LITTLE ROCK — Former Little Rock attorney Elgin Clemons and his wife are the targets of a lawsuit filed in a Utah federal court as part of an effort to recover more than $50 million bilked from more than 200 investors in a Ponzi scheme.
Wayne Klein, the court appointed receiver who filedthe complaint, said Friday that he expects to file similar suits in the coming weeks against other Arkansans who profited from the investment scam.
“We do have payments that went to people in Arkansas,” Klein said. “We are in the process of filing suit against the people who got money.”
Clemons and his wife, Little Rock native and attorney Tracy Hollingsworth, missed a Friday deadline to respond to the lawsuit, according to court records. The suit, filed last month, outlines payments totaling $4.9 million that Clemons and Hollingsworth reportedly received from the pyramid scheme.
The Commodity Futures Trading Commission alleges that between May 2005 and November 2008, Houston businessman Robert Andres, Winsome Investment Trust and others fraudulently took at least $50.2 million from more than 243 people.
Clemons, as Andres’ former lawyer, is a prominent character in the reported plot.
After months of investigating financial documents, Klein said Friday that he’s still not clear about Clemons’ role in the complicated scheme.
“What we’re trying to figure out is ... where to place him in the diagram of all of the players,” Klein said Friday. “What I need to know is who got money. It’s up to that person to demonstrate that the money they received was for legitimate purposes.”
Bank records indicate that Clemons received $1.19 million in direct wire transfers from companies involved in the scheme, the complaint said. Records show Hollingsworth received direct transfers totaling $64,000.
Winsome transferred the remainder of the money to various people and companies in the United States and abroad “at the instruction and for the benefit of Clemons,” the complaint states.
“We know what he did,” Klein said of Clemons. “We don’t know what he was thinking and what’s behind the scenes.”
Klein declined to identify other Arkansans he is investigating or say what their involvement was.
“We do have people who are in Arkansas that got money that we think they should not have,” he said. “That could range from overpaid investors to people who were hired to do things for Clemons.”
Klein filed the complaint in U.S. District Court in Utah to prevent Clemons and Hollings worth, who now live in New Jersey, from transferring money or protecting assets to avoid repaying investors.
Klein said he has identified more than a dozen “bizarre and unbelievable moneymaking schemes.” More than one of the schemes reportedly involved Clemons’ claim that he represented Arab multimillionaire Mohamed Alabbar.
Clemons surrendered his Arkansas law license in February as he faced disciplinary action by the state Supreme Court’s Committee on Professional Conduct. He was accused of unethical conduct involving the Arkansas Arts Center and in his dealings with a Texas company.
Clemons was serving on the art museum’s board of trustees in November 2008 when he promised museum leaders a $500,000 gift from Alabbar.
That money never materialized, and Alabbar told the Democrat-Gazette through a spokesman in May that he does not even know Clemons.
Correspondence between Clemons and museum officials obtained through an Arkansas Freedom of Information Act request indicate that Clemons repeated the pledge numerous times over the course of two years, using letters supposedly signed by Alabbar and letters and emails from Andres.
The Arts Center faced a financial crisis in the spring of 2010 when the Alabbar donation never arrived.
Bank records reveal that Clemons pulled in millions from the scheme during the period when he repeatedly promised museum leaders that Alabbar’s pledge was forthcoming.
In November and December of 2008 alone, he received direct payments or instructed others to make payments to benefit him totaling $2.8 million, according to the federal complaint.
In October 2008, real estate records indicate, Clemons and Hollingsworth purchased a $1.16 million home in Skillman, N.J.
Clemons didn’t respond to messages left on his New Jersey home phone, and his last known cellular number has been disconnected.
Alabbar is chairman of Emaar Properties, one of the world’s largest real estate developers and based in Dubai, United Arab Emirates. Business Week estimated his personal net worth in 2007 at $500 million.
Documents indicate that Clemons presented himself - sometimes on “Ali Alalabbar Group LLC” letterhead - as sole trustee of the Alabbar family’s sovereign wealth fund.
Klein, based in Salt Lake City, said he found evidence to show that Clemons made similar promises - with higher stakes - to his client, Andres, and to Andres’ company, Winsome Investment Trust.
Clemons worked for Little Rock law firm Wright, Lindsey & Jennings from August 2006 until the firm’s leaders terminated him on Jan. 28, 2010.
Ed Lowther, managing partner of the firm, said they fired Clemons less than two weeks after hearing allegations that Clemons was acting in an unethical manner. The Wright firm immediately launched an internal investigation, turning its findings over to the Supreme Court’s Committee on Professional Conduct.
The Professional Conduct Committee found reason to believe that Clemons violated ethics rules involving “dishonesty, fraud, deceit and misrepresentation” in his correspondence with Arts Center leaders.
Clemons’ questionable dealings surfaced when an attorney representing a Texas company named CVR called the Wright firm saying that Clemons - who indicated he was representing Alabbar - had proposed buying CVR for $99 million. CVR had “loaned” Clemons $201,000 for transaction expenses, but when the deal never went through, he refused to return the money, according to Wright firm officials.
