A creditors meeting on Tuesday started to resemble a criminal proceeding as the wife of apparent Ponzi schemer Jack E. Brown invoked the Fifth Amendment 61 times in response to questions about her part in what authorities believe was a multi-million dollar scam.
Flanked by two attorneys, Janet Brown read emotionlessly from a prepared statement whenever questions touched on the operations of Brown’s Tax Service, which bankruptcy trustee Jerry Farinash says was a front for an illegal Ponzi scheme.
Brown wore a simple shirt and no jewelry, and shifted nervously at times during the hearing, held at U.S. Bankruptcy Court, Chattanooga. Afterward, she tried to escape cameras and creditors through a side door, powerwalking the long way around the courthouse.
Many of the two-dozen victims in attendance have accused her of helping to draw up documents and being complicit in the plot to rake in millions from unknowing widows and retirees. Brown claimed not to know much about the family’s holdings, which were substantial prior to the 2012 bankruptcy.
Brown also claimed to have handed over all of her assets to the bankruptcy court as instructed, and said she was not hiding any assets — a claim that ignited sharp whispers in the spectator gallery.
Bankruptcy trustee Jerry Farinash didn’t appear to believe Brown’s claim, showing photos of her wearing diamond encrusted earrings and necklaces that she had not turned in under the terms of her involuntary bankruptcy.
“I thought I gave you everything,” she protested.
Questioning by Nicholas Foster, an attorney for the U.S. Trustee’s Office in Chattanooga, revealed that Brown earned tens of thousands of dollars from the sale of a Mercedes and a motorcycle after the bankruptcy was filed, which she used to pay attorneys instead of returning the cash to creditors.
For most questions, Brown attorneys Tom Ray and Mike Little leaned in, whiskered together and shook their heads, before tapping the piece of paper on the table that contained Brown’s written Fifth Amendment statement.
Did she sell a motorcycle to pay an attorney? Did she transfer tens of thousands of dollars from victims to a bank account she created after her husband was hospitalized? Did she give cash to anyone to hold? Did she sign checks and draft promissory notes?
Brown pled the Fifth.
Creditors fared no better in getting answers.
“Mrs. Brown, where is my money?,” asked Charles Griffith.
Brown pled the Fifth.
“My wife’s going to retire in two weeks, less the amount of money you and Jack [Brown] took,” said Jeff Eblen. “You were always in the office. Where is my money?”
Brown pled the Fifth.
“Where are the criminal charges? What else do you need?,” Eblen asked after Farinash called off the meeting due to Brown’s failure to answer questions.
The U.S. Attorney’s office has not announced any charges against the Browns, though some victims say they are cooperating with law enforcement investigators.
Other victims say they’re still paying for the mistake of investing with the Browns.
Martha Dixson is facing tax penalties for her husband’s withdrawl from the couple’s investment account, which he then invested with Brown’s Tax Service. Her husband died in September.
“[Jack Brown] talked about preaching, and about his son [Jason Brown] being a preacher,” Dixson said. “It makes me think, I wonder if I can trust people.”
Later in the hall, Dixson watched Janet Brown exit the courtroom with her attorneys.
“I see no remorse, no guilt,” Dixson said.
In hindsight, the investment seemed too good to be true, almost foolish, said Robert Giles. But at the time, there was never a question. The Browns were successful. People who invested with them made money. They were active in the church. It was a no-brainer.
“The whole thing is based on trust and belief,” Giles said. “I’m just glad I’m only guilty of being stupid.”
Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...