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Aiken businessman, private school's accounts ordered frozen

Wednesday, March 13, 2013 3:03 PM
Last updated Thursday, March 14, 2013 1:47 AM
  • Follow Crime & courts

South Carolina’s Attorney General’s office has suspended the license of an Aiken financial adviser and frozen the bank accounts of his businesses, including the new $9 million private school he and his wife are in the midst of launching.



A restraining order filed March 5 in the Fifth District of South Carolina Court of Common Pleas, 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 temporary restraining order stems from an investigation by regulators with the Attorney General’s office into millions of dollars in securities sold by Brooks to investors in Compass Academy, a private school under construction on Toolebeck Road, just west of Aiken.

In addition to the restraining order, Brooks’ registrations as a financial adviser and broker-agent in South Carolina were summarily suspended Feb. 25, the same day regulators filed another action seeking a permanent revocation of his licenses to deal in securities.

Assistant Attorney Gen­eral Tracy Meyers said that revocation is set to take place Friday, unless Brooks requests a hearing.

“That has not occurred yet,” Meyers said.

According to a complaint filed by Meyers, Brooks, who has an office on Laurens Street in Aiken, 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.

Meyers explained the complaints do not accuse Brooks of criminal wrongdoing, but that she has referred the matter to the Attorney General’s criminal division.

Mark Powell, spokesman for South Carolina Attorney General Alan Wilson, confirmed the referral, but said the office would not comment on criminal investigations.

How all this will affect Compass Academy, a K-12 private school set to open in August, is unknown.

School administrator Tracy Brooks, who is married to Jonathan Brooks, said construction was continuing and students were being enrolled for the fall term. Tuition starts at $4,700 for early grades and rises to as much as $10,900 for high schoolers, according to the school’s Web site.

Brooks said she was aware of the restraining order, but said, “all of that is behind us.”

“Everything is fine. There isn’t a story,” she said before referring further comment to her attorney, Stan Jackson.

Jackson said construction of the 53,000-square-foot school was about 90 percent complete.

He said investors were actually “lenders,” who had financed buying the land and building the school. He said Compass Academy would lease the facilities from Brooks Real Estate Holdings, once completed. Construction and start-up costs were projected at more than $9 million, according to Compass Academy documents.

“Money is being lent for the construction of the school is actually being used for that and not for some other nefarious purposes,” Jackson said.

According to state documents, state regulators began looking into Brooks’ business dealings in November after it came to their attention that money from his clients’ Individual Retirement Accounts had been invested in the private school.

In response to investigators’ queries, Brooks disclosed that three clients had invested in Brooks Real Estate Holdings, which he said owns the property where the school is located. According to the documents, Brooks also presented copies of checks, purporting to show refunds to those clients for their investments.

State regulators later learned that at least 12 people had invested in the real estate company, and that the checks Brooks claimed to show refunds were not actually used, documents said.

Regulators also allege Brooks has failed to keep adequate records, and has co-mingled funds of the school and his businesses.

Regulators said Brooks also has failed to provide receipts and invoices for more than $5 million in payments of $5,000 or more in 2012 from the Compass bank account.

“To date, all known investor funds have been deposited in a Compass account controlled by Brooks and his wife,” according to the Feb. 25 notice seeking to revoke Brooks’ financial licenses.

According to state documents, Brooks has continued to sell securities, even though he was fired by High Street Securities in November after the premature liquidation of a client’s annuities resulted in “significant penalties.”

Jackson said he had been hired last week to deal with what he called “a big misunderstanding with the Attorney General’s office.”

Jackson said he was unaware Brooks’ financial adviser license had been suspended, but he had been in discussions with state regulators and was working to provide the documents they have requested.

“We are providing information and hope to have this matter resolved this week,” he said. “I believe this is a tempest in a teapot.”

Meyers said any investors seeking information about the allegations could call the Attorney General’s office at (803) 734-9916.

Comments (16) Add comment
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karradur
2878
Points
karradur 03/13/13 - 03:47 pm
2
1
http://www.compassacademyaiken.com/

Yeah, THAT doesn't look like a scam.

freito0227
3
Points
freito0227 03/13/13 - 04:07 pm
1
0
Wow! If you take off room

Wow! If you take off room and board and just consider tuition it costs more for a high schooler to go to Compass Academy than for my daughers tuition at College.

dichotomy
36253
Points
dichotomy 03/13/13 - 04:28 pm
1
0
A 501(c)(3) doesn't usually

A 501(c)(3) doesn't usually make for much of an investment.....unless something ain't on the up and up. Sure sounds like a lot of people throwing money at something that is supposed to be a non-profit.

rmwhitley
5547
Points
rmwhitley 03/13/13 - 05:06 pm
0
0
Where
Unpublished

do I sign up to invest?

