united states district court renasant bank,...

3375-004//51399.docx 1

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

RENASANT BANK, INC., Plaintiff,

) ) ) )

v. ) CIVIL ACTION JOHN F. SMITHGALL, ELAINE SMITHGALL, JASON SMITHGALL, RAY SIMMONS, HANOVER GROUP HOLDINGS, LLC, AQUISTION SF LLC, AJS INVESTMENT GROUP, LLC, ALASKA REAL ESTATE, LLC, APPALACHIAN COMPANY, APPALACHIAN ASSETS, LLC, CENTER INVESTMENTS, INC., EUFALA CORP., JFS VISION, LLC, JSDD, LLC, KING TRACT, LLC, KJS INVEST GROUP, LLC, NACOOCHEE CORPORATION, RENTPROP, LLC, SOUTHFUND COMPANIES, SOUTHFUND DEVELOPMENT II, INC., SOUTHFUND DEVELOPMENT III, INC., SOUTHFUND DEVELOPMENT, INC., SOUTHFUND BROTHERS, LLC, JON DOES 1-10 Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

FILE NO. ___________

Case 1:15-cv-00459-WSD Document 1 Filed 02/17/15 of 38

3375-004//51399.docx 2

COMPLAINT

COMES NOW, Plaintiff, Renasant Bank, through counsel and files

this, its Complaint against Defendants as follows:

PARTIES

(1)

Plaintiff is a banking corporation organized and existing under the

laws of the State of Mississippi, and authorized to do business in the State of

Georgia, with its principal place of business located at 209 Troy Street, Tupelo,

Lee County, Mississippi.

(2)

Plaintiff is the successor-in-interest to Crescent Bank and Trust

Company (“Crescent Bank”), which went into receivership on July 23, 2010.

(3)

Defendant John F. Smithgall is a citizen of the State of Georgia and

resides in Atlanta, Fulton County, Georgia and may be served at 4765 Paran Oak

Court, Atlanta, Georgia 30327.


3375-004//51399.docx 3

(4)

Defendant Elaine Smithgall, Defendant John Smithgall’s wife, is a

citizen of the State of Georgia and resides in Atlanta, Fulton County, Georgia and

may be served at 4765 Paran Oak Court, Atlanta, Georgia 30327.

(5)

Defendant Jason Smithgall, Defendant John Smithgall’s son, is a

citizen of the State of Georgia and resides in Atlanta, Fulton County, Georgia and

may be served at 161 Ridgeland Way, N.E., Atlanta, Georgia 30305.

(6)

Defendant W. Ray Simmons is a citizen of the State of Georgia and

resides in Atlanta, Fulton County, Georgia and may be served at 1095 Ferncliff

Road, N.E., Atlanta, Georgia 30324.

(7)

Defendant Hanover Group Holdings, LLC is a Delaware Limited

Liability Company doing business in Georgia with its principal place of business

located at 4470 Chamblee Dunwoody Road, Suite 290, Atlanta, Georgia 30338-

6229. Defendant Hanover Group Holdings, LLC may be served through its

Member, John F. Smithgall, at 4470 Chamblee-Dunwoody Road, Suite 290,

Atlanta, DeKalb County, Georgia 30338.


3375-004//51399.docx 4

(8)

Defendant Hanover Group Holdings, LLC, is subject to venue and

jurisdiction in this Court pursuant to O.C.G.A. §§ 14-11-703 and 14-2-510.

(9)

Defendant Aquisition SF LLC is a Limited Liability Company

organized and existing under the laws of the State of Georgia, with its principal

place of business located at 161 Ridgeland Way, Atlanta, Fulton County, Georgia

30305. Defendant Aquisition SF LLC may be served through its registered agent,

Jason Smithgall, at 161 Ridgeland Way, Atlanta, Fulton County, Georgia 30305.

