A hearing has been requested to consider an order to sell the Compass Academy property on Toolebeck Road for a “buy-it-now” price of $1.5 million, which receiver Sherri Lydon has determined is the most efficient means of selling the property.
Attorney Wesley Few on Aug. 7 filed the motion on behalf of Lydon, requesting a hearing before Judge Jeanette McBride.
“The motion really is a procedural matter,” Few said. “Quite frankly, the (South Carolina) Attorney General instituted that action and seized the assets, and appointed Sherri as a receiver because there was such an interest.”
Lydon, an attorney based in Columbia, was selected as the receiver of all frozen assets belonging to Compass Academy, Jonathan “Jay” Brooks, Tracy Brooks and related companies.
Brooks, his wife Tracy and his companies, J. Brooks Financial and Brooks Real Estate Holdings, have previously been accused by the Attorney General's office of illegally selling unregistered securities to fund the establishment of Compass Academy.
The Brookses have also been accused by the Securities Division of the Attorney General's office of using those funds to buy groceries, their home, vacations and jewelry, rather than investing them.
Brooks also faces multiple civil lawsuits.
According to Few's motion, once Brooks and his attorney Stan Jackson knew Brooks was under investigation by the S.C. Attorney General's Office, and, after a lis pendens was filed on the real property in March, Brooks devised a mortgage.
Brooks said he was advised by Jackson to record the mortgage to support a defense against “securities” act violations that the monies provided were a loan, therefore, not a security, according to the motion.
“On information and belief, none of the alleged mortgagees (i.e., presumably investors with J. Brooks or J. Brooks Financial) even knew this mortgage was recorded or expected it to be recorded, nor are there any notes or obligations for which the mortgage could stand as collateral,” the motion states.
There have been discussions of investors forming a Limited Liability Corporation to purchase the school. At the moment, there has not been any action to make the move of purchasing the institute.
“Actually, some of the people who invested or dealt with Jay and his wife, they want to see that school option because they bought into that notion because who doesn't want to see a good quality school go up,” Few said.
According to Few, insurance on the building is expensive.
“Receivers pay all that stuff,” he said. “There's not much money left; a situation like this is a mess. For these situations, a motion like this would be typical. We see ourselves as looking out for investors who are not parties to the lawsuit.”
The felony charge of securities fraud carries a punishment possibly up to 10 years in prison and/or a fine of up to $500,000.
Maayan Schechter is the City beat reporter with Aiken Standard and started in July. She has a degree in mass communications-journalism from the University of North Carolina Asheville.