Aequitas

Aequitas Ponzi Fraud Case Results in $234.6M Settlement

Published on: July 16, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Investors who lost money after investing in Aequitas Management LLC, which is accused of running a $350M Ponzi scam, have arrived at a $234M settlement in their fraud case against EisnerAmp LLP, Deloitte & Touche LLP, TD Ameritrade, Duff & Phelps, Sidley Austin LLP, Integrity Bank and Trust of Colorado, and Tonkon Torp. The defendants are accused of playing a part in the plaintiff’s losses because of their purported involvement in the sale of Aequitas securities.

More than 1,500 investors collectively invested over $350M in Aequitas securities while thinking that they were backing trade receivables in healthcare, education, transportation, and other areas. This investor fraud case, Ciuffitelli et al v. Deloitte & Touche LLP et al, was brought as a proposed class action and filed over three years ago by claimants in Oregon and California.

Based on a complaint brought also in 2016 by the US Securities and Exchange Commission (SEC), Aequitas is accused of misleading investors about the extent their money became involved in for-profit education company Corinthian Colleges, which filed for bankruptcy in 2015. The regulator accused Aequitas of becoming a Ponzi scam after Corinthian failed, with the company continuing to sell securities for the purposes of paying back earlier investors and to support its executives’ expensive lifestyles.

Investment Scam: Ex-MRI International CEO Convicted in $1.5B Ponzi Scam, Receiver Says Aequitas Capital Management Was Involved in $617M Fraud, and Texas-Based AriseBank CEO Is Accused in $4M Cryptocurrency Fraud

Published on: December 12, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Former MRI International Head is Found Guilty in $1.5B Ponzi Scam

Edwin Fujinaga, the ex-CEO of medical billings collections company MRI International, has been convicted of multiple counts of wire fraud, mail fraud, and money laundering. He is scheduled to be sentenced earlier this year.

According to the release issued by the US Attorney’s Office for the District of Nevada, Fujinaga and two other MRI executives were indicted in 2013 and were accused of fraudulently soliciting investments from over 10,000 residents in Japan, who wired their money to the US into bank accounts that he controlled. Fujinaga told investors that their funds would go toward buying medical claims only.

Judge Rules That Aequitas Investors’ Securities Fraud Lawsuit Against TD Ameritrade and Others May Proceed

Published on: July 8, 2017 | by Shepherd Smith Edwards & Kantas, LLP

In Oregon, a district court judge has refused to dismiss a proposed class action lawsuit accusing TD Ameritrade (AMTD), Integrity Bank & Trust, Deloitte & Touche LLP, Eisner Amper LP, and law firms Tonkon Torp and Sidley Austin of playing a part in the alleged securities fraud committed by Aequitas Management LLC, which is now defunct.

Over 1500 investors entrusted over $350M to Aequitas. They each invested amounts ranging from about $60K to over $1M in Aequitas funds, including the Aequitas Income Opportunity Fund II LLC that they now claim was a Ponzi scam.

Last year, in its civil securities case, the US Securities and Exchange Commission accused the Oregon-based investment group and three of its executives of concealing the firm’s financial woes while still raising millions of dollars. Investors thought they were backing investments involving transportation, education, and healthcare when their funds were allegedly being used to save Aequitas. Meantime, newer investors’ funds were also used to pay earlier investors in a Ponzi-like scam.
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SEC Files Fraud Charges Against Aequitas Management Over Ponzi Scam

Published on: March 10, 2016 | by Shepherd Smith Edwards & Kantas, LLP

The Securities and Exchange Commission says that Aequitas Management LLC and four affiliates allegedly bilked over 1,500 investors. One of the affiliates, Aequitas Capital Management, has been in the headlines recently in the wake of news that the investment firm was letting go of almost all of its employees because of financial problems.

According to the regulator, the Oregon-based investment group and three of its executives tried to hide their financial woes while raising over $350M from investors. Meantime, investors were allegedly fooled into believing that they were putting their money in transportation, education, and health-care related investments when really their funds were going toward trying to save the firm. Earlier investors were purportedly paid with the money of newer investors, which is a trademark of a Ponzi scam.

The SEC’s complaint contends that CEO Robert Jesenik and EVP Brian Oliver knew about Aequitas financial problems but kept soliciting investors so they could continue bringing in money to cover the firm’s expenses, including redemptions and interest payments to earlier investors, and try to keep the business afloat. Ex-COO and CFO N. Scott Gillis is accused of hiding the fact that the firm was insolvent. He purportedly knew that Oliver and Jesenik were still soliciting investors.

Meantime, Aequitas’s top executives continued to make “lucrative” salaries as they brought more investors into a “losing venture.” They traveled in private jets and paid for golf outings and dinners for potential investors. They also persuaded prior investors to bring in more funds.

Aequitas Lays Off More Employees in the Wake of Faulty Subprime Bets

Published on: February 12, 2016 | by Shepherd Smith Edwards & Kantas, LLP

In the second round of layoffs, Aequitas Capital Management announced that it is letting of even more workers in the wake of financial problems. A week after disclosing that it would lay off about a third of its workers, the investment firm told employees that almost everyone else would have to go. Workers were given 60 days notice. A spokesperson for Aequitas explained that the Oregon-based investment firm was modifying its strategy and changing its business model.

The firm which manages investments for rich individual investors appears to be having serious cash flow issues. This is a definite about-face for a company that once held $500 million in assets under management. Not only was it a challenge for Aequitas to make payroll during the first month of this year, but also the firm angered investor clients last year when it told them that it couldn’t meet scheduled payouts because of liquidity issues. Company officials claimed that the delays were unexpected because of “incoming investments” and “timing mismatches involving cash flow.”

Over the last few years, the investment firm has become more focused on subprime credit to purchase consumer healthcare debt, student debt, and motorcycle loans. In total, investors have bet close to $600M on Aequitas’ subprime lending strategies.

Aequitas was also connected Corinthian Colleges Inc., which has been accused by federal regulators of using deceptive and predatory tactics to get students to enroll and borrow money for tuition. According to The Oregonian, a firm affiliate purchased over $500M in Corinthian student loans at a reduced rate and charged the college chains millions of dollars in fees for its assistance. The company had set up the Campus Student Funding LLC to purchase the debt from Corinthian.