Escolar Documentos
Profissional Documentos
Cultura Documentos
16CV25920
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COMPLAINT
(Violations of Oregon Securities Laws Under
ORS 59; Violations of Oregon Elder Abuse
Statute Under ORS 124)
CLAIMS NOT SUBJECT TO
MANDATORY ARBITRATION
JURY TRIAL REQUESTED
Plaintiffs,
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v.
DELOITTE & TOUCHE, LLP, a Delaware
limited liability partnership;
EISNERAMPER, LLP, a New York
limited liability partnership; TONKON
TORP, LLP, an Oregon limited liability
partnership; SIDLEY AUSTIN, LLP, an
Illinois limited liability partnership;
DUFF & PHELPS, LLC, a Delaware
limited liability company; and
TD AMERITRADE, INC., a New York
corporation,
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Defendants.
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Page 1 70116678.2
Complaint
MILLER NASH GRAHAM & DUNN LLP
AT T OR NE YS AT LAW
T : ( 5 0 3 ) 2 2 4 -5 8 5 8 | F : ( 5 0 3 ) 2 2 4 -0 1 5 5
3 4 0 0 U. S. B AN CO RP T OW E R
1 1 1 S.W . FI FT H AVEN UE
P ORT L A N D , O RE GO N 9 7 2 0 4
I.
1.
Defendants Deloitte & Touche, LLP, EisnerAmper, LLP, Tonkon Torp, LLP,
Sidley Austin, LLP, and Duff & Phelps, LLC (collectively, the "Professional Defendants"),
provided audit, legal, and valuation services in furtherance of Aequitas Management, LLC's
purchase Aequitas securities, provided assurances to investors about Aequitas, and recommended
Aequitas to investors. Because of the fraud, plaintiffs lost collectively over $44,400,000.00 in
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2.
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financial statements, which were prepared with the assistance and contributions of the
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Professional Defendants, Aequitas perpetrated an elaborate fraud on its investors that included
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Aequitas misled investors that their money was being invested in credit
receivables when most of the money was being used to pay off other
investors, to cover operating expenses, and to provide Aequitas executives
the luxuries of a private jet, lavish parties, plush office renovations, and
substantial compensation. Specifically, on information and belief,
Aequitas Commercial Finance, LLC ("ACF"), invested only 25 percent of
investor money in income-generating assets during 2014 and only
8 percent during 2015.
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Page 2 70116678.2
Complaint
MILLER NASH GRAHAM & DUNN LLP
AT T OR NE YS AT LAW
T : ( 5 0 3 ) 2 2 4 -5 8 5 8 | F : ( 5 0 3 ) 2 2 4 -0 1 5 5
3 4 0 0 U. S. B AN CO RP T OW E R
1 1 1 S.W . FI FT H AVEN UE
P ORT L A N D , O RE GO N 9 7 2 0 4
Aequitas falsely represented that its securities were liquid assets, when in
reality the ability of Aequitas to liquidate prior investments was dependent
on getting new investor proceeds.
Aequitas mislead investors into believing that its securities were stable and
secure.
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Aequitas concealed that it lacked the ability to cover over $220 million in
redemptions that came due in 2015. Instead, Aequitas continued to sell its
securities through 2013, 2014, 2015, and early 2016 based on
representations of strength, diversification, and growth.
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Page 3 70116678.2
Complaint
MILLER NASH GRAHAM & DUNN LLP
AT T OR NE YS AT LAW
T : ( 5 0 3 ) 2 2 4 -5 8 5 8 | F : ( 5 0 3 ) 2 2 4 -0 1 5 5
3 4 0 0 U. S. B AN CO RP T OW E R
1 1 1 S.W . FI FT H AVEN UE
P ORT L A N D , O RE GO N 9 7 2 0 4
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3.
Aequitas sold its securities through general solicitation and as part of a broad,
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continuous, and integrated offering that included online marketing, presentations to large groups,
pressured arrangements with investment advisors, and one-on-one solicitations to accredited and
unaccredited investors, several of whom shared no preexisting relationship with Aequitas. The
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4.
Through their advice, audits, and assistance with Aequitas's offering materials,
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defendants were instrumental in Aequitas's improper solicitation and fraudulent sale of the
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Investors believed that defendants were reputable firms. Aequitas identified and
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highlighted the role of the Professional Defendants in its promotional materials and financial
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statements as Aequitas's auditors, legal counsel, and advisors. References to defendants gave the
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Aequitas investment scheme credibility and the appearance of quality. This credibility and
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appearance of quality, stability, and security induced investors to entrust their money to
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Aequitas.
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6.
By way of example, EisnerAmper and Deloitte enabled Aequitas to sell its
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Aequitas's true financial condition, the actual value of collateral purportedly backing
Page 4 70116678.2
Complaint
MILLER NASH GRAHAM & DUNN LLP
AT T OR NE YS AT LAW
T : ( 5 0 3 ) 2 2 4 -5 8 5 8 | F : ( 5 0 3 ) 2 2 4 -0 1 5 5
3 4 0 0 U. S. B AN CO RP T OW E R
1 1 1 S.W . FI FT H AVEN UE
P ORT L A N D , O RE GO N 9 7 2 0 4
investments, and Aequitas's concentration in Corinthian. Duff & Phelps similarly added
credibility to Aequitas's deception by providing asset valuations that were used in Aequitas's
offering materials, while Tonkon and Sidley delivered the legal support necessary to orchestrate
and perpetuate Aequitas's scheme through, among other things, the improper solicitation and sale
of its securities, the preparation of misleading offering materials, and intracompany formation
improper and fraudulent sale of securities by recommending Aequitas to investors and by serving
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Through this action, plaintiffs seek to recover damages and attorney fees under
the Oregon Securities Laws and Oregon's Elder Abuse statute.
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II.
A.
PARTIES
Plaintiffs
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Plaintiffs are a group of investors who all purchased various securities from the
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B.
Defendants
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services in the state of Oregon that are the subject of this dispute.
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10.
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accounting services in the state of Oregon that are the subject of this dispute.
Page 5 70116678.2
Complaint
MILLER NASH GRAHAM & DUNN LLP
AT T OR NE YS AT LAW
T : ( 5 0 3 ) 2 2 4 -5 8 5 8 | F : ( 5 0 3 ) 2 2 4 -0 1 5 5
3 4 0 0 U. S. B AN CO RP T OW E R
1 1 1 S.W . FI FT H AVEN UE
P ORT L A N D , O RE GO N 9 7 2 0 4
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Defendant Tonkon Torp, LLP, is an Oregon limited liability partnership. On
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information and belief, Tonkon performed legal services in the state of Oregon that are the
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Defendant Sidley Austin, LLP, is an Illinois limited liability partnership. On
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information and belief, Sidley performed legal services in the state of Oregon that are the subject
of this dispute.
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Defendant Duff & Phelps, LLC, is a Delaware limited liability company
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registered to do business in Oregon. On information and belief, Duff & Phelps performed
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accounting and valuation services in the state of Oregon that are the subject of this dispute.
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This court has personal jurisdiction over defendants because, as described below:
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(a) defendants do business and engage in substantial activities in this state; and (b) the injuries to
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plaintiffs arise out of acts and omissions that occurred within the state of Oregon.
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This court has subject matter jurisdiction over defendants and this action under
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ORS 14.030 because this court has personal jurisdiction over all defendants.
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Page 6 70116678.2
Complaint
MILLER NASH GRAHAM & DUNN LLP
AT T OR NE YS AT LAW
T : ( 5 0 3 ) 2 2 4 -5 8 5 8 | F : ( 5 0 3 ) 2 2 4 -0 1 5 5
3 4 0 0 U. S. B AN CO RP T OW E R
1 1 1 S.W . FI FT H AVEN UE
P ORT L A N D , O RE GO N 9 7 2 0 4
17.
Multnomah County is a proper venue for the claims for relief under ORS 14.080
because defendants Tonkon, Deloitte, and TD Ameritrade conducted regular, sustained business
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A.
FACTUAL BACKGROUND
Aequitas's Operation
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Founded in 1993, Aequitas at all relevant times operated out of its central Lake
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Oswego, Oregon, offices under the leadership of its chief executive officer and president, Robert
Jesenik.
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Aequitas purportedly generated revenue through the sale and management of
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various investment products, including promissory notes and participation interests in Aequitas
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equity funds.
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Aequitas sold investors on an investment strategy that consisted primarily of
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and consumer credit. At one point, Aequitas focused on buying healthcare receivables from
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hospitals around the country. Aequitas emphasized the purported safety of its investments based,
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in part, on recourse agreements that required the hospitals to buy back delinquent receivables.
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Beginning in or around 2011, Aequitas expanded its healthcare receivables
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strategy to student loan receivables, investing heavily in student loan receivables from
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Corinthian, a for-profit education company. Over the years that followed, Aequitas acquired a
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substantial position in Corinthian student loan receivables. Many of these loans were subject to
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Page 7 70116678.2
Complaint
MILLER NASH GRAHAM & DUNN LLP
AT T OR NE YS AT LAW
T : ( 5 0 3 ) 2 2 4 -5 8 5 8 | F : ( 5 0 3 ) 2 2 4 -0 1 5 5
3 4 0 0 U. S. B AN CO RP T OW E R
1 1 1 S.W . FI FT H AVEN UE
P ORT L A N D , O RE GO N 9 7 2 0 4
22.
