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.