A South Carolina judge granted an indefinite extension Monday of a restraining order that freezes the bank accounts of an Aiken businessman accused of violating state securities regulations.
This is the second extension of the temporary restraining order originally granted March 5 by the 5th District of South Carolina Court of Common Pleas. The order freezes the use of Security Federal bank accounts belonging to Jonathan W. Brooks, J. Brooks Financial Inc., Brooks Real Estate Holdings and Compass Academy, the private school under construction on Toolebeck Road, east of Aiken.
The order will remain in place until Brooks has a hearing on a complaint from state regulators accusing him of deceiving investors who have poured millions into funding the purchase of property and construction of Compass Academy, which is set to open in August.
According to a March 5 complaint filed by Assistant Attorney General Tracy Meyers, Brooks is accused of violating securities regulations, including selling unregistered securities, committing fraud and making false and misleading statements. The complaint seeks to place Brooks’ assets, including those of Compass Academy, in the control of a receiver, to disgorge all “ill-gotten gains” and impose civil penalties of $10,000 per violation of the state securities act.
Brooks’ state registrations as a financial adviser and broker-agent also have been suspended. The complaints do not accuse him of criminal wrongdoing, but the matter has been referred to the attorney general’s criminal division.
In addition to the securities complaint, Brooks and his wife, Tracy Brooks, are facing two civil lawsuits filed in recent weeks related to their involvement with Compass Academy.
Brooks’ attorney, Stan Jackson said Monday he was aware of the restraining order extension and had requested a hearing date for his clients.
Meyers is seeking to have Brooks’ assets, including Compass Academy, be placed under a court-appointed receiver, who will determine how best to repay the investors. She also is seeking to permanently bar Brooks from selling securities in the state of South Carolina. She also has referred the case to the attorney general’s criminal division for further investigation.
Jackson said he hopes a judge will come up with a way to allow construction of the school to continue.
“We don’t believe a receivership is the best for the school or the investors,” Jackson said. “A receiver is often the first to get paid in these situations.”