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South Carolina attorney general seeks receiver for Compass Academy

Friday, March 22, 2013 8:21 PM
Last updated Saturday, March 23, 2013 6:02 AM
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AIKEN — Whether Aiken’s Compass Academy opens its doors to students this fall could be decided by a court-appointed receiver, if the South Carolina Attorney General’s Office has its way.

The attorney general is seeking to place a receivership over the businesses of Jonathan and Tracy Brooks in order to protect investors in the private school under construction on Toolebeck Road, east of Aiken.

Stan Jackson, the attorney for the couple, confirmed Friday that a consent order and receivership had been proposed by Assistant Attorney General Tracy Meyers. Such action would be a way to lift a 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.

That order is set to be extended Monday unless the Brookses agree to the receivership, Meyers said Friday. She said a court-appointed receiver would serve the best interests of the investors, which could mean continuing construction of the school or liquidating the assets.

Jackson said he is seeking a solution that will ensure the K-12 school will be completed and open for students in August as planned. He’s concerned a receiver will not want to do that. His clients could request a public hearing and seek a compromise in the form of a decision by a judge.

Meyers said her office is only concerned with enforcing securities regulations and protecting investors.

“It’s not about the school, it is about the securities,” she said. “It is about the money – how it was raised, what people were told and how it was spent.”

According to a March 5 complaint filed by 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. The complaints do not accuse Brooks of criminal wrongdoing, but the matter has been referred to the attorney general’s criminal division.

In addition to the securities complaint, the couple is facing two lawsuits filed in recent weeks related to their involvement with Compass Academy.

The first, filed Feb. 25 by Caniglia Management Group and Thomas and Joshua Caniglia, alleges breach of contract. According to the suit, the Caniglias were hired by Jonathan and Tracy Brooks to assist with selecting property for Compass Academy, negotiating with the architect, help with zoning, permits and utilities issues and to act as a liaison between “contractors, builders and architects and city, county and state officials,” among other duties.

The Caniglias were supposed to be paid a fee equal to 5 percent of the project’s total cost, or $350,000 in increments set in the contract, the lawsuit said. The lawsuit alleges they were paid $17,000 and then told in June their “services were no longer needed because the Texas investors had refused to permit any further payments.”

The Brookses have not yet filed a response to the lawsuit. Jackson said he was not representing them in the matter, nor in another lawsuit filed March 8.

That suit, filed by Aiken County resident Sandra Fadeley, alleges Jonathan Brooks or another person forged Fadeley’s name on financial documents, sold stocks without her knowledge or consent and transferred more than $470,000 of those funds to the Compass Academy account at Security Federal bank.

Fadelely is seeking class action status for the case, a jury trial and unspecified damages.

Neither Jonathan nor Tracy Brooks have commented publicly about the situation since the attorney general’s actions were reported this month.

They did post a statement last week on the Compass Academy Web site, which denied all wrongdoing.

The statement, which has since been removed, said, “No lenders have complained about their funds. All of this will pass in time. The future will prove us right. We did nothing wrong and time will give evidence to this.”

STATEMENT POSTED BY JONATHAN AND TRACY BROOKS

Response to Allegations on Wednesday, March 14th:

Today has been an incredibly humbling day. The morning began with a steady stream of supportive friends, staff, and families. Not sure what to expect, I was prepared to give an “official statement” about the accusations against Compass Academy and my husband, Jay Brooks. As I began to speak, folks informed me that they were not at the office to question the allegations but wanted to support our family. Thank you to everyone who is loving and supporting us through this difficult time. As promised, here is the response from my husband, Jay Brooks....

