An Ohio-based investment firm that is named as a defendant in a lawsuit, along with Compass Academy co-founder Jay Brooks, filed an answer to the plaintiff’s complaint.
The answer was filed with the Aiken County Clerk of Court’s office on July 2 by attorneys representing Equity Trust Company.
The complaint names Brooks, his wife, Tracy, and their companies, as well as High Street Securities of Arkansas and Sterling Trust, a division of Equity Trust, as defendants.
Brooks is accused by two Aiken County residents and two residents of Denton County, Texas, of convincing them, as their financial adviser, to invest their retirement savings with him; however, Brooks allegedly invested the money in a private school, Compass Academy, which he planned to start with his wife.
The amounts Brooks allegedly swindled out of the plaintiffs range from $75,000 to $358,000, according to court documents. The plaintiffs are seeking actual damages, punitive damages, court costs and attorney fees.
The defense denied a majority of the allegations, but for many of the allegations, attorneys for Equity Trust responded, “Defendant lacks knowledge sufficient to form a belief as to the truth or falsity of the allegations ...”
One paragraph in the complaint states that Equity Trust engaged in South Carolina-based transactions with Brooks as the designated account representative for the plaintiffs. The complaint alleges that Equity Trust “aided and abetted the ongoing fraud” by using its IRA assets to purchase unregistered, illiquid shares of Brooks Real Estate Holdings.
According to the answer, Equity Trust was a “passive custodian” of the plaintiffs’ retirement accounts. The firm denied the allegation that it “aided and abetted” the alleged fraud and demanded “strict proof thereof.”
The defense argued in the answer that the case should be dismissed because the plaintiffs “fail to state a claim upon which relief can be granted.” They also argue that Aiken County is not the proper venue because the plaintiffs entered into contracts with Equity Trust that “provided exclusive venue in Ohio for disputes between these parties.” Additionally, the defense contends that the plaintiffs’ claims “fail” because the matter and the parties’ relationship are governed by Ohio state law.
The document states that claims against Equity Trust are barred because “the damages, if any, that Plaintiffs have alleged were caused by superseding, intervening acts or omissions for which Defendant is not liable or by the acts or omissions of persons or entities for whom or which Defendant is not responsible.”
The defense wrote that Equity Trust’s “actions or omissions were not the proximate cause of any injuries alleged and/or sustained by Plaintiffs,” and that the firm has dealt with the plaintiffs “reasonably, in good faith and in compliance with all laws and contractual terms.”
The document concludes by asking the court to dismiss the case and award Equity Trust costs and expenses that arise in defending the action.
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.