(10)

Defendant AJS Investment Group, LLC is a Limited Liability

Company organized and existing under the laws of the State of Georgia, with its

principal place of business located at 4470 Chamblee-Dunwoody Road, Suite 290,

Atlanta, DeKalb County, Georgia 30338. Defendant AJS Investment Group, LLC

may be served through its registered agent, John F. Smithgall, at 4470 Chamblee-

Dunwoody Road, Suite 290, Atlanta, DeKalb County, Georgia 30338.

(11)

Defendant Alaska Real Estate, LLC is a Limited Liability Company



3375-004//51399.docx 5

place of business located at 4470 Chamblee-Dunwoody Road, Suite 290, Atlanta,

DeKalb County, Georgia 30338. Defendant Alaska Real Estate, LLC may be

served through its registered agent, John F. Smithgall, at 4470 Chamblee-


(12)

Defendant Appalachian Company is a corporation organized and

existing under the laws of the State of Georgia, with its principal place of business

located at 4470 Chamblee-Dunwoody Road, Suite 290, Atlanta, DeKalb County,

Georgia 30338. Defendant Appalachian Company may be served through its

registered agent, John F. Smithgall, at 4470 Chamblee-Dunwoody Road, Suite 290,


(13)

Defendant Appalachian Assets, LLC is a Limited Liability Company



DeKalb County, Georgia 30338. Defendant Appalachian Assets, LLC may be




3375-004//51399.docx 6

(14)

Defendant Center Investments, Inc. is a corporation organized and



Georgia 30338. Defendant Center Investments, Inc. may be served through its



(15)

Defendant Eufala Corp. is a corporation organized and existing under

the laws of the State of Georgia, with its principal place of business located at 4470

Chamblee-Dunwoody Road, Suite 290, Atlanta, DeKalb County, Georgia 30338.

Defendant Eufala Corp. may be served through its registered agent, John F.

Smithgall, at 4470 Chamblee-Dunwoody Road, Suite 290, Atlanta, DeKalb

County, Georgia 30338.

(16)

Defendant JFS Vision, LLC is a Limited Liability Company organized

and existing under the laws of the State of Georgia, with its principal place of

business located at 4470 Chamblee-Dunwoody Road, Suite 290, Atlanta, DeKalb

County, Georgia 30338. Defendant JFS Vision, LLC may be served through its


3375-004//51399.docx 7



(17)

Defendant JSDD, LLC is a Limited Liability Company organized and



Georgia 30338. Defendant JSDD, LLC may be served through its registered agent,

John F. Smithgall, at 4470 Chamblee-Dunwoody Road, Suite 290, Atlanta, DeKalb

County, Georgia 30338.

(18)

Defendant King Tract, L.L.C. is a Limited Liability Company



DeKalb County, Georgia 30338. Defendant King Tract, L.L.C. may be served

through its registered agent, John F. Smithgall, at 4470 Chamblee-Dunwoody

Road, Suite 290, Atlanta, DeKalb County, Georgia 30338.

(19)

Defendant KJS Invest Group, LLC is a Limited Liability Company



3375-004//51399.docx 8


DeKalb County, Georgia 30338. Defendant KJS Invest Group, LLC may be



(20)

Defendant Nacoochee Corporation is a corporation organized and



Georgia 30338. Defendant Nacoochee Corporation may be served through its



(21)

Defendant Rentprop, L.L.C. is a Limited Liability Company



DeKalb County, Georgia 30338. Defendant Rentprop, L.L.C. may be served




3375-004//51399.docx 9

(22)

Defendant Southfund Companies is a corporation organized and



Georgia 30338. Defendant Southfund Companies may be served through its



(23)

Defendant Southfund Development, Inc. is a corporation organized



County, Georgia 30338. Defendant Southfund Development, Inc. may be served



(24)

Defendant Southfund Development II, Inc. is a corporation organized



County, Georgia 30338. Defendant Southfund Development II, Inc. may be served


3375-004//51399.docx 10



(25)

Defendant Southfund Development III, Inc. is a corporation organized



County, Georgia 30338. Defendant Southfund Development III, Inc. may be



(26)

Defendant Southfund Brothers, LLC is a Limited Liability Company



DeKalb County, Georgia 30338. Defendant Southfund Brothers, LLC may be




3375-004//51399.docx 11

(27)

Defendant Jon Does 1-10 are individuals and/or entities used by the

Defendants to conceal assets to avoid collection of debts. Defendant Jon Does

shall be identified with more specificity as information becomes available.

