The Compass Academy founders currently denying investment fraud charges may sign “the death sentence of securities” this weekend and have their assets placed in the hands of a court-appointed administrator to pay back investors.
Tracy and Jonathan Brooks, the public engines behind the independent school currently being built east of Aiken, are considering consent orders from the Attorney General’s office that would place another individual in charge of their personal assets, those of Compass Academy and the couple’s other companies.
Four consent orders were sent home from the Securities Commission with the Brooks’ attorney Stan Jackson on Thursday.
If signed, two orders would bar the Brookses from ever selling securities in South Carolina again – what is called “the death sentence of securities.” The other two would agree to hand control of assets over to a court-appointed receiver. A receiver, in financial terms, would be someone chosen to control and distribute funds to investors.
“Everything under the temporary restraining order stays frozen and goes to the benefit of the investors,” Tracey Myers of the Securities Division of the Attorney General’s office, said.
The Brookses attorney, Jackson, said late Friday via e-mail, “We are still considering our options.”
Earlier this month, a temporary restraining order was placed on the accounts of Compass Academy – which is a $5.5 million investment – J. Brooks Financial, Brooks Real Estate Holdings and the broker license of Jonathan Brooks. Since then, liens have been placed on the property on which Compass is being built. This week, a lien also was placed on the Brooks’ personal home. The freezing of assets is extremely rare, Myers said — In 20 years of securities law, this type of action has been taken only four times.
The receiver would make sure all funds invested in the allegedly illegal Compass Academy securities were returned to the investors. If, as alleged, Jay Brooks did misappropriate funds, his own assets would go toward repaying those monies.
Both defendants have aggressively denied the charges throughout and posted statements calling the case and reports of it “lies” and part of a conspiracy against the Compass Academy project.
However, Myers said Friday that emails sent to Compass Academy supporters included blatant, misleading information and added that Jay Brooks’ and Jackson’s claims that the couple were cooperating with the Attorney General’s office were not true.
The couple has until Monday to sign the consent orders or the case will go forward with a public hearing to decide if the currently frozen assets and suspended broker license should remain that way.
If rejected, a hearing would be held in the Richland County Court of Common Pleas in Columbia.
“If they don’t sign, we’re prepared to move forward with a hearing,” Myers said. “If they ask for a hearing, they get one in two days.”
The hearing would simply apply to the frozen assets and suspended license. Whatever the outcome of that hearing, a trial likely would be many months away.
If the case moves forward, Myers said an amended complaint likely would be filed to include Tracy Brooks, as she is not named in the original charge.