SEC Indicts Oregon Firm of Running a Ponzi Scheme
Oregon, March 10, 2016 – The U.S. Securities and Exchange Commission has recently sued an Oregon company and its top executives on accusations that they allegedly operated a $350 million Ponzi scheme. In its complaint, filed on March 10, 2016 in the U.S. District Court for the District of Oregon, the SEC said that Aequitas group allegedly operated a scheme to defraud and misuse client assets in connection with investments offered through the Aequitas group of companies, founded by Robert J. Jesenik and based in Lake Oswego, Oregon.
The SEC’s complaint alleged that CEO Robert Jesenik and Executive Vice President Brian Oliver Jesenik raised funds primarily by issuing promissory notes through Aequitas Commercial Finance, LLC (ACF), an entity wholly owned by Aequitas Holdings, LLC. The ACF notes were typically offered on one to four year terms with interest rates generally between 5 and 15 percent. According to its financial records, ACF appeared to have been profitable from 2011 to 2013. However, in May 2014, Corinthian Colleges, a for-profit education provider, whose receivables made up 75% of the receivables owned by ACF, defaulted on its obligations to ACF, intensifying the significant cash flow shortages of ACF and its parent, Aequitas Holdings. By July 2014, Jesenik and Oliver knew that redemptions and interest payments to prior investors were being paid primarily from new investor money in a Ponzi-like manner, and that very little investor money was being used to purchase trade receivables.
The lawsuit allegedly seeks civil penalties against the executives and the relinquishment of illegal gains. The SEC named three top executives as defendants, Jesenik, Oliver, and former Chief Financial Officer and Chief Operating Officer, N. Scott Gillis, alleging that they used the vast majority of investor funds to repay prior investors and to pay the operating expenses of the Aequitas enterprise.
The case is filed in the Portland Division of the U.S. District Court for the District of Oregon and assigned to Honorable Judge Paul Papak. The case no. is 3:16-cv-00438-PK.
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