Dixieman
16572
Points
Dixieman 03/14/13 - 10:07 am
2
0
9,000,000 POINTS @ $1 PER POINT = ...LESSEE.....

Why is this only now getting in the paper since actions were filed several weeks ago. I am afraid this is going to blow up in a nasty way - hope the investors get their money back!!

PUPPYMOMMA
1367
Points
PUPPYMOMMA 03/13/13 - 11:23 pm
1
0
Sounds like a new episode of

Sounds like a new episode of "American Greed".

Riverman1
90449
Points
Riverman1 03/14/13 - 05:19 am
3
0
The commercials for that

The commercials for that school struck me as odd.

Dixieman
16572
Points
Dixieman 03/14/13 - 05:48 am
2
0
Can I have my money back?

The commercials and the documents for investors struck me as odd too, and take a look at the investment firm's website and the "Second Amendment and Investing" page which is odd in the extreme IMHO. The videos on the school site seem to show just a very few kids over and over, odd for a school that is not open yet. Methinks I detect the scent of a rodent.

Bodhisattva
6835
Points
Bodhisattva 03/14/13 - 07:25 am
3
0
According to this they have

According to this they have 355 students and 47 teachers. Odd for a place that hasn't even been built.

http://www.privateschoolreview.com/school_ov/school_id/42142

curly123053
5141
Points
curly123053 03/14/13 - 07:36 am
1
0
Interesting......

I smell a skunk with this big project. If they do not know which side of Aiken this academy is located how can they keep the investments right? Compass is not on the west side of Aiken. Toolebeck Rd is located East of Aiken.
About the plans and the costs, I always have leery thoughts when any project is starting out real big, instead of growing as it goes. This action by the state will scar the image of this school, even if it survives this action. Parents will be leery of sending their kids to this academy after this kind of action.

karradur
2878
Points
karradur 03/14/13 - 08:38 am
1
0
It's funny how all it takes is a good scam...

...to bring Chronicle commenters together.

This sounds REALLY fishy. The link Bodhisattva provided mentions the percentage of non-white students. That's a little strange, considering the school isn't even built yet.

karradur
2878
Points
karradur 03/14/13 - 08:40 am
1
0
@Dixieman

I'm curious to know what link you're looking at with the "Second Amendment and Investing" thing.

Dixieman
16572
Points
Dixieman 03/14/13 - 04:41 pm
2
0
1 POINT PER STUDENT = MAYBE ZERO?

karradur -here it is

http://www.jaybrooksfinancial.com/articles-videos.html

The article is really odd and misstates almost everything it says about the common law and high frequency trading on Wall Street. The comments are not just wrong, they are...bizarre. Totally They make as much sense to me as the autobiography of a Martian purple giraffe breeder. What do you think?

bodhisattva - Here is something from Compass' website:

"Q: Will Compass Academy be accredited?
"A: Yes. We are working directly with the South Carolina Independent School Association in an effort to ensure that we are doing things properly."

Note the use of "will," not, "is," so accreditation is today just a hope/dream. And the South Carolina Independent School Association list of members on its website does NOT include Compass Academy.
Hmmmmmmmm.

At least Dr. Azziz does not seem to be involved.

been_here_forever
5
Points
been_here_forever 03/14/13 - 09:46 am
1
0
Karma....it's a

well, you know.

As an Aiken resident - not surprised at all. Since the inception of this 'idea' of a school, things have smelled rotten.

Reaping what you've been sowing, Compass Academy 'Administrators'.

karradur
2878
Points
karradur 03/14/13 - 11:13 am
1
0
@Dixieman

I know gun control is a hot issue around here but that article is just all kinds of weird and doesn't seem to have much of a place on a financial advisor's website.

Dixieman
16572
Points
Dixieman 03/14/13 - 08:34 pm
1
0
Reply to karradur

It is just a weird article from the get-go.

The Knave
24
Points
The Knave 03/15/13 - 12:31 pm
0
0
It should be reassuring to

It should be reassuring to know that the academic background of the "alledged" head scam-ster -- Mr. Brooks -- consists of attendance at some backwater bible college. I have met the guy, and he is your typical right-wing-nut sanctimonious religionist. On the other hand, the qualifications of the "administrator" of the school, his wife, are much more impressive. She has been in charge of answering the phone and other miscellaneous duties at their little Laurens Street storefront. You can bet that if the situation is ugly enough to wake up the sleepy securities regulators in SC, this thing will end very badly. And, once again, the Augusta Chronicle and Aiken Standard are a day late and a dollar short in picking up this smoking t***. Here is a link to the SC AG's complaint:
http://www.scag.gov/wp-content/uploads/2013/03/Complaint.pdf

Dixieman
16572
Points
Dixieman 03/15/13 - 06:56 pm
1
0
DIXEMAN HAS LOTSA POINTS

This has nothing to do with his being right wing (if he is). Most people who believe foolish things are left-wingers.

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