The assets of Compass Academy, Jay Brooks and his other businesses have been frozen indefinitely by a Richland County judge after the Aiken businessman didn't sign consent orders putting these assets in the hands of a court-appointed receiver.
On Monday, Circuit Court Judge Casey Manning signed an order that makes a temporary restraining order remain in effect indefinitely, pending a full hearing on the Attorney General's assertations that the funds are not safe if left in Brooks' hands.
“Plaintiff has shown there is a danger of irreparable harm to the public interest and the investing markets of the State of South Carolina if Defendants Jonathan (Jay) W. Brooks, J. Brooks Financial, Inc, Brooks Real Estate Holdings, LLC and Compass Academy Llc access to the Funds is not restrained,” Judge Manning wrote.
On Monday, all parties agreed on the restraining order remaining in place.
This is the second extension of the order that was originally imposed March 5, the day when the civil complaint against Brooks for securities fraud was made public. The order freezes the use of Security Federal Bank accounts belonging to Brooks, his businesses and Compass Academy.
The freezing of accounts was an extraordinary step for the Securities Division of the Attorney General's office to take, said Tracy Meyers with the Attorney General's office. Meyers previously said that in 20 years of securities law, she has only frozen accounts four times.
Meyers is seeking to have Brooks' assets, including Compass Academy, placed under a court-appointed receiver, who will determine how best to repay the investors. To that end, leins have been placed against Brooks' home and the Compass Academy property. Meyers also is seeking to permanently bar Brooks from selling securities in the state of South Carolina.
The four consent orders presented to Jay and Tracey Brooks last week were for them both to agree to these requests. In deciding not to sign, the case moves forward.
The case also has been referred to the attorney general's criminal division for further investigation.
When asked about the criminal investigation, Mark Powell, director of communications at the Attorney General's office, said that his office cannot comment on a pending review.
“All we are concerned with is the selling of securities,” Meyers said last week.
Last year, Jay Brooks was terminated from High Street Securities Inc. as a result of an internal investigation, according to the Financial Industry Regulatory Authority. Brooks, a broker, was alleged to have prematurely liquidated annuities of clients who were seniors. The action cost “significant surrender penalties” to the clients, according to the authority.
Meyers said Friday that if the consent orders were not signed and the case moved toward a trial, Tracey Brooks would be added to a revised complaint. At the moment, only Jay Brooks is accused by the Attorney General's office of violating securities regulations, including selling unregistered securities, committing fraud and making false and misleading statements. The complaint seeks to “disgorge all ill-gotten gains” and impose civil penalties of $10,000 per violation of the state securities act on Brooks and also on his businesses.
In addition to the attorney general's claims, the Brookses are facing two civil lawsuits in Aiken County's Court of Common Pleas, both also related to Compass Academy.
Stan Jackson, lawyer for Jay and Tracey Brooks, failed to respond to repeated emails sent Monday regarding this story.