The court-appointed receiver of all of the frozen assets of Compass Academy has concluded it is not feasible to get the school up and running for the 2013-2014 school year and has been given approval to market and list the buildings and property of the school.
Some of the school's investors, however, have plans to try and purchase the building and “continue its vision.”
Columbia-based attorney Sherri Lydon, a former federal and state prosecutor, was selected by Circuit Court Judge Clarence Newman as the receiver of all frozen assets belonging to Compass Academy, Jonathan “Jay” Brooks, Tracy Brooks and related companies. At the top of Lydon's list was to see if the school had clear funds to be able to open for the coming school year.
“Conducting an investigation into the feasibility of completing the construction of Compass Academy and beginning classes for the 2013-2014 school year is to be a high priority of the receiver,” Newman wrote.
Lydon declined an interview for this story; however, on her law firm's website, she writes that Newman scheduled a hearing last Monday on her recommendation “to market and list the building and property” of Compass Academy.
According to Stan Jackson, an attorney for Compass Academy, it was the estimated cost to finish construction and dwindling enrollment numbers that led to Lydon's conclusion.
Jackson said Lydon's report was filed “under seal” and that he has yet to see a copy of it that he requested.
“The investors were allowed to be heard,” Jackson said of Monday's hearing. “They wanted time in which to put together a group and maybe form another company in which to continue the school and continue its vision, thereby protect their investments. ... The response of the receiver was, before we can sell the school, we'd have to have another hearing to have any offer approved by the court.”
Aiken resident Jerry Rowe was the first investor to speak at Monday's hearing. He said he was not surprised by Lydon's findings.
“We agreed on that at the beginning of May – that there was no way the money was going to be raised to finish the school, have it open and get an enrollment for May of this year,” he told the Aiken Standard. “There's just no way that could take place, so we were definitely in agreement.”
Rowe said enrollment hinges on the school's completion.
“The enrollment has gone by the wayside steadily since March and will continue to zero before August,” he said. “But that doesn't mean it can't come back next year.”
Rowe said he and the other investors asked the judge for time to assemble a group now that Lydon's report is in.
“We were asking for some time for us to form an LLC (limited liability corporation) to get a recognizable group and be able to come back with the plan of purchasing the school and opening the school for August 2014,” he said.
That group is now in the works.
“He said we have some time to get ourselves together and make a formidable bid of rate building,” Rowe said. “The building will not be sold until he says it's sold.”
Rowe said the group is “very confident” about assembling and continuing the vision of Compass.
“Some of us are firm believers that the area wants more choices for education, and there's some parents who would love to be using it, and it certainly is worth the work to give it the best try we could possibly give it,” he said.
Jay Brooks, his wife Tracy, and Jay Brooks' companies, J. Brooks Financial and Brooks Real Estate Holdings, are accused of illegally selling unregistered securities to fund the establishment of Compass Academy. They also are accused by the Securities Division of the Attorney General's Office of using those funds to buy groceries, their house, vacations and jewelry rather than investing them.
Rowe said that as soon as the building is sold, regardless of who purchases it, “the Brookses will be out of it.”
Jackson said if the building is sold, it is “very unlikely” the investors would receive any money from the sale. “It's pretty much a single-purpose building, and any change in that purpose would require a substantial investment in retrofit,” he said.
Jackson also said he made a motion during Monday's hearing to be relieved as counsel for Compass Academy. The judge indicated he would execute an order relieving Jackson if there was no objection filed by the receiver after a 10-day period.
“I do not want to incur additional costs at the cost of Compass Academy and its future ... when those needed funds would be going to the completion of the school and the education of the students who want to attend,” he said.
Teddy Kulmala covers the crime and courts beat for the Aiken Standard and has been with the newspaper since August 2012. He is a native of Williston and majored in communication studies at Clemson University.