFTC No reparation or civil litigation?




Settlement 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.


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?




Settlement Amount:

Individual Contribution Amount:



BrokerCheck Report

THOMAS MARTIN MURPHREE CRD# 3228405


Report Summary

Broker Qualifications 2 - 3

Registration and Employment History 4 - 5


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.


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.


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


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.


www.t~ n ra. orQ~broKercn ecK userc;wdance


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.



www. r a n ra. o rq ~ p ro Ke rc n e c K user vuitlance


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/.

02019 FINRA. All rights reserved. Report about THOMAS M. MURPHREE. 3


www.nnra.orq~broKercnecK user ~uiaance


~~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

02019 FINRA. All rights reserved. Report about THOMAS M. MURPHREE. 4


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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.



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End of Report




User Guidance


Investment Adviser Representative Public Disclosure Report

THOMAS MARTIN MURPHREE CRD# 3228405 Report #17104-83575, data current as of Thursday, April 25, 2019.


Report Summary 1

Qualifications 2 - 3

Registration and Employment History 4


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.


~~:'

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


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.



REGISTRATIONS

User Guidance


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.




User Guidance

www.advi seri nfo.sec.gov


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).




User Guidance


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.


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.



User Guidance

www. adviseri nfo. sec.gov

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