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VOL. 122 | NO. 188 | Thursday, October 4, 2007

Judge Thwarts Lawyer's Attempt To Block Forest Hill Inquiry

By Bill Dries

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State investigators and the court-appointed receiver of Forest Hill cemeteries and funeral homes began to meet some resistance this week in their civil cases against those who allegedly embezzled more than $20 million from the cemetery trust funds.

The resistance came from attorneys for Mark Singer, a former Smith Barney broker from New Hope, Pa. Singer was indicted in the criminal case in April along with Forest Hill owners Clayton Smart and Stephen Smith, both of Oklahoma.

All three are defendants in the two civil cases brought by the Tennessee attorney general, Shelby County District Attorney General Bill Gibbons and Max Shelton, the receiver of Forest Hill. None of the defendants was present for Tuesday's hearing before Chancellor Arnold Goldin.


Show him the money

At the nearly two-hour hearing, Shelton sought $2.8 million tied through bank records to Singer and his wife, Kimberly. Shelton wanted the money, which he claims came from the Forest Hill trust funds, transferred from a court registry fund to the Forest Hill account he is administering as he runs the business under a court order.

But attorney Zach Fardon, who along with Kemper Durand represents Singer, argued the couple should have a chance to respond. Kimberly Singer is a codefendant in Shelton's civil suit.

"This is the ultimate issue. It is at best premature," Fardon said. "There is a right to procedure to litigate this case. ... They are asking for a verdict today."

James Newsom, Shelton's attorney, said the money trail presented by investigators clearly shows the money flowed to the Singers from Forest Hill through several companies allegedly controlled or owned outright by Smart.

"They have been caught red handed ... with Forest Hill trust fund money," he said. "That money shouldn't be held hostage."

Goldin ruled that the Singers should have a chance to tell their side of the story about the origins of the money, "even though it certainly appears to be suspect."

The state may prove its case eventually.

"I don't think today is the day," he said in denying the motion.


'The ends of justice and fairness'

Singer's legal counsel had less luck trying to convince Goldin to stay the civil cases until the criminal case is decided. Goldin denied their motion for the stay.

The cases make the same allegations. The differences involve a higher level of proof beyond a reasonable doubt in the criminal case as well as the possibility of jail time. The civil cases involve financial claims and attempts to recover lost funds as well as seek damages against the defendants.

"The ends of justice and fairness are not served by pushing those issues before this court," Fardon told Goldin. "We are in the process of facing the music, if you will, in (the criminal) case. It is not fair. It is not efficient to force these parallel issues to go forward."

Shelton angrily accused the Singers of stalling in accounting for their assets.

"The game plan by Mr. Singer is to delay as long as he possibly can," Shelton said in making the case that the public interest involving more than 10,000 Forest Hill policy holders outweighs the interest of Singer.

He argued Singer played a part in turning the established Memphis business into a "god awful mess" and bringing the business to "the brink of ruin."

"We've got it turned around and going the right direction. But to keep it going the right direction, we've got to get more money in here," he said. "These 13,000-some-odd victims - some of them are dying virtually every day. They've got to be taken care of. You can't just push them in a ditch."     

Shelton also said having access to the money could help settle a class action lawsuit by Forest Hill customers pending in Memphis federal court.

In other developments:

  • Attorneys for the state asked Goldin to postpone any ruling on their earlier request to have Smart's wife, Nancy, held in contempt of court for refusing to turn over a list of assets and helping her husband sell a house in Oklahoma that was among the frozen assets in the case.

    Nancy Smart has hired an attorney and has agreed to cooperate with investigators, although negotiations between both sides continue. Goldin agreed to postpone any ruling for now. Her husband remains in the Shelby County jail, where he faces not only criminal charges, but two contempt of court citations issued by Goldin earlier in the civil case.

  • Goldin declared a judgment by default for $22,136,269.13 against Indian Nation LLC, Covenant Insurance Ltd. and Covenant Limited USA LLC.

The amount is the total the state claims was taken illegally from the Forest Hill trust funds. Indian Nation was the company that owned Forest Hill at the time.

Clayton Smart owns 95 percent of Indian Nation, while Smith owns the remaining 5 percent, according to the state. The judgment effectively allows the receiver of Forest Hill to pursue any assets from those entities including funds in bank accounts, Newsom said.

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 98 172 17,556
MORTGAGES 101 194 20,229
FORECLOSURE NOTICES 2 11 2,656
BUILDING PERMITS 223 349 36,295
BANKRUPTCIES 52 115 11,279
BUSINESS LICENSES 26 58 5,767
UTILITY CONNECTIONS 27 27 6,741
MARRIAGE LICENSES 17 68 3,984