Aequitas Business Partner Corinthian Colleges Ordered to Pay Over $1 Billion for Misleading Students

A California judge ordered the now-defunct Corinthian Colleges Inc. (“Corinthian”), business partner of Aequitas Capital Management (“Aequitas”), to pay $1 billion over claims the company misled students and investors on March 25, 2016.

This comes two weeks after the Securities and Exchange Commission (“SEC”) charged Oregon-based Aequitas with operating a “Ponzi-like” scheme.  Silver Law Group is currently investigating claims against Aequitas and Registered Investment Advisor (“RIAs”) firms with respect to possible violations of federal securities.

Corinthian filed for bankruptcy on May 2015 and is unlikely to pay the $1 billion in civil penalties and damages to affected students, but the ruling has paved the way for the U.S. Department of Education to declare that loans issued to attend Corinthian can be forgiven.

Corinthian has long been accused of using predatory and deceptive tactics to entice students into enrolling and borrowing for tuition.  Aequitas and its subsidiaries would purchase these loans at half price and charge the college chain millions in fees for its help, all the while perpetuating Corinthian’s deceptive practices by helping keep Corinthian colleges open.  Aequitas would then package these immorally obtained loans into securities and sell them to investors.

The writing was written all over the wall in many places and in bright, bold letters.  The underlying assets of Aequitas securities were originated by the troubled Corinthian, which at some point would be stopped from charging excessive prices to students who would then receive worthless pieces of paper.  Aequitas securities were not sustainable and never had a bright outlook.

The numerous RIAs who marketed and sold Aequitas securities to investors are required by law to investigate the investments they sell in order to form a reasonable basis for recommending a particular product.  These RIAs had the financial statements and other research reports at their fingertips in order to fulfill the requirement of investigating and conducting due diligence in order to form a reasonable basis for recommending Aequitas securities.

Unfortunately, many RIAs did not.  In fact, some of the RIA firms that sold Aequitas securities had strong ties to Aequitas and affiliated entities.  CliftonLarsonAllen Wealth Advisors’ CEO, Tony Hallada, made multiple cameos in Aequitas promotional videos and the firm owns 49 percent Innovator Management with Aequitas and its CEO, Robert Jesenik, owning the remaining 51 percent.

Silver Law Group has helped numerous investors recover lost money due to RIAs and broker-dealers unsuitable and negligent recommendations.

If you invested in Aequitas Management LLC; Aequitas Commercial Finance, LLC; Aequitas Holdings, LLC; Aequitas Capital Management, Inc.; and/or Aequitas Investment Management, LLC, you may be entitled to recover some or all of your investment losses.  Please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or toll free at (800) 975-4345 to speak to an attorney to find out how we may be able to help you recover some of your investment losses.