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South Carolina judge orders receivership for Compass Academy

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A Columbia attorney was appointed receiver Monday for the assets of an Aiken couple, including the private school the two started.

Judge Clifton Newman of the Fifth Judicial Circuit appointed Sherri Lydon as receiver over Compass Academy and the assets of Jonathan and Tracy Brooks, according to Mark Powell, a spokesman for the South Carolina Attorney General’s office.

Jonathan Brooks, an Aiken financial advisor, has been accused by state regulators of fraud and misuse of investors’ funds in financing the new private school, east of Aiken. His wife, Tracy Brooks, the school administrator, has also been accused of misuse of school funds, including the purchase of a $21,000 diamond ring with investor money, according to a civil complaint filed this month.

The order appointing a receiver bars the couple from accessing the school or investment accounts and prohibits them from possessing school records or property.

The order also requires the receiver to provide a full accounting of all assets and property within 30 days to the court, including a report on the feasibility of finishing construction of the school and opening it as scheduled in August.

The court order gives the receiver exclusive control of all property, money, records and bank accounts associated with the enterprise, which has been under investigation by state regulators since late 2012.

The order also grants the receiver power to sell property and liquidate assets, with the court’s approval.

Jonathan and Tracy Brooks have been under a temporary restraining order since March 5, 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. Brooks’ state registrations as a financial adviser and broker-agent also have been suspended.

In additions to the receivership, the complaint seeks to order Jonathan Brooks to disgorge all “ill-gotten gains” and to impose civil penalties of $10,000 per violation of the state securities act.

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Dixieman
14412
Points
Dixieman 04/23/13 - 09:48 am
2
0
Phase 1 completed

Here's my prediction from March 22. Let's see how I'm doing:

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.
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If I'm wrong I'll give up all my hard-earned points (which are as valuable and useful as Compass Academy).

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