Compass Academy founder denies claims; $5.5M invested

  • Posted: Saturday, March 16, 2013 12:41 a.m.
    UPDATED: Saturday, March 16, 2013 8:47 a.m.

In the days since the investigation and lawsuit against Compass Academy founders Jonathan “Jay” and Tracy Brooks was made public, much has changed.

Jay Brooks issued a statement on the school's website and via social media, denying all allegations made by the Attorney General's Office, which include fraud, lying to investors and the Securities Commission and the misappropriation of funds invested in the Compass Academy project.

On Wednesday, just a few hours before Jay Brooks' statement was issued, 33 people were added to the mortgaged property – bought by Brooks in May 2012 for $300,000 – on which the school is being built.

Those people and their investments – which total $5.544 million worth of Compass Academy securities – are now part of the public record.

In all, $3.5 million of the funds came from Aiken and Graniteville investors. One small investment came from Augusta, with the rest of the funds provided by four Texas-based individuals who invested between $271,171 and $683,091.

That piece of property also has someone else with a claim on it – Attorney General Alan Wilson.

On behalf of the Securities Division of the AG's Office, attorney Tracy A. Meyers filed a “lis pendens.” Meaning “a suit pending,” the filing gives notice that there is a claim on the property, and the filing informs the general public that there is a claim against it and the title is not free and clear.

This claim comes from the complaint filed against Jay Brooks, Compass Academy and his other companies, which holds substantial penalties of $10,000 per act, if he is found guilty.

But Jay Brooks says he does not believe he is guilty of anything. Tracy Brooks, who handles all matters relating to Compass Academy, posted a statement on the schools' website late Thursday evening.

The statement attacked the Aiken Standard's reporting of the lawsuit as “ripe with lies” and “horribly malicious.” Also in the statement, Jay Brooks offered denials of certain aspects of the AG's complaint and the Aiken Standard's story.

The denials were laid out numerically.

“1. I am not facing criminal charges.”

This is true, no criminal charges have been filed against Jay Brooks. However, his case is under “criminal review” by the AG's Office.

“2. My securities licenses have not been revoked.”

True, Brooks' licenses are not revoked, but he cannot use them as the case against him has caused them to be suspended until further review.

“3. I did not lie to the Attorney General's office.”

The Securities Division said it stands by its pleadings, which make multiple, explicit references to Jay Brooks lying. “Defendant Brooks lied, among other things, about the number of his and (J. Brooks Financial's) clients invested in BREH and Compass; the circumstances of one or more of his investments; representations made in connection with one or more investments; and the securities underlying one or more of the investor's investment,” the complaint states.

“4. There have been no ill gotten gains.”

The Attorney General's complaint states the Brooks “on one or more occasions, misappropriated investor funds for personal use.”

“5. I committed no fraud or deception.”

“Defendants have, on one or more occasion, in connection with the offer or sale of a security ... engaged in an act, practice or course of business that operates or would operate as a fraud,” the complaint accuses.

Jay Brooks' statement goes on to say that “we” have provided all receipts and bank statements, as well as a list of lenders to the AG's office.

The AG's office has received all of the documents most-recently requested from Jay Brooks and his financial firms. However, his wife Tracy Brooks, who runs school operations, has an appointment Monday regarding missing receipts and the reasons that they are missing.

On Friday, a judge granted a 10-day extension for records to be collected and examined. The Securities Division is working with the couple to try and get the matter resolved before they have to report back to Circuit Court Judge Casey Manning. If no resolution is reached, a public court hearing on the matter will be scheduled.

Repeated requests for comment from Jay Brooks and his attorney Stan Jackson were not returned Friday.

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