Aequitas touted that it operated its "business prudently," assuring investors that
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"[w]hen in doubt," Aequitas would "share morenot less with clients." In addition to applying
"faith-based values throughout" its organization, Aequitas "use[d] innovation and imagination to
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In reality, Aequitas misled investors and used investors' money for its executives'
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personal gain and vanity, including private jets, extravagant parties and trips, and new offices.
B.
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Through the design and engineering of Jesenik, other Aequitas employees, and
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outside legal counsel, including Tonkon and Sidley, the Aequitas operation expanded into a web
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ownership. Aequitas used its control over this corporate infrastructure to orchestrate
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intercompany transactions between various Aequitas entities, including loans and in-kind
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distributions. A depiction of the "Aequitas Entity Structure" filed by the receiver in SEC v.
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25.
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Oregon limited liability company at the top of Aequitas's elaborate structure. On information
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and belief, Aequitas Management held an 84 percent ownership interest in and exercised control
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Also formed in 2007, Aequitas Holdings is an Oregon limited liability company
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that directly or indirectly owned all the Aequitas entities that issued securities to investors.
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Aequitas Holdings was the sole owner of Aequitas Capital Management, Inc. ("ACM"), which is
Page 8 70116678.2
Complaint
MILLER NASH GRAHAM & DUNN LLP
AT T OR NE YS AT LAW
T : ( 5 0 3 ) 2 2 4 -5 8 5 8 | F : ( 5 0 3 ) 2 2 4 -0 1 5 5
3 4 0 0 U. S. B AN CO RP T OW E R
1 1 1 S.W . FI FT H AVEN UE
P ORT L A N D , O RE GO N 9 7 2 0 4
an Oregon corporation that was formed in 1993. ACM served as the manager of several
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ACM was the sole owner of Aequitas Investment Management, LLC ("AIM"), an
Oregon limited liability company that was formed in 2006. AIM served as an investment advisor
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Aequitas sold promissory notes and ownership interests through the companies
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listed below. The promissory notes and ownership interests issued by Aequitas through these
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("ACF"), was formed in 2003 as an Oregon limited liability company. ACF was operated as a
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commercial finance company, purportedly targeting "inefficient market conditions" that were
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ACF raised capital through its "Private Notes Program" by issuing promissory
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notes to investors (the "ACF Notes"), which were marketed and sold through private placement
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memoranda ("PPMs"), promotional materials, and other forms of solicitation. The ACF Notes
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paid interest rates ranging from 5 to 15 percent. Investors had the option of receiving quarterly
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interest payments or reinvesting interest at the same rate and receiving the balance when the
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ACF Notes matured. The ACF Notes generally matured from one to five years after issuance.
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Most, if not all, of the ACF Notes included terms that allowed the investor to extend the maturity
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Page 9 70116678.2
Complaint
MILLER NASH GRAHAM & DUNN LLP
AT T OR NE YS AT LAW
T : ( 5 0 3 ) 2 2 4 -5 8 5 8 | F : ( 5 0 3 ) 2 2 4 -0 1 5 5
3 4 0 0 U. S. B AN CO RP T OW E R
1 1 1 S.W . FI FT H AVEN UE
P ORT L A N D , O RE GO N 9 7 2 0 4
31.
The ACF Notes were purportedly secured by the "entire balance sheet of ACF,"
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meaning that investors held a security interest in all of ACF's right, title, and interest in corporate
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As part of its solicitation, Aequitas provided potential investors with PPMs that
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purportedly summarized the general terms of the ACF Notes, Aequitas's corporate structure and
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ACF's PPM dated November 30, 2012, included the following statements, among
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others:
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"Coming out of the credit crisis, Aequitas expanded its focus to include corporate
and institutional borrowers. The Company has completed several transactions
structured to limit credit risk to Secured Note holders and the Company by
purchasing/financing its assets at a discount with recourse to large corporate
balance sheets, leading to significant asset coverage."
"The Company uses proceeds from the issuance of Secured Notes to engage in
various specialty financing transactions, and to provide senior and junior debt and
equity funding for the benefit of its affiliates and its related investment programs.
The activities include but are not limited to:
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Page 10 - Complaint
70116678.2
34.
ACF's PPM dated November 30, 2012, also included a "Financial Information
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Summary" that reflected a purported increase in net revenue from $4,792,200 in 2010 to
in 2010 to $136,639,900 in 2011. The PPM identified EisnerAmper as ACF's auditor and
Tonkon as its legal counsel. The PPM also identified the financial information with the headings
"Audited," "INCOME STATEMENT," and "BALANCE SHEET" and included financial data
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Aequitas issued a supplemental PPM for ACF dated March 1, 2013, that attached
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and restated the same information contained in ACF's PPM dated November 30, 2012, including
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the statements above. The PPM identified EisnerAmper as ACF's auditor and Tonkon as its
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legal counsel. The PPM also identified the financial information with the headings "Audited,"
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"INCOME STATEMENT," and "BALANCE SHEET" and included financial data that was
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Aequitas issued another PPM for ACF dated November 30, 2013, which included
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ACF's PPM dated November 30, 2013, also included a "Financial Information
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Summary" that reflected a purported increase in "total comprehensive income" from $2,498,000
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$208,863,000 in 2012 to $306,523,000 in 2013. The PPM identified Deloitte as ACF's auditor
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and Tonkon as its legal counsel. The PPM also identified the financial information with the
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financial data derived from EisnerAmper's combined 2011 and 2012 ACF audit. For example,
Page 11 - Complaint
70116678.2
the PPM represented that Aequitas's "Audited 2011" "Gain/(Loss) on Investments," was
"$3,659," while EisnerAmper's combined 2011 and 2012 ACF audit reflected a "Gain on sale of
provided to potential investors in the ACF PPM was derived from Deloitte's 2013 ACF audit.
For example, the PPM represented that Aequitas's "Audited 2013" "Loans to Affiliates," in
thousands of dollars, was "$120,539," while the balance sheet from Deloitte's combined 2013
and 2014 ACF audit reflected that "Notes receivable, affiliates" in 2013 was "$120,539,015."
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material for ACF dated August 28, 2014, that included the following statements under the
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"Financings are privately negotiated and are secured by significant equity and/or
underlying assets pledged as collateral underneath them. The pool of assets is
often comprised of self-liquidating assets.
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"A diversified portfolio of private credit instruments can provide substantial yield
pickup over public market fixed income securities while still providing strong
collateral and downside protection.
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39.
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auditors," the promotional material included the following purported financial information for
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ACF's total assets had a book value of $482,190,000 and were secured by
collateral valued at $646,976,000.
ACF's net assets had a book value of $379,726,000 and were secured by
collateral valued at $544,512,000.
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Page 12 - Complaint
70116678.2
40.
The student loan receivables were purportedly one of ACF's largest assets. ACF
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purchased the student loan receivables directly, as well as through its subsidiary ASFG, LLC
(later renamed "Campus Student Funding, LLC" ("CSF")). The bulk of the student loan
receivables held by ACF, ASFG, and CSF were subject to a recourse agreement with Corinthian.
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At least as early as December 2011, ACF promotional materials sometimes
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included a map of the United States that depicted the nationwide distribution of Corinthian's
campuses. The map made it appear that Aequitas's investments in student loan receivables were
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generated from schools across the country. The map made no mention that all, or nearly all, of
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Aequitas's student loan receivables were purchased from Corinthian and that the "school
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locations" on the map were all, or nearly all, for-profit colleges owned by Corinthian. In fact, the
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ACF's purported assets also included debt obligations (through loans or advances)
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owed by various Aequitas entities. For example, ACF funneled money to its parent company,
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Aequitas Holdings, which in turn would provide advances to other Aequitas entities. ACF's
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loans to Aequitas Holdings were purportedly secured by all the assets of Aequitas Holdings.
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In addition, ACF's purported assets included ownership interests that it held in
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various Aequitas entities, including Aequitas Capital Opportunities Fund ("ACOF"); Aequitas
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Financial Holdings, LLC; MotoLease Financial, LLC; and Unigo Student Funding, LLC.
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Page 13 - Complaint
70116678.2
44.
ACM served as the manager of ACF. As compensation for its services, ACF paid
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ACM an annual fee of 2 percent of ACF's assets, in addition to 20 percent of ACF's annual net
income.
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The ACF Notes were not registered as securities. ACF was also not registered as
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an investment company under the U.S. Investment Company Act of 1940 (the "Investment
Company Act").
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TD Ameritrade encouraged investors to purchase ACF Notes, provided
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Aequitas formed Aequitas Income Opportunity Fund, LP ("AIOF"), in 2009.
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AIOF raised capital by selling five-year promissory notes to investors (the "AIOF
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Notes"). The AIOF Notes included a provision allowing the noteholder to redeem the note after
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two years. The AIOF Notes were marketed and sold through promotional materials and other
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forms of solicitation. The AIOF Notes carried a fixed 10 percent annual interest rate plus the
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possibility of an enhanced yield. The AIOF Notes were purportedly secured by all assets of
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AIOF and characterized as "senior secured." Some, if not all, of the AIOF Notes included terms
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financing the purchase of student loan and healthcare receivables and purchased or participated
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in financing other senior secured loans and consumer and commercial receivables.
Page 14 - Complaint
70116678.2
50.