JURISDICTION

Jurisdiction and venue are proper in this Court pursuant to 28

U.S.C.A. § 1332 and 28 U.S.C.A. § 1391, because Plaintiff Renasant Bank and

Defendants are citizens of different states and the amount in controversy exceeds

the sum or value of $75,000.00, exclusive of interest and costs.

FACTS

A. The Underlying Lawsuit.

(28)

On May 25, 2011, Plaintiff Renasant Bank filed a lawsuit against

Defendant John Smithgall, Charles Dinsmore, and EarthResources of Franklin

County, LLC for defaulting on a promissory note made to Plaintiff Renasant

Bank’s predecessor, Crescent Bank and Trust. See Renasant Bank, Inc. v.

EarthResources of Franklin County, LLC, et al., United States District Court,

Middle District of Georgia, Civil Action File No. 3:11-CV-143 (hereinafter the

“Underlying Lawsuit”).


3375-004//51399.docx 12

(29)

On May 13, 2013, Plaintiff Renasant Bank was granted a summary

judgment of $4,086,094.70 against Defendant John Smithgall, as enforcement of

Defendant John Smithgall’s Limited Personal Guaranty of the defaulted debt of

EarthResources of Franklin County, LLC. A copy of the Order is attached hereto

as Exhibit A and incorporated herein by reference. The Judgment was entered by

the clerk of court on May 14, 2013.

(30)

The May 13, 2013, Order was affirmed by the Eleventh Circuit Court

of Appeals on October 9, 2013 and a Mandate was issued on November 8, 2013.

(31)

The United States Supreme Court did not accept the Underlying

Lawsuit on Certiorari.

B. Post Judgment Concealment of Assets.

(32)

Defendant John Smithgall refused to properly answer post-judgment

discovery propounded by Plaintiff Renasant Bank. On January 17, 2014, Plaintiff

Renasant Bank filed a Motion to Compel.


3375-004//51399.docx 13

(33)

Judge Land scheduled a hearing on Plaintiff Rensant Bank’s Motion

to Compel, to be held on March 13, 2014.

(34)

On the afternoon of Friday, March 7, 2014 Defendant John

Smithgall’s counsel provide a disc containing over 2,800 pages of information in

response to Plaintiff Renasant Bank’s Motion to Compel. See letter attached

hereto as Exhibit B and incorporated herein by reference.

(35)

Most of the disc’s content consisted of 12 months of brokerage

account statements for 15 separate brokerage accounts and one self-directed IRA

brokerage account, all of which were represented to be in the name of Defendant

John Smithgall. The remaining disc content listed expenses reported to a tax

preparer for completion and filing of a 2012 income tax return.

(36)

The documents provided show that post-judgment, Defendant John

Smithgall moved at least $27.55 million out of his brokerage accounts into other

accounts. See Affidavit of Clark E. Blackwell [Doc. 107] filed on March 19, 2014

in the Underlying Action.


3375-004//51399.docx 14

(37)

Defendant John Smithgall diverted millions of dollars, by wire

transfer, from his personal accounts to other entities that he personally owned or

controlled. Most of these transfers occurred in September of 2013, just prior to the

affirmation of the judgment rendered against Mr. Smithgall by the United States

Eleventh Circuit Court of Appeals.

(38)

On August 27, 2014, counsel for Plaintiff Renasant Bank took the

post-judgment deposition of Defendant John Smithgall.

