Securities and Exchange Commission v. Adams et al

Filing 28

ORDER granting 27 Motion for Interim Relief. Signed by District Judge Carlton W. Reeves on 6/5/2018. (cr)

Case 3:18-cv-00252-CWR-FKB Document 28 Filed 06/05/18 Page 1 of 4

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
SECURITIES & EXCHANGE
COMMISSION, et al.,
V.

PLAINTIFFS

CAUSE NO. 3:18-CV-252-CWR-FKB

ARTHUR LAMAR ADAMS,
et al.

DEFENDANTS

ORDER FOR INTERIM RELIEF PENDING
APPOINTMENT OF A TEMPORARY RECEIVER
This Court, having determined that certain interim relief is appropriate to preserve the
assets of the Defendants pending the selection of a Temporary Receiver, orders as follows:

A.

The Defendants and all persons receiving notice of this Order by personal service,

facsimile or otherwise, are hereby restrained and enjoined from directly or indirectly taking any
action or causing any action to be taken, without the prior order from this Court, which would:
1.
Interfere with the Temporary Receiver’s eventual efforts to take control,
possession, or management of monies, funds, securities, credits, effects, goods, chattels,
lands, premises, leases, claims, rights and other assets, together with all rents, profits,
dividends, interest or other income attributable thereto, of whatever kind, which the
Defendants own, possess, have a beneficial interest in, or controls directly or indirectly
(“Receivership Property” or, collectively, the “Receivership Estate”); such prohibited
actions include but are not limited to, using self-help or executing or issuing or causing
the execution or issuance of any court attachment, subpoena, replevin, execution, or other
process for the purpose of impounding or taking possession of or interfering with or
creating or enforcing a lien upon any Receivership Property;
2.
Dissipate or otherwise diminish the value of any Receivership Property;
such prohibited actions include but are not limited to, releasing claims or disposing,
transferring, exchanging, assigning or in any way conveying any Receivership Property,
enforcing judgments, assessments or claims against any Receivership Property or any
Receivership Defendant, attempting to modify, cancel, terminate, call, extinguish, revoke
or accelerate (the due date), of any lease, loan, mortgage, indebtedness, security
agreement or other agreement executed by any Defendant or which otherwise affects any
Receivership Property; or,

Case 3:18-cv-00252-CWR-FKB Document 28 Filed 06/05/18 Page 2 of 4

3.
Interfere in any manner with the exclusive jurisdiction of this Court over
the Receivership Estate.
4.
Nothing in paragraph A herein shall prohibit any business in which either
defendant owns an interest and which is managed by a third party from entering into
commercially reasonable agreements on behalf of that business or continuing to pay
operating expenses for that business as they come due in the ordinary course of business.
Management of any such businesses shall maintain a list of any such agreements and
payments and shall, upon appointment of a Temporary Receiver in this matter, provide
that list to the Temporary Receiver. This paragraph specifically authorizes the majority
owners of Delta Farm Land Investments LLC (“DFLI”), a Mississippi limited liability
company in which Defendant, Arthur Lamar Adams, owns a one-third interest, to take the
following actions:
a. To continue to operate and manage DFLI, including temporarily replacing
Arthur Lamar Adams as the managing member and registered agent for
service of process until the appointment of a Temporary Receiver (and the
filing with the Mississippi Secretary of State the documentation necessary to
effectuate such temporary appointment);
b. To open and maintain bank accounts and to make deposits and withdrawals
therefrom so as to continue to receive income and pay expenses, including all
taxes and assessments of any kind, as they come due in the ordinary course of
business (subject to audit and challenge as specified below by the Temporary
Receiver);
c. With regard to the real property described on the Promissory Note attached
hereto as Exhibit “A” (the “Subject Property”), which is owned by DFLI and
pledged as collateral for the Promissory Note, to make all payments as and
when due under the terms of the Promissory Note. The next such payment is
due on June 30, 2018, in the amount of $43,356.00. The majority members of
DFLI are authorized to make all payments due under the Promissory Note,
including the portion of such payments that would otherwise be due from
Arthur Lamar Adams. The majority members of DFLI are authorized to
recoup the amount of payments made on behalf of Arthur Lamar Adams from
future revenue of DFLI, including revenue from lease agreements or the
proceeds from a sale of the Subject Property, provided that no such
recoupment shall decrease Arthur Lamar Adams’s membership interest in
DFLI;
d. To enter into the following agreements regarding the Subject Property, which
are substantially similar to arrangements DFLI has previously entered into and
which generate revenue for DFLI: (i) an Agricultural Lease Contract in the
form attached hereto as Exhibit “B” and (ii) a Hunting Lease Agreement in
the form attached hereto as Exhibit “C”;
e. To continue to collect the income on and to renew when necessary, two
Conservation Reserve Program Contracts attached hereto as Exhibits “D” and
“E”; and

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f. To continue to market for sale the Subject Property, provided that the
approval of the final terms of any sale of the Subject Property will be reserved
to this Court or the receiver, as appropriate.
DFLI shall maintain a list of payments and agreements necessary to effectuate the actions
listed above to be provided to this Court and the Temporary Receiver upon appointment.
The Temporary Receiver may challenge any of the actions taken pursuant to this
paragraph only on the basis of (1) not being in the ordinary course of business; (2)
pursuant to any contractual right that Arthur Lamar Adams may have under the DFLI
operating agreements; or (3) pursuant to any rights provided by Mississippi law to
minority members of limited liability companies.
B.

As set forth in detail below, the following proceedings, excluding the instant

proceeding and all police or regulatory actions and actions of the Commission related to the
above-captioned enforcement action, are stayed until further Order of this Court:
All civil legal proceedings of any nature, including, but not limited to, bankruptcy
proceedings, arbitration proceedings, foreclosure actions, default proceedings, or other
actions of any nature involving: (a) any Receivership Property, wherever located; (b) any
of the Defendants, including but not limited to its subsidiaries and partnerships; or, (c)
any of the Defendants’ past or present officers, directors, managers, agents, or general or
limited partners sued for, or in connection with, any action taken by them while acting in
such capacity of any nature, whether as plaintiff, defendant, third-party plaintiff, thirdparty defendant, or otherwise (such proceedings are hereinafter referred to as “Ancillary
Proceedings”).
C.

The parties to any and all Ancillary Proceedings are enjoined from commencing

or continuing any such legal proceeding, or from taking any action, in connection with any such
proceeding, including, but not limited to, the issuance or employment of process.
D.

All Ancillary Proceedings are stayed in their entirety, and all Courts having any

jurisdiction thereof are enjoined from taking or permitting any action until further Order of this
Court. Further, as to a cause of action accrued or accruing in favor of one or more of the
Defendants against a third person or party, any applicable statute of limitation is tolled during the
period in which this injunction against commencement of legal proceedings is in effect as to that
cause of action.

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E.

The provisions of Paragraphs B – D above bar any person or entity from placing

either of the Defendants in bankruptcy proceedings.
SO ORDERED, this the 5th day of June, 2018.
s/ Carlton W. Reeves
UNITED STATES DISTRICT JUDGE