With respect to AIOF's investment in student loans, AIOF's promotional materials
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stated, "[A]ll delinquent student loans are recoursed back to the school, creating a situation
where the risk of non-performance shifts from the student to the balance sheet of the school. The
estimated recourse amount, when viewed with the cash balance sheet results in an effective
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AIOF's promotional materials also characterized its investment in student loan
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sometimes included a map of the United States that depicted the nationwide distribution of
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Corinthian's campuses. The map made it appear that Aequitas's investments in student loan
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receivables were generated from schools across the country. The map made no mention that all,
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or nearly all, of Aequitas's student loan receivables were purchased from Corinthian and that the
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"school locations" on the map were all, or nearly all, for-profit colleges owned by Corinthian. In
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AIOF invested in Aequitas Corporate Lending, LLC ("ACL"), which invested in
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subsidiaries of ACF and ACOF, including EDPlus Holdings, LLC. In addition, AIOF lent
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money to ACF. ACF's debt obligations to AIOF were purportedly secured by ACF's student
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loan receivables and the cash flows generated by MotoLease. ACF was also AIOF's sole
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member.
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On information and belief, the AIOF Notes were not registered as securities, and
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Page 15 - Complaint
70116678.2
54.
AIM managed AIOF. AIM received a fee for its services as manager equal to
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In late 2013, Aequitas formed Aequitas Capital Opportunities Fund, LP
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("ACOF"). ACOF raised capital by selling ownership interests. ACOF, in turn, used investor
capital to purchase equity interests in certain companies that had previously been held by other
Aequitas entities. ACOF's portfolio companies have included but not been limited to the
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following:
(a)
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student loan receivables from Corinthian and at various times did business as Unigo;
(c)
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frequency trading, profiting from transaction fees paid by clients and rebates paid by securities
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exchanges;
(d)
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prime and subprime consumers to acquire recreational vehicles, such as ATVs and motorcycles;
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and
(e)
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ACOF's purported profits and value derived primarily from its ownership interests
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Page 16 - Complaint
70116678.2
57.
Aequitas marketed and sold ACOF ownership interests (the "ACOF Interests")
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through PPMs, promotional materials, and other forms of solicitation. The ACOF Interests
offered a "preferred return" of 8 percent annually. The ACOF partnership expired after seven
years, and limited partners, including private investors, could not withdraw from the partnership
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PPMs that summarized the general terms of the investment opportunity, Aequitas's corporate
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ACOF issued a PPM dated February 2014 that informed investors that "capital
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committed to [ACOF] will be allocated to both existing and new investments, with a significant
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With respect to EDPlus, ACOF's PPM provided the following statements:
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"Relative to the finance function of the company, EDPlus partners with Campus
Student Funding, LLC[], which finances purchases of new and seasoned private
student loans on both full-recourse and non-recourse bases.
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"Today, all of the recourse loans that are purchased are cross-collateralized with
all other loans purchased from the respective educational institution. If an
educational institution is unable to honor its recourse obligation, [Campus Student
Funding] would be entitled to all of the cash flows from the loans until all of the
remaining individual loans were fully repaid. By structuring the purchase of the
loans at a significant discount that provides substantial over-collateralization, CSF
is able to mitigate the risk of an educational institution not meeting its obligation
to repurchase severely delinquent loans."
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All, or nearly all, of the student loan receivables that EDPlus was involved with
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Page 17 - Complaint
70116678.2
62.
ACOF's February 2014 PPM included valuations for its various portfolio
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performance metrics purporting to support the valuation of EDPlus reflected a purported increase
November 30, 2013. These figures were based on the "face value of outstanding receivables."
63.
ACOF's February 2014 PPM advertised that Duff & Phelps had been engaged to
"provide an estimated range of fair values" for some of ACOF's portfolio companies, including
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EDPlus. Duff & Phelps's valuation ranges were provided to investors in the PPM.
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ACOF's February 2014 PPM and other promotional materials provided to
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investors also touted Deloitte as its auditor and Sidley as the legal advisor to ACOF's general
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partner (Aequitas Capital Opportunities GP, LLC) and its investment advisor (AIM).
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65.
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ACOF's February 2015 PPM supplement explained that the December 31, 2013,
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valuations in the PPM were "audited by an independent auditor." This independent auditor was
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Deloitte.
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66.
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In addition, the February 2015 PPM supplement explained that "Duff and Phelps
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provided an estimated range of fair values for" CPYT, Unigo, and ETC, and that "the valuations
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listed [in the PPM] are within the estimated ranges provided by Duff and Phelps."
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67.
The ACOF Interests were not registered as securities. ACOF was not registered
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Page 18 - Complaint
70116678.2
68.
AIM served as the investment advisor for ACOF. AIM received a fee for its
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services as the investment advisor equal to 2 percent annually of all capital commitments from
limited partners.
4.
69.
Aequitas formed Aequitas Income Opportunity Fund II, LLC ("AIOF-II"), in
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2014.
70.
AIOF-II raised capital by issuing notes to investors (the "AIOF-II Notes"), which
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were marketed and sold through PPMs, promotional materials, and other forms of solicitation.
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The AIOF-II Notes paid 10 percent annual interest on 12-month notes. Investors could receive
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quarterly interest payments or reinvest interest at the same rate and receive the balance at
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maturity. The AIOF-II Notes were for a 12-month minimum, but no note could have a term
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extending beyond September 30, 2024. Most, if not all, of the AIOF-II Notes included terms that
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The AIOF-II Notes were purportedly secured by a lien on all assets of AIOF-II.
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The AIOF-II Notes were characterized as "senior secured" with first priority security interest in
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all assets of the fund. The AIOF-II Notes were subordinate to certain "senior lenders."
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72.
According to AIOF-II's PPM dated October 1, 2014, AIOF-II was formed to
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"purchase or finance the purchases of receivables, loans and leases from various credit strategy
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programs, including but not limited to, hospitals, educational institutions and other businesses."
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Aequitas's strategy included AIOF-II's lending money to ACF and its subsidiaries, which would
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Page 19 - Complaint
70116678.2
73.
AIOF-II's PPM dated October 1, 2014, included the following statement relating
2
3
"All of the recourse loans that are purchased are cross-collateralized with all other
loans purchased from the respective school. If a school is unable to honor its
recourse obligation, Aequitas would be entitled to all of the cash flows from the
loans until all of the remaining individual loans were fully repaid. By structuring
the purchase of the loans at a significant discount which provides substantial overcollateralization, Aequitas is able to mitigate the risk of a school not meeting its
obligation to repurchase severely delinquent loans."
74.
5
6
All, or nearly all, of the student loan receivables were from Corinthian.
9
10
75.
AIOF-II's PPM identified Deloitte as its auditor and Tonkon as its legal counsel.
11
12
76.
The AIOF-II Notes were not registered as securities. AIOF-II was not registered
13
14
15
77.
AIM managed AIOF-II. AIM received a fee for its services as manager equal to
16
17
18
19
78.
20
21
79.
APCF raised capital by issuing notes to investors (the "APCF Notes"), which
22
23
were marketed and sold through PPMs, promotional materials, and other forms of solicitation.
24
The APCF Notes carried either a fixed interest rate of 12 percent or a fixed interest rate of
25
8 percent, with an enhanced yield of up to 7 percent based on the annual profits of the fund.
26
Investors had the option of receiving quarterly interest or reinvesting interest at the same rate and
Page 20 - Complaint
70116678.2
receiving the balance when the APCF Notes matured. The APCF Notes were for a minimum
three-year term. Most, if not all, of the APCF Notes included terms that allowed the investor to
80.
The APCF Notes were purportedly secured by all assets of APCF. The APCF
Notes supposedly held a "priority security interest" with priority status over certain collateral.
81.
APCF's PPM dated July 31, 2015, marketed its investment strategy, which
10
included the acquisition, purchase, or financing of "credit strategy receivables," including student
11
loan and healthcare receivables. APCF invested in ACOF and its subsidiaries, including EDPlus,
12
13
82.
14
15
opportunity available only to Aequitas's "best clients" that provided more security and stability
16
17
83.
18
APCF's PPM identified Deloitte as its auditor and Tonkon as its legal counsel.
19
84.
20
21
The APCF Notes were not registered as securities. APCF was not registered
under the Investment Company Act.
22
85.
23
24
AIM managed APCF. AIM received a fee for its services as manager equal to
2 percent annually of all outstanding notes issued by APCF.
25
26
Page 21 - Complaint
70116678.2
6.
Portfolio Companies
86.
In addition to the Aequitas entities identified above, ACF and ACOF owned in
part or in whole a variety of companies that supposedly performed services related to the
processing of healthcare or student loan receivables, as well as unrelated finance services (the
"Portfolio Companies").
87.
8
9
10
Aequitas raised capital by issuing equity interests in the Portfolio Companies and
by causing the Portfolio Companies to issue promissory notes (the "Portfolio Securities").
Examples include:
11
ETC Founders Fund, LLC ("ETC Fund"), which was partially owned by
ACF, sold ownership interests directly to investors.
12
13
14
15
88.
16
17
securities, and the Portfolio Companies were not registered as investment companies under the
18
19
D.
20
89.
21
22
23
90.
24
25
From 2012 through 2015, Aequitas solicited and sold its products to thousands of
investors through a broad and multifaceted marketing campaign that included the following:
26
Page 22 - Complaint
70116678.2
1.
Online Marketing
91.
3
4
Aequitas touted that "[w]e have created a number of new and innovative
investment opportunities that can add real value to your portfolio."
6
7
8
9
10
11
12
13
14
Through its website, Aequitas engaged in the general solicitation of unaccredited investors.
15
2.
16
92.