(39)

During the post-judgment deposition on August 27, 2014, Defendant

John Smithgall admitted that he formed a new company called Hanover Holdings

Group, LLC and that he had transferred millions of dollars of personal holdings

into this new limited liability company.

(40)

Defendant John Smithgall is the 50% owner of Defendant Hanover

Holdings Group, LLC and maintains control of Defendant Hanover Holdings

Group, LLC.


3375-004//51399.docx 15

(41)

Defendant John Smithgall transferred all of his ownership interests in

Defendant AJS Investment Group, LLC; Defendant Appalachian Company;

Defendant Eufala Corporation; Defendant JFS Properties, Inc.; Defendant

Investprop LLC, and potentially other entities, to Defendant Hanover Group

Holdings, LLC.

(42)

Defendant Jason Smithgall and Defendant Ray Simmons are the other

members/owners of Defendant Hanover Holdings Group, LLC and together own

50% of Defendant Hanover Holdings Group, LLC.

(43)

Upon direction from the Court in the Underlying Lawsuit, Defendant

John Smithgall produced a Personal Financial Statement, which states that on

March 24, 2014, Defendant John Smithgall’s interest in Hanover Group Holdings,

LLC was $42,149,699.

(44)

The personal financial statement that Defendant Smithgall produced

after the Court’s directive lists Defendant Smithgall’s net worth as of March 24,

2014 as $89,460,388.


3375-004//51399.docx 16

(45)

In the fiscal quarter immediately following the issuance of the 2013

Judgment by the United States District Court, Defendant John Smithgall kept

various stock-brokers busy moving assets while ignoring Plaintiff’s post-judgment

discovery requests.

(46)

During his deposition on August 27, 2014, Defendant John Smithgall

testified that he did not have the ability to pay the Judgment. See Smithgall

Deposition, a complete copy of which is attached hereto as Exhibit C and

incorporated herein by reference,1 p. 9.

(47)

On May 2, 2014, Renasant Bank filed Garnishment actions against the

following entities, all of which are or were owned and/or controlled by Defendant

Smithgall:

x AJS Investment Group, LLC

x Alaska Real Estate, LLC

x Appalachian Company

1 Plaintiff files contemporaneously herewith its Motion to File Sealed Documents for the Exhibits to the

Deposition of John F. Smithgall. Such Exhibits contain private account numbers for Defendant Smithgall which Plaintiff is requesting be filed under seal to maintain such privacy.


3375-004//51399.docx 17

x Appalachian Assets, LLC

x Center Investments, Inc.

x Eufala Corp.

x JFS Vision, LLC

x JSDD, LLC

x King Tract, LLC

x KJS Invest Group, LLC

x Nacoochee Corporation

x Rentprop, LLC

x Southfund Companies

x Southfund Development II, Inc.

x Southfund Development III, Inc.

x Southfund Development, Inc.

x Southfund Brothers, LLC

(48)

Defendant John Smithgall personally answered these Garnishment

actions on June 17, 2014. See Exhibit D attached hereto and incorporated herein

by reference.


3375-004//51399.docx 18

(49)

In the Garnishment Answers signed and filed by Defendant John

Smithgall, insufficient assets were identified to satisfy the Judgment. In fact, only

$1,330.04 held by Nacoochee Corporation was identified as being collectible.

(50)

During the deposition of Defendant John Smithgall held on August

27, 2014, Defendant John Smithgall unequivocally testified that the millions of

dollars that he wired out of his accounts could have been used by Defendant John

Smithgall to satisfy the Judgment owing to Plaintiff Renasant Bank. See Smithgall

Deposition, p. 64.

(51)

By moving these funds and assets out of his personal name, Defendant

John Smithgall has made himself allegedly insolvent.

(52)

On August 28, 2014, counsel for Renasant sent a letter to Defendant

John Smithgall’s counsel demanding payment of the Judgment. Counsel for

Defendant John Smithgall responded by letter dated September 2, 2014.

