The attorney representing Aiken’s Compass Academy has agreed to the South Carolina attorney general’s demand to place the school and its finances under the control of a receiver.
Mark Powell, spokesman for the attorney general’s office, said the two sides came to an agreement Tuesday morning before a hearing that had been scheduled to take up the matter in Columbia.
In addition to the receivership, Powell said the parties also agreed to extend a temporary restraining order that freezes the school’s bank accounts indefinitely and those of Aiken businessman Jonathan Brooks. Brooks has been accused by state securities regulators with fraud in financing the new school, which is under construction east of Aiken.
Stan Jackson, the attorney representing Brooks’ wife, Compass Academy Administrator Tracy Brooks, said he is working to get a receiver in place as soon as possible so the project can continue.
“I wanted to get this done today,” he said Tuesday.
Jackson said he proposed two candidates for the job at Tuesday’s hearing. One is Melanie Oldham, an accountant and lawyer, who Jackson said had experience with construction projects and forensic accounting. The other is Gerald Rowe, a former builder and one of the investors in Compass Academy, Jackson said.
Jackson said Rowe has invested $115,000 in the school and has offered to invest $40,000 more to keep the project going.
Powell said the attorney general’s office is withholding comment on the two candidates and will likely have its own candidate for receiver in the near future. A hearing is set for April 12 on the matter, but the two sides could agree on a receiver before that time, he said.
State officials have said that a receiver does not have to continue building the school. That person could instead choose to halt construction and liquidate assets, if the receiver determines that is the best way to protect investors.
After a receiver is in place, state officials will lift the temporary restraining order filed in the 5th District of South Carolina Court of Common Pleas, which freezes the use of Security Federal Bank accounts belonging to Jonathan W. Brooks, J. Brooks Financial Inc., Brooks Real Estate Holdings and Compass Academy.
According to a March 5 complaint filed by Assistant Attorney General Tracy Meyers, Jonathan 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.
Jackson said at Tuesday’s hearing, Jonathan Brooks agreed to relinquish all interest in Compass Academy and step back from the project.
“He will not have any involvement at all,” he said, explaining that Tracy Brooks could remain in her position, at least temporarily, to assist the receiver, once appointed.
“That will be up to the receiver,” he said.