17
18
19
20
Partners ("ACP") and Aequitas Financial Services Network ("AFSN")through which Aequitas
21
marketed its products in presentations, seminars, and other communications. On information and
22
belief, Aequitas further formed, owned, paid, and/or lent money to several investment advisors
23
and conditioned its financial support on the sale of a certain number of Aequitas products.
24
Through these activities, Aequitas engaged in general solicitation of accredited and unaccredited
25
26
Page 23 - Complaint
70116678.2
3.
93.
Aequitas pitched its investment opportunities at meetings and events that were
attended by large groups of potential investors. For example, Aequitas presented to a group of
approximately 50 to 100 people in Sun Valley, Idaho during a seminar put on by the
motivational speaker and author Tony Robbins. On information and belief, Aequitas executives
also made the following presentations to the Palm Beach Investment Research Group:
On May 29, 2014, Aequitas presented regarding its private note program,
which it described as a "high yielding secured debt offering that comprises
a diversified portfolio of private credit investments providing substantial
yield pickup over public market fixed income securities while still
providing strong collateral and downside protection."
On April 30, 2015, Aequitas pitched its "niche credit strategies which
deliver high levels of stable, non-correlated income by way of consistent
quarterly interest payments. Key strategies in healthcare, education, and
financial services feature consumer level financing with contractual risk
mitigation agreements with financially strong institutions."
9
10
11
12
13
14
15
16
17
18
19
Through these presentations, Aequitas engaged in general solicitation of investors with whom it
20
21
4.
22
94.
23
24
flying them around on Aequitas's private jet. For example, during at least 2011, 2013, 2014, and
25
2015, Aequitas arranged for travel, golf, dining, and lodging at an exclusive resort in Palm
26
Springs. As part of the event, the attendees were pitched Aequitas investment opportunities.
Page 24 - Complaint
70116678.2
5.
95.
Aequitas marketed the sale of its securities through presentations and direct
solicitations conducted by its executives. For example, Aequitas executives Bob Jesenik and
Brian Oliver engaged in the regular solicitation and sale of Aequitas securities through numerous
phone calls, presentations, meetings, golf outings, and dinners with investors during 2013, 2014,
and 2015. Neither Jesenik nor Oliver was licensed as a seller or broker of such securities.
96.
9
10
On information and belief, AIOF and ACF securities were marketed and sold to
unaccredited investors, without providing PPMs or subscription agreements.
11
97.
12
On information and belief, Aequitas also solicited and sold its securities to
13
investors with whom it had no substantive preexisting relationship before the solicitation and
14
sale.
15
98.
16
Through the activities listed above and others, Aequitas engaged in a broad,
17
continuous, and integrated offering of its products, as part of the same plan of financing and for
18
the same purpose of selling sub-prime investments in under-represented credit markets, including
19
20
E.
21
99.
22
23
24
100.
25
At the end of 2010, Aequitas reported that it owned $2.7 million in healthcare
26
receivables and no student loan receivables. By the end of 2011, these reported amounts had
Page 25 - Complaint
70116678.2
increased to $40.2 million in student loan receivables, compared with $19.6 million in healthcare
receivables. One year later, Aequitas's outstanding student loan receivables had exploded to
reportedly $124.8 million, compared with $27.9 million in healthcare receivables, a ratio of
nearly 4.5 to 1. And at the end of 2013, Aequitas reported that it was carrying $153.5 million in
Corinthian student loan receivables compared with only $12.4 million in healthcare receivables.
Heading into 2014, Aequitas was 12 times more concentrated in student loan receivables than
healthcare receivables.
101.
Aequitas acquired most of the student loan receivables through ASFG, LLC, and
10
CSF. Corinthian agreed to pay Aequitas a "discount" fee on each loan, and the parties' recourse
11
agreement required Corinthian to buy back loans that were delinquent for 90 days.
12
102.
13
14
15
16
17
18
19
20
21
22
23
24
25
26
Page 26 - Complaint
70116678.2
Corinthian lost over $120 million between June 30, 2011, and June 30,
2013.
2
3
4
5
6
7
103.
Meanwhile, Aequitas was experiencing its own significant developments,
8
9
10
Aequitas was defending two lawsuits filed by its partner in the student
loan financing business, American Student Financial Group, Inc.
American Student Financial Group, Inc., claimed that Aequitas had
breached agreements and engaged in other wrongdoing in connection with
an agreement to finance Corinthian student loans. (Tonkon represented
Aequitas in this litigation.)
17
18
11
12
13
14
15
16
19
104.
20
21
22
losses associated with the program recourse [student loan receivables agreement with Aequitas],
23
inclusive of the discount paid to ASFG, are estimated to be approximately 50% of the amount
24
funded." In other words, Corinthian forecasted that it would have to spend tens of millions of
25
dollars buying back loans from Aequitas that were made to delinquent borrowers.
26
Page 27 - Complaint
70116678.2
105.
On June 10, 2014, Corinthian defaulted on its obligations to ACF and Aequitas.
2
3
106.
On July 3, 2014, the U.S. Department of Education issued a press release
4
5
announcing its imposition of certain conditions on Corinthian while "Corinthian works to either
sell or close its campuses across the country in the next six months."
107.
On September 16, 2014, the U.S. Consumer Financial Protection Bureau sued
8
9
Corinthian for misrepresenting job placement data and violating debt collection laws.
10
108.
Aequitas purchased only $8.2 million in student loan receivables during all of
11
12
2014, a 92 percent decline from the prior year. Despite this dramatic drop in new student loan
13
14
throughout 2014 and 2015, touting its diversification and "substantial over-collateralization" of
15
16
109.
On May 4, 2015, Corinthian filed for bankruptcy.
17
18
F.
19
20
21
On information and belief, by 2014 at the latest, Aequitas was using most of the
22
investor proceeds it received to pay other investors and to cover operating expenses rather than
23
using money from investors to purchase credit receivables. On information and belief, ACF
24
invested only 25 percent of investor money in income-generating assets during 2014 and only
25
26
Page 28 - Complaint
70116678.2
111.
In 2015, Aequitas had over $220 million in debt to investors coming due. Rather
2
3
than adjusting its valuations and acting to inform and protect its investors, Aequitas persuaded
investors to extend or roll over their investments. Aequitas misled investors about the health of
Aequitas's business, convincing investors to extend the maturity date of their notes in exchange
for additional interest payments. When Aequitas began missing interest payments in 2015, it
provided false explanations and vague commitments to delay or make up the missed interest
payments.
112.
In 2015, Aequitas created APCF and persuaded investors to roll their existing
10
11
Aequitas securities into it. APCF was marketed as an exclusive opportunity for high-end
12
investors. In reality, APCF was a ploy to avoid making payments to investors by enticing them
13
into rolling their money into a new investment with a later maturity date.
14
113.
Throughout 2014, 2015, and early 2016, Aequitas continued to sell securities by
15
16
touting its investment strategies in credit markets, including Corinthian's student loan
17
receivables.
18
G.
19
114.
By at least as early as June 2015, the SEC was investigating Aequitas.
20
21
115.
In February 2016, Aequitas sent a letter to investors, including plaintiffs, stating
22
23
that it was unable to pay interest or redemptions on the outstanding Aequitas securities.
24
25
26
Page 29 - Complaint
70116678.2
116.
On March 10, 2016, the SEC filed a lawsuit, entitled Securities and Exchange
2
3
Commission v. Aequitas Management, LLC, et al., USDC Oregon Case No. 3:16-cv-00438-PK,
117.
On March 16, 2016, the U.S. District Court for the District of Oregon placed
6
7
Aequitas in receivership.
8
9
118.
H.
10
11
issuers, lenders, managers, advisors, and holding companies, Aequitas concealed and
12
exacerbated its financial deterioration by, among other misconduct, the following:
1.
13
14
119.
15
16
Oliver, and Andrew MacRitchie, controlled and set the value of the receivables. At least by
17
2013, Aequitas used inflated valuations of these purported assets to manipulate Aequitas's true
18
financial condition, thereby falsely presenting a far more successful business than actually
19
existed.
20
120.
For example, Aequitas refused to adjust its asset valuations to account for
21
22
Corinthian's freefall. Aequitas's 2011 and 2012 financial statements, audited by EisnerAmper,
23
stated that Aequitas would not suspend revenue recognition on delinquent student receivables
24
subject to recourse agreements because Aequitas was "reasonably assured" that it would be able
25
to collect on the delinquent receivables through recourse, despite Corinthian's financial struggles.
26
Page 30 - Complaint
70116678.2
121.
methodology with Deloitte's knowledge and approval, even after Corinthian defaulted on its
122.
Aequitas reported in its financial statements that its right to retain cash collections
6
7
owed by student borrowers to Corinthian would cover Aequitas's investment and future fees
associated with the student loan receivables. On information and belief, the students who
Aequitas claimed it would collect from were high-risk borrowers that had already defaulted.
10
123.
Deloitte audited the ACF financial statements in which Aequitas made these
11
12
claims.
13
124.
On information and belief, Aequitas also committed its credit receivables as
14
15
collateral to multiple obligations, which had the effect of impairing and overstating the value of
16
17
125.
Valuations set by the Investment Committee, and included in Aequitas's audited
18
19
financial statements, PPMs, and promotional materials, were false and misleading.
2.
20
21
126.
22
23
the purported total value of Aequitas's nonmarketable common stock and private equity funds
24
was $15.7 million. By the next year, this value had purportedly more than doubled to
25
$31.8 million. As of December 31, 2013, Aequitas reported an asset value of $93 million, which
26
Page 31 - Complaint
70116678.2
the Investment Committee increased significantly again to $142.5 million as of December 31,
2014.
