Spectators hissed as Jason Brown started to blame his late father, apparent Ponzi schemer Jack E. Brown, for the entirety of the small-town meltdown that has left dozens of widows and retirees destitute.
But the room went quiet as he unexpectedly began to deliver an apology for his dad's actions, which for many victims may be all they ever receive from his bankrupt estate.
"I'm very sorry for what he did to you," Jason Brown said, turning Thursday to the dwindling group of creditors who still attend these court-ordered meetings. "We're in the same boat as you are. We lost everything."
Jason Brown was hoodwinked by his father just like everyone else, he told attorneys. He's lost every dollar he's ever earned, just like everyone else, having paid tens of thousands of dollars in legal bills alone, he said. And like everyone else, he was violated by someone close to him, someone he trusted, he said.
"The trust I had with him was a life-long trust. He was a man of gold all my life," Jason Brown said of his father. "I understand now those notes and what was brought up here wasn't the right thing to do."
Jack Edwin Brown, the tax preparer who won over neighbors in Soddy-Daisy and Sale Creek with his down-home charm, winning smile and infectious laugh, was buried in early September after a long bout with a variety of serious illnesses. But not before his former customers accused him of heading up a so-called "family Ponzi scheme" to defraud them of a collective $12 million in fictitious investments. Court records show that Brown used proceeds from retirees' "investments" to make payments to other "investors," as well as to fund a lavish lifestyle for himself and his family at their country estate.
Though no charges have been filed, trustees have said that Jason Brown and Jason's wife, Janet Brown, were intimately involved in the scheme. Jason Brown signed checks and conducted business integral to the Ponzi scheme, was paid $78,000 per year and received $542,000 in "bonuses" during the last three years -- none of which he reported to the Internal Revenue Service -- for "preparing $40 tax returns and doing some light bookkeeping," bankruptcy trustee Jerry Farinash said in a complaint.
Jason Brown claimed he was simply obeying his sick father's wishes. He said he had no reason to disbelieve his dad until Brown's Tax Service began to dissolve almost one year ago.
Since the scheme fell apart, his life has changed dramatically. Gone are the fancy cars. The nice house will be sold. His mother was forced to surrender her jewelry. Whatever the banks don't take will be divided among creditors. Even his wife is going to declare bankruptcy soon, he said. Today, Jason Brown is working for his father-in-law at an auto parts store for $260 a week, and he does odd deliveries for power plant operators as a subcontractor.
"I had to make money," he explained.
He called the bonuses "gifts" he received from his parents, even though the checks were written through Brown's Tax Service.
"I asked him, do I need to claim that as income, and he'd say, 'No, I've taken care of it,'" Jason Brown said.
He insisted that in each case where he ever handled investments, signed documents, made stock trades, moved cash around or had anything to do with the Ponzi scheme, it was at his father's behest.
But his professions of innocence didn't impress creditors or trustees, who for hours brought up example after example of Jason Brown's involvement in the family business.
Wayne Hixson, who invested or loaned the Brown family more than half a million dollars, claimed Jack Brown had told him and other creditors that if anything ever happened, Jason could take care of the business, including the investments.
"He told us we didn't have to worry about it, that you could take care of it," Hixson said.
"He told everyone that," Brown responded. "I would have never said, 'Yes, I can handle your money.'"
Trustee Richard Jahn told Hixson his money was likely gone, "frittered away."
"He's denying he knows anything about this money," Jahn told. "He's putting it all on his dad."
Contact staff writer Ellis Smith at email@example.com, or 423-757-6315.
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, ...
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