SEC Charges Oregon-based Aequitas Management LLC and Its Executives with Operating $350 Million Investment Fraud

The U.S. Securities and Exchange Commission (SEC) has charged Oregon-based Aequitas Management, LLC (“Aequitas”), and several of its executives with operating a $350 million investment scheme that defrauded investors in a last-ditch effort to raise funds to save Aequitas from a complete financial collapse. Aequitas, along with CEO Robert J. Jesenik, Executive Vice President Brian A. Oliver, and former CFO and COO N. Scott Gillis, were charged with multiple violations of federal securities laws in a Complaint filed in Oregon federal court.  The SEC is seeking injunctive relief, disgorgement of ill-gotten gains, prejudgment interest, and civil monetary penalties as well as bars prohibiting Jesenik, Oliver, and Gillis from serving as officers or directors of any public company.

According to the SEC’s Complaint, Aequitas and four of its corporate affiliates (Aequitas Holdings LLC, Aequitas Commercial Finance LLC, Aequitas Capital Management Inc., and Aequitas Investment Management LLC) defrauded more than 1,500 investors nationwide between January 2014 and January 2016 into believing they were making health care, education, and transportation-related investments. To the contrary, the Complaint alleges that invested funds were instead being used for other purposes, including to pay lucrative salaries and extravagant perks for Jesenik, Oliver, and Gillis; and to stave off the businesses’ impending financial collapse.  In mid-2014, Corinthian Colleges, a for-profit education provider, defaulted on its recourse obligations to Aequitas, which significantly increased Aequitas’ already dire cash flow problems.  Rather than disclose to its investors the rapidly deteriorating state of its finances, Aequitas purportedly hid that vital information and used investor funds to keep its enterprise afloat — even using some new investor funds to pay earlier investors in a classic Ponzi scheme fashion.  By November 2015, Aequitas’ operations reached a point of nearly total collapse; and in February 2016, the firm dismissed two-thirds of its employees and hired a Chief Restructuring Officer.

“We alleged 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 unknowing investors into a losing venture,” said Jina L. Choi, Director of the SEC’s San Francisco Regional Office.

According to the SEC complaint and other news sources, Registered Investment Advisory firms (“RIAs”) owned by Aequitas and other independent RIAs sold Aequitas notes. Investors may have potential claims against their financial advisor for failing to conduct reasonable due diligence, overconcentration or fraud in the sale of the notes.

Silver Law Group has successfully recovered multi-million dollar awards for its clients in a wide variety of investment fraud cases throughout the country and abroad. If you have questions about your legal rights, or have been the victim of fraud, contact Scott L. Silver to discuss your legal matter in a free consultation.  CONTACT Silver Law Group: Telephone: (800) 975-4345 (Toll Free); Web site: www.silverlaw.com; E-mail: ssilver@silverlaw.com.