SEC Accuses Aequitas of ‘Ponzi-like’ Scheme

Posted on April 4th, 2016 at 9:42 AM
SEC Accuses Aequitas of ‘Ponzi-like’ Scheme

From the Desk of Jim Eccleston at Eccleston Law LLC:

The SEC recently filed charges against Aequitas Capital Management, claiming that the firm and its CEO, Bob Jesenik, defrauded investors by covering the weakening condition of the firm. The SEC report states that the firm hid its “rapidly deteriorating financial condition” and continued to raise more than $350 million from investors. More recently, the firm, based in Lake Oswego, has been appointed a receiver to allocate its remaining assets to defrauded investors, according to a SEC news release.

In the complaint filed in Oregon federal district court, CEO Robert Jesenik and Executive VP Brian Oliver are alleged to have known in July 2014 that the firm was using new investors’ funds to pay interest and redemptions to earlier investors. The complaint also pointed out significant cash flow shortages that increased through 2015.

While the firm’s condition continued to deteriorate, the firm did not stop raising capital from investors, using the private jet, or attending “posh dinners and golf outings.” The SEC report also names former CEO and COO, N. Scott Gillis who allegedly helped to conceal the firm’s condition and was aware of the allocation of investor funds to pay for operating expenses and interest payments to earlier investors. During the period under investigation Jesenik, Oliver, and Gillis received at least $2.5 million in salaries, according to the complaint.

Director of the SEC’s San Francisco Regional Office, Jina L. Choi, stated in a press release, “We allege that Aequitas had severe and persistent cash flow shortages and top executives knew they weren’t using money raised from investors like they said they would. But they refused to disclose the true financial condition, continued to draw lucrative salaries, and roped even more investors into a losing venture.”

The SEC is seeking permanent injunctions, disgorgement with prejudgment interest, and monetary penalties. In addition, it is seeking to bar Jesenik, Oliver, and Gillis from serving as officers for any other public company. 

The attorneys of Eccleston Law LLC represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

Tags: Eccleston, Eccleston Law, Eccleston Law LLC, James Eccleston, SEC, Aequitas Capital Management, Robert Jesenik

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