Jonathan “Jay” Brooks is going to have his day in court.
On April 2, Jay Brooks will appear before a Circuit Court Judge in Columbia to argue that his assets, those of Compass Academy and those of his companies, J. Brooks Financial and Brooks Real Estate Holdings, should not remain frozen while he fights allegations of securities fraud.
The hearing will determine if the temporary restraining order currently placed against the assets will become an injunction. If that happens, the assets can only be released if the case ends in favor of the Brookses.
Jay Brooks is alleged, by the Securities Division of the Attorney General’s office, to have illegally sold securities – as investments in Compass Academy – that were unregistered with the State and that he was not registered as a broker-dealer with the company that sold them. He is also accused by the Attorney General’s Office of converting invested funds for his own use.
Brooks’ attorney has denied any wrongdoing on the part of his client. Tracey Brooks, wife of Jay, posted statements last week on the Compass Academy website reportedly from her husband that described the case and the reporting of the case as “malicious lies.” The statement since has been removed from the site.
The Brookses likely would both be facing allegations if the case goes to a trial, according to Tracy Meyers of the Attorney General’s office. Meyers said that an amended complaint would likely add Tracey Brooks.
The hearing on Tuesday will be in front of Judge Clifton Newman of Kingstree, S.C.
Jay Brooks and the Securities Division Timeline – Securities Division Complaint:
(All information below is taken from documents filed in the Attorney General’s case or the Financial Industry Regulatory Authority)
Jan. 4 – J. Brooks Financial registered as investment adviser. Brooks registers as an investment adviser representative of J. Brooks Financial.
Dec. 2 – Brooks becomes a registered agent of High Street Securities, Inc.
July 17 – Securities Division begins audit of Brooks’ Laurens Street offices.
Oct. 24 – Audit report released with 11 findings. These include Brooks charging clients fees or commissions without disclosing it to them; stating in brochures that no commission will be charged, yet commissions were charged; and many other discrepancies between statements made by Brooks and his records.
Nov. 5 – High Street Equity Fund investigates Brooks for activities relating to fixed annuities of four senior citizens which cost them over $100,000 in early termination fees. Additional, similar requests were also discovered to be pending.
Nov. 9 – The Securities Division receives information that money from Individual Retirement Accounts (IRAs) of Brooks’ clients is being invested in “a private school in Aiken, South Carolina with which Brooks was closely associated.”
Nov. 9 – Investigation into the alleged transactions begins by requesting information from Compass Academy and any J. Brooks Financial clients who had invested in Compass.
Nov. 9 – Brooks identifies three clients as investors in Brooks Real Estate Holdings. Brooks provides copies of cashier’s checks that he claimed had been provided to refund investors.
Nov. 21 – Brooks is terminated by High Street. Termination was for annuities activities and claims that Brooks was referring clients to an undisclosed real estate development company.
Dec. 31 – Deadline for Brooks to pay fee for audit and update paperwork and brochures to correct discrepancies.
Jan. 4 – After receiving no information from Brooks, the Securities Division places a call to Brooks. No answer.
Jan. 7 – Securities Division subpoena Brooks’ bank statements and him to appear to provide sworn testimony.
Jan. 15 – Brooks had not returned call and no response to audit report. Under oath, Brooks says he had submitted his response and the fees he owed before the Dec. 31 deadline.
Jan. 15 – Securities Division receives a check for the audit fees dated Jan 15.
Jan. 16 – Securities Division requests more documents, receipts and records.
Jan. 18 – Brooks indicates on registration documents that he is registered with an unaffiliated broker-dealer firm and with High Street. No such registration was documented.
Jan. 18 – Brooks submits incomplete audit response.
Jan. 29 – Brooks responds to audit request saying he does not have invoices from the company hired to construct Compass Academy.
Jan. 29 – Determined by Securities Division that 61 payments in excess of $5,000 were made from the Compass account.
Feb. 20 – Brooks had not provided any invoices or receipts for any of the more than $5 million of payments from the Compass accounts of $5,000 or more.
Feb. 25 – Notice of Intent to Seek Revocation of Investment Adviser, Investment Adviser Representative and Broker-Dealer Agent Registrations is filed by the Attorney General’s office.
March 5 – Securities Division files Complaint against Brooks and places a temporary restraining order freezing his assets and those of Compass Academy, J. Brooks Financial and Brooks Real Estate Holdings.
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