(53)

Defendant John Smithgall has refused to satisfy the Judgment.


3375-004//51399.docx 19

(54)

On September 30, 2014 counsel for Plaintiff Renasant Bank wrote a

letter to Defendant John Smithgall’s counsel specifically requesting the following

information:

1. the whereabouts of the funds he transferred from his personal

accounts at J.P. Morgan in September of 2013 (see deposition pp. 46-47; 52);

2. the whereabouts of the funds he transferred from J.P. Morgan

on July 23, 2013 (see deposition p. 48);

3. the whereabouts of funds transferred on January 16, 2013 (see

deposition Exhibit 9);

4. the whereabouts of the funds transferred on February 28, 2013

to Nachoochie Corporation (see deposition p. 54);

5. the whereabouts of the funds transferred on July 30, 2013 in the

amount of $4 million (see deposition p. 55);

6. the whereabouts of the funds transferred on September 11, 2013

in the amount of $4,772,825.94 (see deposition p. 55); and

7. the whereabouts of the funds transferred on September 4, 2013

in the amount of $2,077,500 (see deposition p. 58).


3375-004//51399.docx 20

(55)

In response to the September 30, 2014 letter, Defendant John

Smithgall’s counsel provided a spreadsheet purporting to answer the above-listed

inquiries.

(56)

According to the information provided in response to the September

30, 2014 letter, as of September 30, 2014:

1. at least $4,959,320.11 was in possession of Defendant

Appalachian Assets in a SunTrust Account identified as 8893;

2. over $5,900,000 was in possession of Defendant Aquisition SF

in a SunTrust Account identified as 5490;

3. at least $4,000,000 was in possession of Defendant Nacoochee

Corporation in a SunTrust Account identified as 6225; and

4. at least $1,400,000 was in possession of Defendant Investprop

in a Suntrust Account identified as 4109.

(57)

All of these funds were previously in the name of Defendant John

Smithgall.


3375-004//51399.docx 21

(58)

Defendant John Smithgall nevertheless refuses to satisfy the

Judgment.

(59)

Counsel for Defendant John Smithgall indicated by letter dated

October 31, 2014, that these transfers to these entities were made “as in inherent

part of, and pursuant to, Mr. Smithgall’s direct or indirect ownership or

membership interests in the companies or entities in which the funds were

invested.” See Exhibit E attached hereto and incorporated herein by reference.2

J.P. Morgan Chase

(60)

Among four (4) separate brokerage accounts held by J.P. Morgan

Chase, both securities holdings and overall account balances were depleted from a

combined pre-judgment balance of $11,600,000 to a year-end 2013 balance of

$8,901.52.

2 Plaintiff files contemporaneously herewith its Motion to File Sealed Documents for the attachment to the

correspondence from counsel for Mr. Smithgall which consists of a spreadsheet that contains private account numbers for Defendant Smithgall which Plaintiff is requesting be filed under seal to maintain such privacy.


3375-004//51399.docx 22

(61)

The 2013 trading volume among the four J.P. Morgan Chase accounts

was approximately $22,500,000.

(62)

Post-judgment, Defendant John Smithgall liquidated $11,600,000 in

securities holdings and moved the funds out of the various J.P. Morgan Chase

brokerage accounts.

(63)

The documents provided late on March 7, 2007 show that the J.P.

Morgan Chase account with the ending identifier “AF5” had an average 2013 pre-

judgment balance of approximately $1,700,000. See Smithgall Deposition Exhibit

5 (JS_PJ_10579).

(64)

In July 2013, Defendant John Smithgall transferred $6,500,000 in

securities in the “AF5” account and liquidated those same securities at a substantial

profit 60 days later in September 2013. See Affidavit of Clark E. Blackwell [Doc.

107] filed on March 19, 2014 in the Underlying Action.


3375-004//51399.docx 23

(65)

On July 23, 2013, Defendant John Smithgall caused J.P. Morgan

Chase to wire $2,500,000 Million to Defendant’s personal account at SunTrust

Bank. See Smithgall Deposition Exhibit 6 (JS_PJ_10772).