It is with great sadness that I write this to you. As many of you know, no great endeavor goes without opposition. We have had forces plotting against us from the start. It breaks my heart to tell you that those negative forces have stooped to all time lows. The article that ran in the Aiken Standard was ripe with lies, horribly malicious, and completely off base. Please allow me to clarify a few points that were alleged: 1. I am not facing criminal charges. 2. My securities licenses are not revoked. 3. I did not lie to the Attorney General’s office. 4. There have been no ill gotten gains. 5. I committed no fraud or deception. 6. There was no comingling of corporate and school funds. We have provided the Attorney General’s office a complete list of lenders for the building which will house Compass Academy. We also gave them all receipts and bank statements to prove that all money went where it was supposed to. No lenders have complained about their funds. All of this will pass in time. The future will prove us right. We did nothing wrong and time will give evidence to this. Sincerely, Jay Brooks

ATTN ALL FAMILIES: Compass Academy will continue to move forward. Every day families enroll their children because they believe in our education plan. So many children will thrive in our school and we already can see lives that have been changed. Now more than ever, we are motivated to prevail. Thank you for your trust, loyalty, and most of all your love and prayers. Please call me directly with any questions, 270-2640.

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Riverman1
84905
Points
Riverman1 03/23/13 - 05:49 am
2
0
School building that never was

Those commercials were so strange showing the students and teachers, but no school. The school building that never was goes into receivership.

curly123053
4732
Points
curly123053 03/23/13 - 07:38 am
2
0
Greed!

Greed once again brings down what a lot of people thought was going to be a good venture. If the Brooks would have played by the rules they could have succeeded, but greed crept into their hearts resulting in a lot of investors losing out.

Dixieman
15307
Points
Dixieman 03/23/13 - 11:36 am
3
0
I can write the rest of the story right now

Okay, this story practically writes itself. Here is what you will be reading in the next few weeks and months:
1. Receiver will be appointed.
2. License revocation and fraud claims will grind slowly through the courts.
3. School funding and construction will cease because funds are frozen and promoters are busy defending in court.
4. The promoters of this scheme will claim that if only the state had not stepped in and meddled with success by accusing them of fraud, appointing a receiver, etc., etc., the school would have opened on time and been a great success. "The Attorney General is only hurting the children of South Carolina," they will moan, while daintily blotting their crocodile tears with their embroidered hankies.
5. Assistant Attorney General Tracy Meyers will regret greatly that she ever said "her office is only concerned with enforcing securities regulations and protecting investors. 'It’s not about the school, it is about the securities,' she said. 'It is about the money – how it was raised, what people were told and how it was spent.'"
She is, of course, absolutely right, but her words will be seized upon by the promoters and she will be flogged for having supposedly "destroyed the hopes of the little children, who are, after all, our future" (every sleazy lowlife politician's favorite defensive shield will now put to use here).
What she SHOULD have said is, "No good school can be founded on fraud and lies. This action will protect the children of South Carolina." (Memo to Tracy: get a better public relations consultant.)
6. School will never get built. Kids will go elsewhere (lots of good private schools in the area already) and actually have an opportunity to get educated.
7. Some investors will get, many years from now, a few pennies on the dollar back from their investments. Many of them will not learn their lesson and will go on to lose more in similar schemes.
8. Somebody will eventually plead guilty to some lesser charge -- attempted double parking or something -- and promise not to do it again. Slap on the wrist penalty imposed, too little, too late.
9. Several dimbulbs will go down with the ship, believing to their dying breath in this thing no matter what the evidence shows.
10. Lesson: There's another one born every minute.

If I'm wrong I'll give up all my hard-earned points.

The Knave
24
Points
The Knave 03/24/13 - 12:51 pm
1
0
What we have here is a very

What we have here is a very unusual event. That is, a securities regulator/enforcer actually interceding at an early enough time that something might actually be salvaged for the investors and those who have placed enrollment deposits. It is truly amazing (although I guess it shouldn't be) that there are so many gullible and credulous people that will, in the face of overwhelming evidence, continue to defend the fraudsters -- in fact, not even entertain any possibility that they might be guilty. It must be Brooks' backwater bible college training that makes him appear so saintly to those folk. And, they will, as Dixieman has said, blame the AG for the noxious swamp that the Brookes created. Hey -- anybody what to buy a somewhat incomplete school building, located in the midst of no-wheres-ville? I'll bet the Brookes could find some good candidates on their list of please-fool-me-often investors. Of course, a part of the inevitable process will be for the receiver to rake off very generous fees for himself/herself and associated minions, as the scraps from the carcass are eventually doled out.

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