The law firm’s leaders were aware that Clemons was representing Winsome Investments and someone named Alabbar, Lowther said, but they weren’t aware of the CVR deal or the loan made to Clemons, which Lowther said was a breach of ethics.
The Wright firm has had limited communication with Clemons since his dismissal, Lowther said. The firm is cooperating with Klein’s investigation, he added.
There is no indication that any individual with the firm will be implicated in the probe, Lowther said.
All of Clemons’ clients have been notified that Clemons no longer works at the firm.
Elgin Clemons timeline1985
Central High School, student body
president, graduate.
1989
Princeton University graduate,
bachelor of arts degree with
honors.
1989-93
Serves on Princeton board of
trustees.
1994
New York University Law School
graduate.
1996
Admitted to New York Bar, begins
work as an associate at
Shearman & Sterling, New York
City.
2000
Begins work at Morgan Stanley
Dean Witter, New York City.
2006
August: Joins Little Rock law firm
Wright, Lindsey & Jennings.
2008
July 23: Clemons receives first
wire payment of $5,000 from
Winsome Investment Trust and
Bear & Bull Strategies.
Aug. 13: Forms investment entity
called “Ali Abbar Group LLC” in
Delaware, with himself listed as
“trustee for Mohammed bin Ali Al
Abbar.”
Aug. 25: Appointed by Little Rock
Board of Directors to Arkansas
Arts Center board of trustees.
November: Tells fellow Arts
Center trustees that Alabbar
pledged $500,000 to the
museum.
Nov. 4: Winsome sends $410,000
to Mantis F.M. Ltd. in London “at
the instruction and for the benefit
of Clemons,” according to
court-appointed receiver for
Winsome.
Dec. 1: Clemons receives a wiretransfer payment of $920,000 from Bear & Bull Strategies.
Clemons oversees the transfer of another $546,000 from Bear & Bull Strategies to Mantis.
2009 Proposes purchase of Texas corporationCVR by “Ali Abbar Group” for $99 million. Represents both buyer and seller in negotiations. As part of sale negotiations, CVR pays Clemons $201,000 to cover transaction expenses. Alabbar was to repay money when the deal closed.
March 4: Clemons e-mails Nan Plummer, Arts Center director: “Mohammed is a personal friend of mine and a client of our law firm. Additionally, I currently serve as trustee to his family’s personal private sovereign wealth fund.” Says the promised funds would be transferred to the museum by June 30.
June 11: Clemons gives nervous museum leaders a letter purportedly from an account manager named Jerry Goldman on “Ali Alalabbar Group” letterhead confirming that “His Essence, Mohammed bin Ali Abbar” executed the transfer of $500,000 to the United States care of Wright, Lindsey & Jennings.
Oct. 16: Plummer e-mails Clemons, telling him the museum’s finances are in dire straits and she is “very worried” that the promised half-million dollars had not yet arrived. She offers to “hop on a plane” to get it. Clemons apologizes for the delay in an e-mail reply and says he’ll have the money to her within a week. “I will be in town to giveyou the payment myself,” he says.
Nov. 10: Robert Andres, president of C2G Strategies and Winsome, writes Plummer that the Alabbar money is to be wired at 4 p.m. that day.
2010 January: An attorneywith CVR contacts Wright, Lindsey & Jennings, asking for verification that Clemons represented the “real” Alabbar.
Jan. 28: Wright, Lindsey & Jennings terminates Clemons.
Jan. 29: Clemons repays CVR with funds “provided by two of his business colleagues or acquaintances.” Feb. 1: Clemons e-mails Plummer, saying that Alabbar’s funds “have cleared the audit with no findings of wrongdoing” and that the fund transfer should clear by Feb. 10 or 11. “He will stand by his commitment,” he writes.
April 7: Wright, Lindsey & Jennings sends the results of its investigation into Clemons to the Arkansas Supreme Court’s Committee on Professional Conduct.
April 12: Plummer abruptly resigns as it is revealed the museum is $1.2 million in debt.
Nov. 23: The committee accepts Clemons’ petition to transfer his law license to “inactive” status.
2011 Feb. 24: Supreme Court issues an order accepting Clemons’ surrender of his law license.
Nov. 1: Winsome trustee files suit against Clemons and wife Tracy Hollingsworth seeking to recover $4.9 million.
NOTE: Mohamed Alabbar’s name was spelled a variety of ways in the documents obtained by the Arkansas Democrat-Gazette.
SOURCES: Arkansas Arts Center documents drawn from a Freedom of Information Act request and a Supreme Court of Arkansas per curiam dated Feb. 24 granting Clemons’ petition for surrender of his law license, and complaint filed in U.S. District Court for Utah.
Arkansas Democrat-Gazette
Front Section, Pages 1 on 12/25/2011