127.
Despite claiming rapid growth in the value of Aequitas's equity holdings, many, if
not all, of Aequitas's investments, including CPYT, MotoLease, and ETC, were losing money.
For example, Aequitas reported that CPYT lost $4.8 million in 2011, $14.4 million in 2012, and
128.
On information and belief, Aequitas also calculated the value of its equity
10
interests in one or more portfolio companies by improperly applying excessive multiples to the
11
company's earnings, thereby engineering valuations that were, in at least one instance, twice the
12
company's actual value. On information and belief, these inflated valuations were made during
13
the years when EisnerAmper and Deloitte were hired to conduct independent audits.
14
3.
15
129.
16
Aequitas exercised its control over the various Aequitas entities to orchestrate
17
intercompany transactions, including loans that had the effect of overstating assets. These
18
transactions enabled Aequitas to pay excessive compensation to executives and fund their lavish
19
lifestyles.
20
130.
21
For example, at the beginning of 2012, ACF reported $77.7 million in assets from
22
notes receivable issued by Aequitas's affiliate companies. By the end of 2014, that amount had
23
ballooned to $184.7 million. Aequitas caused ACF to make at least 21 intercompany loans,
24
25
Management."
26
Page 32 - Complaint
70116678.2
131.
Aequitas's largest intercompany loan was madewith no maturity dateby ACF
2
3
to Aequitas Holdings (the "Holdings Note"). Aequitas Holdings distributed the proceeds
ACOF, and other subsidiaries. On information and belief, Aequitas also used the loan proceeds
to pay for lavish perks, including private jets, office renovations, and extravagant parties.
132.
From 2011 through 2014, Aequitas Holdings siphoned increasingly more and
8
9
10
more investor money out of ACF, generating a balance due on the Holdings Note of
$120.8 million by the end of 2014.
11
133.
Aequitas Holdings' inability to cover its debt to ACF was increasingly obvious
12
13
and more severe. On information and belief, by treating and recording the Holdings Note at its
14
15
134.
On information and belief, Aequitas Holdings lost over $22 million in 2014 and
16
17
18
135.
On information and belief, along with these massive losses, the collateral backing
19
20
the Holdings Note was not keeping pace with the ballooning loan balance. At the end of
21
February 2015, Aequitas Holdings had $67 million in assets backing $127.6 million due on the
22
Holdings Note. The collateral fell to $65.3 million by June 2015, compared to a loan balance
23
that had increased to $147.4 million. By the end of October 2015, Aequitas Holdings held only
24
25
26
Page 33 - Complaint
70116678.2
136.
perilous state of ACF and Aequitas Holdings during July 2015 when it magically reduced the
value of the Holdings Note from $147 million to $65 million to comply with requirements
imposed by a lender and the Investment Company Act. On information and belief, Sidley
137.
Aequitas's entities were linked through complicated layers of intercompany fee
9
10
and service agreements that made it difficult to track the distribution of proceeds; to understand
11
how Aequitas was charging investors and compensating its various entities, individuals, and
12
partners; and to determine actual value. Examples of such arrangements are the following:
(a)
13
14
15
16
student loan receivables and healthcare receivables businesses. In 2014 alone, ACF paid CPYT
17
and EDPlus collectively over $11.5 million in management fees. The payment of these fees
18
increased the perceived value of ACOF (owner of CPYT and EDPlus), which in turn increased
19
20
21
subsidiary of CPYT, and another Aequitas entity in the healthcare receivables business.
22
CP Technologies was eventually dissolved, and the "servicing arrangement" was extended to
23
CPYT. ACF paid "one-time" fees to CPYT calculated as a percentage of the face amount of
24
receivables bought from hospitals. In both 2013 and 2014, these "one-time" fees exceeded
25
$4 million. In addition to the "servicing arrangement" and "one-time" fees, ACF paid CPYT
26
"servicing fees" each year. In both 2013 and 2014, these "servicing fees" exceeded $2 million.
Page 34 - Complaint
70116678.2
(d)
"origination fees" paid from ACF to CP Technologies, the parent company of CPYT that was
later dissolved. CP Technologies also charged ACF "servicing fees" in 2011 and 2012. These
(e)
In 2011 and 2012, ACF paid fees to Capio Partners, LLC, ("Capio").
Capio serviced healthcare receivables. In 2011, ACF paid Capio $7.2 million in "servicing" fees
and $619,000 in interest. In 2012, ACF paid Capio $4.9 million in "servicing" fees and an
9
10
138.
I.
11
12
investors through representations made in PPMs, promotional materials, and oral statements, as
13
well as through its omission of critical facts. In addition to the deception alleged above,
14
15
1.
16
139.
17
18
19
(a)
20
investors would be invested in credit receivable markets, including healthcare, student loan, and
21
consumer credit.
22
(b)
According to ACF's PPM dated November 30, 2012, ACF would use
23
"proceeds from the issuance of Secured Notes to engage in various specialty financing
24
transactions, and to provide senior and junior debt and equity funding for the benefit of its
25
26
Page 35 - Complaint
70116678.2
(c)
from the sale of [ACF] Notes are used by ACF to provide capital directly or indirectly to
(d)
other securities of growth oriented companies generally in the financial services arena."
(e)
AIOF-II's PPM dated October 2, 2014, stated that AIOF-II had been
formed to "purchase or finance the purchase of receivables, loans and leases from various credit
strategy programs, including but not limited to, hospitals, educational institutions and other
10
businesses."
11
(f)
12
Aequitas-affiliated funds (including ACOF and ACL) as part of its strategy to "acquire, purchase
13
14
education, financial technology, consumer finance and business finance markets"; "corporate
15
lending" within Aequitas; and "credit strategy receivables" that included "[e]ducation
16
receivables."
17
(g)
18
diverted millions of dollars of investor money to pay earlier investors, cover expenses, enrich
19
Aequitas executives, and fund Aequitas's extravagances, including lavish parties and a private
20
jet.
21
22
(h)
23
24
(i)
On information and belief, less than 8 percent of new investor money went
25
26
(j)
Page 36 - Complaint
70116678.2
least as early as 2012, that their investment in ACF would be used solely to buy healthcare
receivables. Aequitas instead used proceeds invested through the ACF Notes to invest across a
variety of credit markets other than healthcare, in addition to paying other investors and Aequitas
itself.
2.
140.
7
8
(a)
10
"diversified portfolio of private credit instruments," which included its investments in healthcare
11
receivables, student loan receivables, and consumer credit. Aequitas's investments through its
12
affiliates in the healthcare credit market was a core part of the investment strategy that Aequitas
13
sold to investors.
14
(b)
15
student loan receivables, compared with only $27.9 million in healthcare receivables. By the end
16
of 2013, Aequitas was purportedly holding $153.5 million in student loan receivables, compared
17
18
19
(c)
20
(d)
21
investment in student loan receivables was diversified among educational institutions. Aequitas
22
touted that its investments in student loan receivables were "risk diversified," and its PPMs and
23
24
25
26
(e)
institutions on a map of the United States, creating the impression that Aequitas purchased
Page 37 - Complaint
70116678.2
student loan receivables from educational institutions located in no fewer than 16 states across
the country. These promotional materials made no mention of Corinthian, nor did they disclose
4
5
(f)
For years, Aequitas failed to disclose that all, or nearly all, its student loan
(g)
specifically noted a "concentration risk" based on the fact that a majority of its healthcare
receivables were acquired from a small number of healthcare facilities supplying such
receivables. Aequitas's far greater concentration in student loan receivables from Corinthian
10
which was under investigation and in defaultwas not disclosed in the financial statements or
11
12
(h)
13
continued through 2012, while EisnerAmper was Aequitas's auditor. EisnerAmper, like Deloitte
14
in 2013 and 2014, did not require Aequitas to disclose a concentration risk based on Aequitas's
15
16
(i)
17
balance sheet was allocated to "corporate debt" and another 24 percent to "corporate equity." On
18
information and belief, as much as 84 percent of ACF's assets consisted of student loan
19
receivables from Corinthian and equity and debt tied to companies affiliated with Aequitas.
20
(j)
21
22
ACF's consolidated assets. On information and belief, Aequitas failed to disclose that Aequitas
23
Holdings, which was indebted to ACF for over $120 million, was also heavily invested in
24
25
26
(k)
On information and belief, Aequitas also failed to disclose that the value
of its private equity interests, including ACOF, was also heavily tied to student loan receivables.
Page 38 - Complaint
70116678.2
3.
141.
3
4
(a)
Aequitas provided "fair value" valuations of its credit receivables that, on information and belief,
were overstated and false. For example, Aequitas's valuations of its student loan receivables
from 2011 forward did not account for the negative developments surrounding Corinthian,
10
bankruptcy. These student loan receivables valuations also affected the value of EDPlus, one of
11
12
(b)
13
constituted material misrepresentations because they failed to account for the overconcentration
14
15
(c)
16
constituted material misrepresentations because they failed to account for its commitment of
17
18
(d)
19
constituted material misrepresentations because they failed to account for the severe shortfall of
20
21
22
(e)
23
(i)
24
25
26
Page 39 - Complaint
70116678.2
(ii)
(iii)
4.
142.
10
omissions relating to the risks associated with Aequitas investment products in the following
11
respects:
12
(a)
Aequitas assured investors that its "[p]rivate credit investments can offer
13
considerably higher yields [than other fixed income investments] without a commensurate
14
increase in risk."
