New bankruptcy petition filed in Soddy-Daisy Ponzi scheme case

New bankruptcy petition filed in Soddy-Daisy Ponzi scheme case

May 24th, 2013 by Ellis Smith in Local - Breaking News

Jason Brown

Jason Brown

Photo by Contributed Photo /Times Free Press.

Creditors and Ponzi scheme victims on Friday filed an involuntary bankruptcy petition against Jason Franklin Brown, son of apparent Ponzi scheme mastermind Jack E. Brown.

Attorney Rebecca Hicks alleged that Jason Brown owes almost $1.5 million for his part in what some have called a "family Ponzi scheme."

In previous filings, Hicks' and others alleged that the Browns solicited money from members of the Soddy-Daisy community with the promise that the money would be invested.

But trustees and victims now believe the Browns instead used the money to fund a lavish lifestyle that include large houses, expensive vacations, an extensive jewelry collection and a parking lot full of motor homes and automobiles. Most of the family's toys have now been sold, returned to banks or are under the control of bankruptcy trustee Jerry Farinash.

Lawyers and victims charge the the scheme, in which the Browns allegedly used information gleaned from Brown's Tax Servce to identify rich retirees and widowers, required the knowing participation of Jack Brown's wife, Janet Elaine Brown, and his son - both of whom regularly worked at Brown's Tax Service.

Jason Brown, who is listed on LinkedIn as a partner at Brown's Tax Service, and who was described elsewhere as the company's chief operating officer, received about $542,000 in "bonuses" over the course of the last three years, none of which he reported to the Internal Revenue Service, according to Farinash. He also received a $52,000 yearly salary and a $26,400 yearly housing allowance for "preparing $40 tax returns and doing some light bookkeeping," Farinash wrote in a complaint.

Despite this financial windfall, "Jason Brown has no formal education in accounting and is not a licensed accountant of any nature," Farinash wrote.

Though Jason Brown has yet to testify in public, Janet Brown invoked her Fifth Amendment right not to incriminate herself more than 60 times at a recent creditors' meeting, before dashing out of a side door in an apparent attempt to escape from waiting reporters and victims.

Farinash has been frustrated by the family's refusal to answer most questions about the whereabouts of creditors' money, and about certain key items that have gone missing during the course of the case.

Attempts to reach the Browns have been unsuccessful. Attorneys for the Browns have previously said that the money is gone, paid back to other victims whose "investments" had matured, or lost in the stock market turmoil caused by the recession.

No criminal charges have been filed in the case, which has been ongoing since November. It is not clear when, or if such charges will be filed. It is the policy of U.S. Attorney Bill Killian not to confirm, deny or comment on the existence of an investigation.