A Leflore County native has agreed to settle with the U.S. Securities and Exchange Commission over his alleged role in a Ponzi scheme that bilked investors out of more than $100 million.

Wayne Kelly, without admitting or denying the SEC’s claim that he knowingly sold millions of dollars in fraudulent promissory notes from 2009 to 2018, has agreed to repay the commissions he earned, which the SEC estimates at $8 million, plus a still-to-be-determined civil penalty.

It is uncertain, though, how much the SEC will actually get from Kelly, as a previous settlement he made in the case took most of his assets and still has him owing more than $400,000.

A final amount will have to be negotiated with the SEC and signed off on by a federal judge, said Kelly’s attorney, Whit Cooper of Ashland.

“Wayne Kelly is going to do what he is ordered to do to the best of his ability to make it right,” said Cooper.

Kelly, 46, and his company, Kelly Management, were associated with Madison Timber Co., a Ponzi scheme engineered by Arthur Lamar Adams. Investors were promised high rates of return and sold phony interests in timber sales that never occurred. The money contributed by later investors was used to pay off earlier ones until the scheme collapsed.

Adams is serving a nearly 20-year sentence for the massive fraud.

Kelly allegedly was one of Madison’s top salesmen. He also recruited others to sell for him, including Stewart Patridge, a friend since childhood and former University of Mississippi quarterback.

Allyson Mills, a receiver appointed by a federal judge in 2018 to claw back some of the investors’ money, claimed that Kelly received $9.7 million in the scheme and paid out $1.5 million in commissions to sub-recruiters.

In a separate lawsuit settled last December, Kelly agreed to pay more than $2 million to the receivership.

As of Friday, according to Mills, Kelly had made cash payments of almost $1.4 million and turned over his interests in three companies worth $352,000. He still owes $400,000 on a promissory note and is pursuing refunds on previous tax returns, 90 percent of which he would have to relinquish to the receivership.

“Kelly still owes the receivership estate significant sums, and we do expect he will continue to repay them,” Mills said.

Kelly, who formerly lived and did business in Madison, has since relocated to the Memphis area.

Meanwhile, Mills continues to pursue lawsuits against Patridge and his mother, Gee Gee Patridge, among others whom Mills alleges either participated in the Ponzi scheme or lent legitimacy to it. The Patridges, who formerly lived in Morgan City, now reside in Madison County.

Both Stewart Patridge and his mother, who is an executive vice president and chief operating officer for BankPlus, have denied the allegations. Both have stated in legal filings that they never knew that Adams was a fraud or that Madison Timber was a Ponzi scheme. Both deny liability to the investors.

In Mills’ most recent report, filed earlier this month, she said she has collected $5.96 million so far for the investors. The total includes $320,000 that three Houston, Texas, religious organizations recently agreed to return that they had received from Kelly and Adams. Earlier this year, two other religious organizations to which the pair had given returned almost $60,000.

Contact Tim Kalich at 581-7243 or tkalich@gwcommonwealth.com.

 

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