15
(b)
16
investment in Corinthian student loan receivables was "within the expected risk profile" because
17
"the risk of default [was] mitigated by balancing the quality of the assets with institutional credit
18
19
(c)
20
offering by evaluating the historical level of risk in the asset class, the financial strength of the
21
originator and servicer as well as the quality of the systems and procedures. Aequitas evaluates
22
the level of risk of each of the factors and structures its reliance on the collateral and the
23
24
(d)
Aequitas represented that its "[f]inancings are privately negotiated and are
25
secured by significant equity and/or underlying assets pledged as collateral underneath them.
26
Page 40 - Complaint
70116678.2
1
2
(e)
(f)
that it had committed the same collateral to multiple obligations and that it lacked sufficient
6
7
(g)
(h)
deterioration, Corinthian's inability to satisfy its recourse obligations, and the resulting impact on
10
the value of Aequitas's assets, collateral, and investment performance. Material facts that should
11
have been properly and timely disclosed include but are not limited to the following:
12
(i)
13
14
(ii)
15
16
(iii)
17
18
19
(iv)
20
21
(v)
22
2014; and
23
(vi)
24
(j)
25
Companies that would affect the value of ACF and ACOF. Specifically, Aequitas failed to
26
disclose that:
Page 41 - Complaint
70116678.2
(i)
sanctioned by the SEC for providing investors with false and misleading
Advisers Act;
(ii)
(iii)
(k)
10
overlapping ownership rendered the performance and viability of each Aequitas issuer (and
11
consequently each investment) dependent on the financial health of ACF and Aequitas Holdings.
12
(l)
Aequitas failed to disclose that by 2014, the Holdings Note was severely
13
under collateralized and that Aequitas Holdings' losses and shrinking assets presented serious
14
15
(m)
During 2014 and 2015, Aequitas failed to disclose that the performance of
16
the investments it sold was threatened by over $220 million in redemptions that were coming due
17
in 2015, including the fact that Aequitas did not have enough cash to satisfy those redemptions.
18
(n)
19
and consider the need for a going concern qualification that would reveal Aequitas's financial
20
distress. On information and belief, based on the information available to it at least as early as
21
2015, the going concern issue should have been raised and disclosed. No such disclosure was
22
made to investors.
23
(o)
24
25
26
(p)
securities.
Page 42 - Complaint
70116678.2
5.
Priority of Investments
143.
3
4
(a)
Aequitas misled investors into believing that their notes had a priority
claim on Aequitas's assets. Aequitas described promissory notes as "secured," including using
the word prominently in the title of promissory notes. But buried deep within promissory notes,
Aequitas stated that this security interest was subordinate to any security interest granted by
10
incurred by Aequitas after the promissory notes were issued to investors. And the notes included
11
no limit on the obligations that Aequitas could incur after issuing them.
12
(b)
13
for multiple loans and lines of credit originated by both Aequitas-controlled entities and third-
14
party lenders.
15
144.
16
As reflected by the allegations above, Aequitas acted with a guilty state of mind
17
while marketing and selling its securities. For example, Aequitas continued to actively market
18
and sell its securities despite knowing, or acting in deliberate disregard of, the following:
19
20
21
22
23
24
25
26
Page 43 - Complaint
70116678.2
2
3
4
5
6
145.
of limitations for violations of ORS 59.115(1)(a) and (b) because (a) defendants aided Aequitas
in actively concealing violations of Oregon securities law; and (b) plaintiffs exercised due
10
11
J.
12
13
146.
14
15
valuation specialist were critical to Aequitas's solicitation and sale of securities to plaintiffs,
16
which necessarily included, among other things, the formation of the Aequitas entities and
17
18
agreements with investors, affiliates, partners, and other Aequitas entities; the design and
19
performance of audits; the preparation of audited financials, valuations, and other financial
20
information provided to investors; legal and accounting advice relating to the operation of the
21
various Aequitas entities; legal advice relating to compliance with securities laws, including
22
registration requirements; and general legal and accounting advice relating to risks and
23
24
147.
25
26
Through their assistance with these and others matters, Deloitte, Tonkon,
EisnerAmper, Sidley, and Duff & Phelps participated in and materially aided Aequitas's sales of
Page 44 - Complaint
70116678.2
securities to plaintiffs. Aequitas's ability to hold out these professionals as its auditors, legal
counsel, advisors, and business partners in the PPMs and promotional materials provided to
investors, and in communications with plaintiffs and other investors, was sufficient alone to give
Aequitas the perception of credibility and quality that induced investors to entrust their
alleged below.
1.
Deloitte
148.
10
statements, Deloitte served as the "auditor/tax advisor" for the Aequitas companies, including
11
ACF, ACOF, AIOF, AIOF-II, and APCF, from the fall of 2013 to at least mid-2015.
12
149.
13
14
"INCOME STATEMENT," and "BALANCE SHEET" that included financial data derived from
15
16
150.
17
18
Deloitte undertook an obligation to ensure that its audits and audit reports complied with
19
applicable industry standards, including requirements governing the design and performance of
20
its audits; the audit of valuations; the inclusion of notes and adequate disclosures in Aequitas's
21
financial statements; and the obligation to evaluate and consider the need for a going concern
22
qualification. Deloitte was also obligated to ensure that it was and remained independent.
23
151.
24
25
26
Page 45 - Complaint
70116678.2
audit to obtain reasonable assurance about whether Aequitas's financial statements were free
152.
In the October 10, 2013, engagement letter, under the heading, "Inclusion of D&T
Reports or References to D&T in Other Documents or Electronic Sites," Deloitte explained that
financial statements as well as other information, "thereby associating D&T with such
document," Aequitas agreed to "provide D&T with a draft of the document to read and obtain
our approval for the inclusion or incorporation by reference of any of our reports, or the
10
reference to D&T, in such document before the document is printed and distributed." Nearly
11
identical language appeared in Deloitte's engagement letter with Aequitas dated September 8,
12
2014.
13
153.
14
Deloitte had copies of Aequitas's PPMs in its audit work paper files, including
15
PPMs for ACF, ACOF, and AIOF-II. PPMs in Deloitte's files identified Deloitte as Aequitas's
16
auditor. The ACF PPM in Deloitte's files even identified financial data in the PPM as "Audited."
17
Aequitas used these and similar PPMs to solicit investors and sell its securities. Investors knew
18
that Deloitte was Aequitas's auditor because PPMs identified Deloitte as the auditor.
19
154.
20
After commencing its audit of Aequitas in the fall of 2013, Deloitte issued an
21
"Independent Auditors' Report" dated May 23, 2014, that included consolidated financial
22
statements for the following entities: ACF; AIOF; AIOF-II; Aequitas CarePayment Fund, LLC;
23
Aequitas Income Protection Fund, LLC; ACOF; Aequitas North American Finance, LLC;
24
CarePayment, LLC, and its subsidiary CP Funding I, LLC; CA Medical, LLC; Campus Student
25
Funding, LLC; CP Leverage I, LLC; CSF Leverage I, LLC; Destination Capital Equipment
26
Finance, LLC; EC Hanger LLC; Motolease Financial, LLC; and Hill Land Company, LLC.
Page 46 - Complaint
70116678.2
155.
Aequitas's audited financial statements, included as part of Deloitte's report dated
2
3
May 23, 2014, address the financial condition of the Aequitas entities; Aequitas's investment in
transactions; and the valuation of ACF's assets, including the credit receivables, ACF's loans, and
156.
Aequitas's financial statements for fiscal year 2013, audited by Deloitte, also
8
9
include a risks and uncertainties section. Under the subheading "Concentration risk," Aequitas
10
11
only 5 of the 27 healthcare facilities that sold those receivables to Aequitas. No note is made
12
13
157.
Deloitte's audit report included Deloitte's independent opinion that ACF's
14
15
consolidated financial statements "present fairly, in all material respects, the consolidated
16
financial position of [ACF] as of December 31, 2013, and the results of its operations and its
17
cash flows for the year then ended in accordance with accounting principles generally accepted
18
in the United States of America." Deloitte's audit report stated that "the audit evidence we have
19
obtained is sufficient and appropriate to provide a basis for our audit opinion."
20
158.
21
Deloitte's audit report dated May 23, 2014, also noted the following:
22
23
24
25
26
Page 47 - Complaint
70116678.2
159.
On May 29, 2015, Deloitte issued an "Independent Auditors' Report" to ACF that
included consolidated financial statements for fiscal years 2013 and 2014. The audited financial
statements included a "prior period adjustment" because Aequitas had "incorrectly calculated the
fair value of its student loan receivables." The audited financial statements also noted that
160.
Deloitte's audit report dated May 29, 2015, provided its opinion that ACF's
8
9
consolidated financial statements "present fairly, in all material respects, the financial position of
10
[ACF] as of December 31, 2014 and 2013, and the results of its operations and its cash flows for
11
the years then ended in accordance with accounting principles generally accepted in the United
12
States of America."
13
161.
14
Deloitte's audit report noted that Aequitas's management set the value of
15
41.9 percent and 55.6 percent of ACF's assets, and Deloitte took Aequitas's word for it.
16
162.
Under SEC rules, Aequitas was required to provide Deloitte's annual audited
17
18
19
163.