(66)

As of September 30, 2014, at least $2,500,000 of the funds transferred

on July 23, 2013, remained in SunTrust account xx-5490 in the name of Defendant

Aquisition SF LLC.

(67)

Defendant Aquisition SF LLC is managed by Defendant John

Smithgall’s son, Defendant Jason Smithgall.

(68)

In September of 2013, Defendant John Smithgall liquidated

$3,959,584.87 in securities from J.P. Morgan Chase Account ending with the

identifier “AL7.” See Smithgall Deposition Exhibit 7 (JS_PJ_10805-10839;

JS_PJ_10826).


3375-004//51399.docx 24

(69)

In September of 2013, Defendant John Smithgall transferred

$2,893,843.48 among various accounts at J.P. Morgan Chase. See Smithgall

Deposition Exhibit 7 (JS_PJ_10829).

(70)

On September 10, 2013, Defendant John Smithgall caused J.P.

Morgan Chase to wire $4,959,320.11 from Account “AF5” to an account at

SunTrust Bank. See Smithgall Deposition Exhibit 8 (JS_PJ_10595).

(71)

As of September 30, 2014 at least $4,959,320.11 remained in

SunTrust account xx-8893 in the name of Defendant Appalachian Assets.

(72)

Defendant Appalachian Assets is controlled by Defendant John

Smithgall.

(73)

During Defendant John Smithgall’s deposition held on August 27,

2014, Defendant John Smithgall could not recall the specific accounts where these

funds were transferred, nor could he recall the reasons why these transactions took

place.


3375-004//51399.docx 25

(74)

The J.P. Morgan Chase account identified as “07649-AL7” had an

average 2013 pre-judgment balance of $3,800,000. Defendant John Smithgall ran

a total of $10,000,000 in securities trades through that account in the first three

fiscal quarters of 2013.

Morgan Stanley

(75)

Among ten (10) separate brokerage accounts held at Morgan Stanley,

both securities holdings and account balances were depleted from a combined pre-

judgment balance of $13,600,000 to a year-end 2013 grand total of $88,574.52.

(76)

The 2013 trading volume among the 10 Morgan Stanley accounts was

$25,800,000.

(77)

Post-judgment, Defendant John Smithgall liquidated his securities

holdings and moved $13,600,000 out of his various Morgan Stanley brokerage

accounts.


3375-004//51399.docx 26

(78)

In Morgan Stanley Account 005-632, the average 2013 pre-judgment

balance was $6,000,000. See Smithgall Deposition Exhibit 9 (JS_PJ_12029-

12044).

(79)

Between July and September of 2013, a total of $8,772,824.94 was

wired from Account 005-632 to Defendant John Smithgall. See Smithgall


(80)

On January 16, 2013 Defendant John Smithgall wired $1,000,000 to

another account in the name of John F. Smithgall. See Smithgall Deposition

Exhibit 10 (JS_PJ_12040).

(81)

On February 28, 2013, Defendant John Smithgall wired $6,000,000 to

an account in the name of Defendant Nacoochee Corporation. See Smithgall



3375-004//51399.docx 27

(82)

At the time of the February 28, 2013 transfer of $6,000,000 to

Defendant Nacoochee Corporation, Defendant John Smithgall was the President of

Defendant Nacoochee Corporation.

(83)

Defendant Nacoochee Corporation is now wholly-owned by

Defendant Hanover Group Holdings, LLC.

(84)

On July 30, 2013, Defendant John Smithgall wired $4,000,000 to

another account in the name of John F. Smithgall. See Smithgall Deposition


(85)

As of September 30, 2014, at least $3,000,000 remained in SunTrust

Account xx-6225 in the name of Defendant Nacoochee Corporation.

(86)

As of April 30, 2013, at least $2,472,292 remained in a BB&T

account in the name of Defendant Nacoochee Corporation.


