Complaint details fraud allegations against Aiken couple

 

The Aiken couple behind Compass Academy used investor money to buy groceries, pay credit card bills and purchase luxuries, including a $21,000 diamond ring, according to new allegations from the South Carolina attorney general’s office.

The allegations were part of a revised civil complaint filed Monday by the attorney general detailing extensive charges of fraud on the part of Jonathan and Tracy Brooks, who solicited investors to build the private school, which is under construction east of the city.

The complaint was filed even as the two sides were in negotiations over who will be appointed receiver over the couple’s assets, including the school property, their home and associated businesses.

Jonathan Brooks has been under scrutiny of state securities regulators since late 2012, when authorities were told that money from his clients’ Individual Retirement Accounts had been invested in the private school.

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.

A restraining order filed in the 5th District of South Carolina Court of Common Pleas also has frozen the use of Security Federal bank accounts belonging to Jonathan W. Brooks, J. Brooks Financial Inc., Brooks Real Estate Holdings and Compass Academy, until a receiver is appointed.

Brooks’ state registrations as a financial adviser and broker-agent also have been summarily suspended. The complaints do not accuse Brooks of criminal wrongdoing, but the matter has been referred to the attorney general’s criminal division.

In the revised complaint filed Monday, state authorities allege the couple has repeatedly “misappropriated investor funds” in recent months to pay for household bills and other expenses not associated with the school.

They also claim the Brookses misled investigators seeking records and accounting of expenses for the school and businesses.

According to the complaint, on Dec. 3, about $21,000 was wired from an account for J. Brooks Financial to Tiffany & Co. to purchase an 18-karat gold and platinum diamond ring for Tracy Brooks. Regulators said that when she was questioned about the expense, Tracy Brooks originally denied she possessed such a ring.

Regulators claim the couple used investor money to pay for a house they bought in Aiken. To complete the
closing on July 31, the Brookses gave a $50,000 promissory note to Caldwell Design and Construction. According to the complaint, Jonathan Brooks wrote a check for the same amount on Dec. 10, from a Compass Academy bank account. Regulators say that check was used to purchase a $50,000 cashier’s check made payable to Mike Caldwell, of Caldwell Design and Construction.

State regulators allege all these transactions were done without the knowledge or authority of the investors.

Mark Powell, spokesman for the attorney general, said that two Columbia lawyers have been proposed to the court as possible receivers – Robert Bolchoz and Sherri Lydon – but that it will be up to a judge to decide which person to appoint.

Aiken businessman, private school's accounts ordered frozen
South Carolina attorney general seeks receiver for Compass Academy

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