In addition to its audits, Deloitte assisted Aequitas with the preparation of the
20
21
financial information that was provided to investors through PPMs, promotional materials, and
22
quarterly reports. Deloitte also participated in and assisted with the valuations of ACOF's
23
portfolio companies and the performance metrics information for those companies. This
24
information was included in PPMs and promotional materials that Aequitas used to solicit
25
potential investors and sell securities. Aequitas also touted to investors that Deloitte "reviewed"
26
Page 48 - Complaint
70116678.2
the valuations. In an October 10, 2013, letter to Aequitas, Deloitte estimated that its audit of
164.
an audit associate. Also on information and belief, she had interned with Aequitas during 2013.
Ms. Jesenik brought any knowledge she had developed of Aequitas's operations with her to
Deloitte.
165.
10
concern. Deloitte was obligated to include a going concern qualification in its opinion of
11
Aequitas's financial statements if Deloitte had substantial doubt regarding Aequitas's ability to
12
13
166.
14
15
Deloitte estimated that its audit fee for 2013 would be $900,000, not including
"[e]ngagement-related expenses."
16
167.
17
18
Deloitte estimated that its audit fee for 2014 would be $1,267,000, not including
"[e]ngagement-related expenses."
19
2.
Tonkon
20
168.
21
As Aequitas advertised in its PPMs, Tonkon served as legal counsel for ACF and
22
AIOF-II at all relevant times. In addition, it served as counsel to ACM, including service as
23
defense counsel in the lawsuit filed against Aequitas by American Student Financial Group, Inc.
24
On information and belief, Tonkon provided legal services to other Aequitas entities.
25
26
Page 49 - Complaint
70116678.2
169.
borrowers, lenders, investors, private investment firms, private equity firms and venture
capitalists in public offerings, commercial loans and private placements of debt and equity
securities."
170.
On information and belief, Tonkon participated in and assisted with company
7
8
formation and governance; legal advice relating to the operation of CarePayment Founders Fund,
ACF, AIOF-II, ACM, and Aequitas Management, including legal compliance issues; and the
10
drafting and modification of PPMs, subscription agreements, promissory notes, and other
11
documents related to the sale of Aequitas securities, including the ACF Notes and the AIOF-II
12
Notes.
13
171.
On information and belief, in the course of advising Aequitas, Tonkon reviewed,
14
15
16
172.
By undertaking the professional responsibilities of legal counsel to ACF, ACM,
17
18
AIOF-II, and Aequitas Management, Tonkon had an obligation to familiarize itself with
19
Aequitas's securities offerings and sales methods along with information that Aequitas reported
20
21
173.
In or about December 2013, Tonkon hired Jessica Morgan, Aequitas's assistant
22
23
general counsel. While working at Aequitas, Morgan advised the company about investment
24
advisor and investment company compliance, governance, and regulatory matters for new funds
25
and products. Morgan brought the extensive knowledge she had developed of Aequitas's
26
Page 50 - Complaint
70116678.2
174.
In or about December 2015, Tonkon hired another assistant general counsel at
2
3
Aequitas, David Myers. Myers also brought the knowledge he had developed of Aequitas's
Sidley
175.
As Aequitas advertised in its PPMs, Sidley served as the corporate counsel for
7
8
ACM and AIM from at least 2012 to 2016. Sidley acted as the corporate counsel for ACOF
from 2014 to 2016. Sidley was also legal counsel for Aequitas Capital Opportunities GP, LLC
10
11
176.
By undertaking the professional responsibilities of legal counsel to AIM, ACM,
12
13
ACOF, and ACOGP, Sidley had an obligation to familiarize itself with Aequitas's securities
14
offerings and sales methods along with information that Aequitas reported in PPMs, offering
15
materials, and promotional materials. On information and belief, Sidley should have
16
familiarized itself with ACF and the ACF assets that Aequitas transferred to ACOF.
17
177.
On information and belief, Sidley prepared legal opinions and analysis regarding
18
19
the registration requirements of Aequitas entities and securities and compliance with the
20
Investment Company Act. Specifically, on information and belief, Sidley provided legal advice
21
to Aequitas in connection with isolating certain assets to help facilitate obtaining a line of credit
22
from Wells Fargo, and advised ACF in connection with the manipulation of the valuation of the
23
Holdings Note to satisfy regulatory requirements. These legal opinions and analysis allowed
24
Aequitas to obtain and maintain financing and lines of credit from financial institutions, enabling
25
Aequitas to continue to sell securities and conceal the matters alleged above.
26
Page 51 - Complaint
70116678.2
4.
EisnerAmper
178.
advisor" for ACF from at least March 2012 to the fall of 2013. EisnerAmper also audited AIOF
and Aequitas Income Protection Fund. Investors knew that EisnerAmper was Aequitas's auditor
179.
8
9
10
ACF's PPMs provided potential investors with financial information under the
headings "Audited," "INCOME STATEMENT," and "BALANCE SHEET" that included
financial data derived from EisnerAmper's combined 2011 and 2012 ACF audit.
11
180.
12
13
EisnerAmper undertook an obligation to ensure that its audits and audit reports complied with
14
applicable industry standards, including requirements governing the design and performance of
15
its audits; the audit of Aequitas's financial statements and valuations; and the inclusion of notes
16
and disclosures in audit reports. EisnerAmper was also obligated to ensure that it was
17
independent.
18
181.
19
EisnerAmper issued its Independent Auditors' Report for ACF dated April 30,
20
2013, that included consolidated audited financial statements for 2011 and 2012. In the report,
21
EisnerAmper provided its opinion that ACF's consolidated financial statements "present fairly, in
22
all material respects, the consolidated financial position of [ACF] as of December 31, 2012 and
23
2011 and the consolidated results of its operations, changes in member's equity and cash flows
24
for each of the years then ended in accordance with accounting principles generally accepted in
25
the United States of America." EisnerAmper further stated that "the audit evidence we have
26
obtained is sufficient and appropriate to provide a basis for our audit opinion." In its
Page 52 - Complaint
70116678.2
Independent Auditors' Report, EisnerAmper did not address the fact that substantially all of
ACF's assets were reported at "fair value." Aequitas determined the "fair value" of student loan
and healthcare receivables and other assets, and EisnerAmper took Aequitas's word for it.
182.
Aequitas's investment in credit receivables (including student loan receivables); related party
relationships and transactions; and the valuation of ACF's assets, including credit receivables,
183.
10
11
Under SEC rules, Aequitas was required to provide EisnerAmper's annual audited
financial statements of the various Aequitas funds to investors.
12
5.
13
184.
14
ACOF's February 2014 PPM advertised that Duff & Phelps had been engaged to
15
"provide an estimated range of fair values" for several of ACOF's portfolio companies, including
16
CPYT, EDPlus, and ETC Global Holdings, Inc. Duff & Phelps's valuation for each of these
17
companies was included in ACOF's PPM with language that clearly identified it as "Duff &
18
19
185.
20
Duff & Phelps's engagement and the valuation estimates it provided added
21
credibility to Aequitas's investment program and materially aided Aequitas's solicitation and sale
22
23
186.
24
25
specialist, Duff & Phelps was obligated to ensure that it complied with applicable industry
26
standards and that it obtained sufficient information to reliably support its valuation estimates.
Page 53 - Complaint
70116678.2
With respect to EDPlus, this obligation included understanding EDPlus's total assets under
management calculations, which, according to the ACOF PPM, was based primarily on the "face
value of outstanding receivables." On information and belief, these included Corinthian student
loan receivables.
K.
187.
ACF Notes, provided assurances to investors about Aequitas, and recommended Aequitas
investments to investors. Through these and other means, TD Ameritrade participated in and
10
11
188.
12
13
14
financial statements.
15
189.
16
17
Aequitas before agreeing to do business with Aequitas and before encouraging investors to
18
invest with Aequitas. TD Ameritrade assured potential Aequitas investors that because TD
19
Ameritrade had done "due diligence," the potential investors should trust TD Ameritrade's
20
21
190.
22
23
Aequitas securities by suggesting that the representative or his or her family member had
24
25
26
Page 54 - Complaint
70116678.2
191.
In addition, TD Ameritrade referred investors to registered investment advisors to
2
3
Ameritrade received a percentage of the fee that an investor paid to his or her registered
investment advisor.
192.
From at least June 2013 to November 2015, TD Ameritrade acted as custodian for
7
8
Aequitas securities. Upon information and belief, TD Ameritrade also received compensation
10
193.
TD Ameritrade provided investors with quarterly statements detailing the value of
11
12
their investment, but rarely provided any updates or additional information regarding Aequitas,
13
the business model, or the security for the investments. In other words, TD Ameritrade
14
15
16
DAMAGES
194.
17
18
investment, and interest rate, is attached as Exhibit 1 and incorporated by reference. Plaintiffs
19
reserve the right to amend and supplement this Complaint with additional plaintiffs who invested
20
with Aequitas.
VI.
21
22
23
24
195.
25
26
Page 55 - Complaint
70116678.2
196.
197.
Aequitas executives, including Robert Jesnick, were not licensed under the
Oregon Securities Laws and solicited and sold securities in violation of ORS 59.055 and
ORS 59.165.
198.
8
9
Aequitas is consequently liable under ORS 59.115(1)(a) for violating the Oregon
Securities Laws.
10
199.
11
12
Ameritrade are liable to plaintiffs pursuant to ORS 59.115(3) because they participated in or
13
14
200.
15
Under ORS 59.115(2)(a) and 59.115(3), upon tender of the securities, defendants
16
Deloitte, EisnerAmper, Sidley, Tonkon, Duff & Phelps, and TD Ameritrade are jointly and
17
severally liable for the consideration paid for the securities, plus interest from the date of
18
payment equal to the greater of 9 percent or the interest rate provided in the securities, less any
19
20
201.