3375-004//51399.docx 28

(87)

As of September 30, 2014, at least $1,000,000 remained in SunTrust

Account xx-5490 in the name of Defendant Aquisition SF LLC.

(88)

On September 11, 2013, Defendant John Smithgall wired

$4,772,825.94 to another account in the name of John F. Smithgall. See Smithgall


(89)


on September 11, 2013 remained in a SunTrust account xx-5490 in the name of

Defendant Aquisition SF LLC.

(90)

As of September 30, 2014, at least $417,000 of the funds transferred

on September 11, 2013 remained in Wells Fargo account xx-2401 in the name of

Defendant Appalachian Company.

(91)


2014, Defendant John Smithgall had no specific recollection of where this money


3375-004//51399.docx 29

went, why this money was transferred, or what he received in exchange for these

transfers.

(92)

Defendant John Smithgall ran a total of $15,000,000 in securities

trades through Account 005-632 in the first three fiscal quarters of 2013.

Charles Schwab

(93)

Defendant John Smithgall’s Schwab One account balance and

securities holdings were depleted from a pre-judgment balance of $2,060,000 to a

year-end 2013 balance of $1,079.73.

(94)

Post-judgment, Defendant John Smithgall liquidated his securities

holdings and moved the funds out of the Schwab One account. See Smithgall

Deposition Exhibit 12 (JS_PJ_12911-12924).

(95)

In August through September of 2013, Defendant John Smithgall

liquidated over $1,800,000 in securities in Schwab Account 6169-9508. See

Smithgall Deposition Exhibit 12 (JS_PJ_12914).


3375-004//51399.docx 30

(96)

On September 4, 2013, Defendant John Smithgall withdrew

$2,077,500.00 from Schwab Account 6169-9508. See Smithgall Deposition


(97)


on September 4, 2013, remained in SunTrust account xx-4109 in the name of

Defendant Investprop, LLC.

(98)

Defendant John Smithgall and Defendant Jason Smithgall were the

members of Defendant Investprop, LLC in September of 2013.

(99)

In 2013, the trading volume among all of Defendant John Smithgall’s

brokerage accounts was $50,880,000. Post-judgment, Defendant John Smithgall

moved at least $27,550,000 out of his brokerage accounts.

(100)


2014, Defendant John Smithgall could not provide any specific information on the

details of the transfers made in 2013.


3375-004//51399.docx 31

COUNT I

FRAUDULENT CONVEYANCE

(101)

Plaintiff realleges and incorporates paragraphs (1) through (100) of its

Complaint as if fully set forth herein.

(102)

Defendant John Smithgall is a judgment debtor to Plaintiff Renasant

Bank.

(103)

After the Judgment was entered on May 13, 2013, Defendant John

Smithgall transferred funds in excess of $27,000,000 out of his personal name to

other entities.

(104)

These funds could have been used to satisfy the Judgment against

Defendant Smithgall.

(105)

Defendant John Smithgall transferred funds in excess of $27,000,000

to other entities in an attempt to avoid collection of the Judgment against him.


3375-004//51399.docx 32

(106)

Defendant John Smithgall has testified that he does not have the

ability to pay the Judgment.

(107)

Defendant John Smithgall has made himself personally insolvent by

transferring funds and assets to other entities.

(108)

Defendant John Smithgall made these transfers without receiving

anything of value in return.

(109)

Defendant John Smithgall is or was an officer, director, manager, or

controller of each of the entities involved in these transfers.

(110)

Defendant John Smithgall moved ownership interests of various

companies that own real property into Defendant Hanover Group Holdings, LLC.

(111)

Defendant Jason Smithgall and Defendant Ray Simmons are co-

owners/members of Defendant Hanover Group Holdings, LLC, along with


3375-004//51399.docx 33

Defendant John Smithgall and were aware of the judgment against Defendant John

Smithgall at the time Hanover was formed.

(112)

Defendant John Smithgall transferred ownership of companies that

own real properties to Defendant Hanover Group Holdings, LLC for no

consideration.

(113)

Defendant John Smithgall retains control of Defendant Hanover

Group Holdings, LLC.

(114)

Defendant John Smithgall transferred ownership of his personal bank

account at SunTrust to the exclusive control of his wife, Defendant Elaine

Smithgall.

(115)

Defendant Nachoochee Corporation continues to possess funds that

were transferred from Defendant John Smithgall to avoid collection of the

Judgment.


3375-004//51399.docx 34

(116)

Defendant Investprop continues to possess funds that were transferred

from Defendant John Smithgall to avoid collection of the Judgment.

(117)

Defendant Appalachian Company continues to possess funds that


Judgment.

(118)

Defendant Appalachian Assets LLC continues to possess funds that


Judgment.

(119)

Defendant John Smithgall retains control over the assets and funds

that he transferred from his individual name since May 13, 2013.

(120)

The transfers constitute a fraudulent transfer under the Uniform

Fraudulent Transfer Act and are voidable.


3375-004//51399.docx 35

COUNT II

INJUNCTIVE RELIEF

(121)



(122)

Defendant John Smithgall and the other Defendants have worked in

concert with intent to hinder collection of the Judgment due to Plaintiff Renasant

Bank.

(123)

The Court should set aside each conveyance of funds made by

Defendant John Smithgall and ownership interests of entities that own real

properties since the Judgment was entered on May 13, 2013.

(124)

Specifically, the Court should set aside the conveyance of:

1. the funds Defendant John Smithgall transferred from his

personal accounts at J.P. Morgan in September of 2013 (see deposition pp. 46-47;

52);


3375-004//51399.docx 36

2. the funds Defendant John Smithgall transferred from J.P.

Morgan on July 23, 2013 (see deposition p. 48);

3. the funds Defendant John Smithgall transferred on January 16,

2013 (see deposition Exhibit 9);

4. the funds Defendant John Smithgall transferred on February 28,

2013 to Defendant Nachoochee Corporation (see deposition p. 54);

5. the funds Defendant John Smithgall transferred on July 30,

2013 in the amount of $4,000,000 (see deposition p. 55);

6. the funds Defendant John Smithgall transferred on September

11, 2013 in the amount of $4,772,825.94 (see deposition p. 55); and

7. the funds Defendant John transferred on September 4, 2013 in

the amount of $2,077,500 (see deposition p. 58).

COUNT III

ATTORNEYS’ FEES

(125)




3375-004//51399.docx 37

(126)

Plaintiff Renasant Bank is entitled to Attorneys’ Fees pursuant to

O.C.G.A. § 13-6-11.

WHEREFORE, Plaintiff Renasant Bank respectfully requests that this

Court:

(a) enter judgment in favor of Plaintiff Renasant Bank and against

the Defendants, jointly and severally, on Count I for Fraudulent

Transfer;

(b) enter judgment in favor of Plaintiff Renasant Bank and against

the Defendants, jointly and severally, on Count II and Order

that the Fraudulent Transfers be set aside and that sufficient

funds are placed in the registry of the Court so that Plaintiff

Renasant Bank can collect the Judgment, plus interest, against

Defendant John Smithgall;

(c) enter judgment in favor of Plaintiff Renasant Bank and against

the Defendants, jointly and severally, on Count III for

Attorneys’ Fees;

(d) grant such other and further relief as this Court deems just

under the circumstances.


3375-004//51399.docx 38

Respectfully submitted February 17, 2015. /s/ Richard A. Wingate F. EDWIN HALLMAN, JR. State Bar of Georgia #319800 RICHARD A. WINGATE State Bar of Georgia #770617 For HALLMAN & WINGATE, LLC Attorneys for Plaintiff 166 Anderson Street, S.E. Suite 210 Marietta, Georgia 30060 (404) 588-2530