21
22
Duff & Phelps, and TD Ameritrade should be required to pay plaintiffs' reasonable attorney fees.
23
24
202.
25
26
Page 56 - Complaint
70116678.2
203.
facts and (b) omitting material facts that were necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading.
204.
6
7
205.
10
Ameritrade are liable to plaintiffs pursuant to ORS 59.115(3) because they participated in or
11
12
206.
13
Under ORS 59.115(2)(a) and 59.115(3), upon tender of the securities, defendants
14
Deloitte, EisnerAmper, Sidley, Tonkon, Duff & Phelps, and TD Ameritrade are jointly and
15
severally liable for the consideration paid for the securities, plus interest from the date of
16
payment equal to the greater of 9 percent or the interest rate provided in the securities, less any
17
18
207.
19
20
Duff & Phelps, and TD Ameritrade should be required to pay plaintiffs' reasonable attorney fees.
21
22
208.
23
24
25
26
Page 57 - Complaint
70116678.2
209.
Aequitas sold securities, in violation of ORS 59.135(1) and (3) by (a) employing a
scheme to defraud investors and (b) engaging in a course of business which operated as a fraud
210.
6
7
Aequitas is liable to plaintiffs under ORS 59.115(1)(a) for violating the Oregon
Securities Law, specifically ORS 59.135(1) and (3).
211.
10
Ameritrade are liable to plaintiffs pursuant to ORS 59.115(3) because they participated in or
11
12
212.
13
Under ORS 59.115(2)(a) and 59.115(3), upon tender of the securities, defendants
14
Deloitte, EisnerAmper, Sidley, Tonkon, Duff & Phelps, and TD Ameritrade are jointly and
15
severally liable for the consideration paid for the securities, plus interest from the date of
16
payment equal to the greater of 9 percent or the interest rate provided in the securities, less any
17
18
213.
19
20
Duff & Phelps, and TD Ameritrade should be required to pay plaintiffs' reasonable attorney fees.
21
22
214.
23
24
25
26
Page 58 - Complaint
70116678.2
215.
facts and (b) omitting material facts that were necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading.
216.
6
7
217.
10
Ameritrade are liable to plaintiffs pursuant to ORS 59.115(3) because they participated in or
11
12
218.
13
Under ORS 59.115(2)(a) and 59.115(3), upon tender of the securities, defendants
14
Deloitte, EisnerAmper, Sidley, Tonkon, Duff & Phelps, and TD Ameritrade are jointly and
15
severally liable for the consideration paid for the securities, plus interest from the date of
16
payment equal to the greater of 9 percent or the interest rate provided in the securities, less any
17
18
219.
19
20
21
VII.
22
23
220.
24
25
26
Page 59 - Complaint
70116678.2
221.
Plaintiffs Paul Gulick, as trustee for the Gulick Family Trust, Lee Johnson, Paul
Sylvan, Walter Wurster, Walter Wurster, as trustee for the Walter W. Wurster Revocable Trust,
and Ronald Inouye, as trustee for the Walter W. Wurster Irrevocable Trust (collectively, the
"Elderly Plaintiffs)" were at all material times vulnerable persons as set forth in
ORS 124.100(1)(g) because each of the Elderly Plaintiffs was an elderly person as defined in
ORS 124.100(1)(b).
222.
The Elderly Plaintiffs were each entitled to the protections of ORS 124.
10
223.
11
12
13
224.
14
15
16
knowingly acting or failing to act under circumstances in which a reasonable person should have
17
18
225.
19
20
are liable for an amount equal to three times all economic and noneconomic damages resulting
21
22
226.
23
24
25
26
Page 60 - Complaint
70116678.2
1.
against all defendants, in an amount to be proved at trial, plus applicable pre- and post-judgment
2.
ORS 124.100(2), against defendants Deloitte, Eisner, Tonkon, and TD Ameritrade for three
times the amount of their economic and noneconomic damages, in an amount to be proved at
10
3.
11
4.
12
5.
Any other further relief that the court deems just, equitable, and proper.
13
14
15
16
22
s/ Alexander M. Naito
Dennis P. Rawlinson, OSB No. 763028
dennis.rawlinson@millernash.com
Joshua M. Sasaki, OSB No. 964182
josh.sasaki@millernash.com
Justin C. Sawyer, OSB No. 014057
justin.sawyer@millernash.com
Alexander M. Naito, OSB No. 124046
alexander.naito@millernash.com
111 S.W. Fifth Avenue, Suite 3400
Portland, Oregon 97204
Phone: (503) 224-5858
Fax: (503) 224-0155
23
24
17
18
19
20
21
25
26
Page 61 - Complaint
70116678.2
Investment Type
ACF
PCF
ACOF
ACOF
PCF
ACF
AIOF
ACF
Interest Rate
13 %
12 %
9 %*
9 %*
12 %
11 %
10 %
9%
Investment Date
6/25/2014
12/31/2015
5/1/2014
6/19/2014
12/31/2015
10/22/2014
9/30/2014
5/16/2014
ACF
9%
11/11/2014
ACF
ACF
PCF
PCF
PCF
PCF
PCF
PCF
PCF
ACF
PCF
PCF
10 %
11 %
12 %
12 %
12 %
12 %
12 %
12 %
12 %
11 %
12 %
12 %
4/23/2015
8/11/2015
7/31/2015
7/31/2015
7/31/2015
7/31/2015
7/31/2015
7/31/2015
7/31/2015
9/14/2015
7/31/2015
7/31/2015
PCF
12 %
7/31/2015
PCF
ACOF
12 %
9 %*
7/31/2015
3/25/2014
70117075.1
EXHIBIT 1
Exhibit 1
Page 1
100%
80%
Aequitas
Wealth
Management, LLC
(DE)
100%
Exhibit 2
Page 1
LP
Private Advisory
Group, LLC
(WA)
68.2%
Aspen Grove
Equity
Solutions, LLC
(OR)
60%
100%
ML Financial
Holdings, LLC
(DE)
100%
17.9%
Aequitas
International
Opportunities LP
(Cayman Islands)
GP
Aequitas
International
Holdings, LLC
(DE)
100%
Innovator
Management, LLC
(DE)
Innovator
Holdings, LLC
(DE)
51%
AAM Fund
Investment, LLC
(DE)
100%
100%
92.1%
100%
100%
Executive
Falcon, LLC
(OR)
79%
23%
32.9%
Ledgestone
Property
(DE)
100%
Ledgestone
Ledgestone
Management, LLC Holdings, LLC
(DE)
(DE)
32.9%
Aequitas
Senior Housing
Operations, LLC
(DE)
29.2%
MOGL Loyalty
Services, Inc.
(DE)
7.1%
100%
100%
100%
<.1%
9.9%
80.3%
Ivey
Performance
Marketing, LLC
(OR)
100%
100%
95.4%
5.9%
Cloudward, Inc.
(DE)
~3%
~3%
Syncronex, LLC
(DE)
100%
46.3%
Aequitas
Income
Protection
Fund, LLC
(DE)
8%
Campus
Student
Funding, LLC
Certified Security
Solutions, Inc.
(OR)
Canas Feast
Winery, L.L.C.
(OR)
Aequitas
Partner Fund, LLC
(OR)
83.6%
APF
Holdings, LLC
(OR)
Skagit
Gardens, Inc.
(WA)
Gridbox
Media, LLC
(DE)
100%
Aequitas 8.1%
Holdings, LLC
Marketing Services
Platform, Inc.
(DE)
10%
Window Rock/
Aequitas EIF
Aequitas Residential
Debt Fund, LLC
Recovery Fund, L.P.
(DE)
(DE)
Independence
Bancshares, Inc.
(SC)
ETC Global
Group, LLC
(DE)
24.3%
Aequitas 11%
Aequitas
ETC Founders
WRFF I, LLC
Fund, LLC
(DE)
(DE)
LP
28.9%
15.4%
Aequitas
Enhanced
Income Fund, LLC
(DE)
100%
Aequitas
Income
Opportunity
Fund, LLC
(OR)
100%
Aequitas
Investment
Management, LLC
(OR)
100%
Aequitas
Private Client
Fund, LLC
(DE)
Aequitas
Commercial
Finance, LLC
Argentus
Partners, LLC
75%
SCA
Holdings, LLC
(WA)
25%
Aequitas
Income
Opportunity
Fund II, LLC
(DE)
12.6%
Strategic
Capital
Alternatives, LLC
Alternative
Capital
Advisers, LLC
(DE)
4.9%
Aequitas
Hybrid Fund, LLC
(OR)
Aequitas 14%
Holdings, LLC
EDPlus
MotoLease, LLC
Holdings, LLC
(DE)
(OR)
100%
75%
Aequitas
Enterprise
Services, LLC
(DE)
100%
25%
Spouting
Aequitas Capital
Rock Financial
Opportunities GP, LLC
Partners, LLC
(DE)
(DE)
GP; 1% LP
2.7%
Aequitas Capital
Management, Inc.
(OR)
Aequitas Capital
Opportunities
Fund, LP
(DE)
51.9%
3.6%
Executive
Citation, LLC
(OR)
CarePayment
Technologies, Inc.
(OR)
Aequitas Asset
Management
Oregon, LLC
(DE)
100%
100%
QuarterSpot, Inc.
(DE)
ACC Funding
Trust 2014-1
(DE)
ACC
MotoLease
Holdings 1, LLC Financial, LLC
(DE)
(OR)
Aequitas Senior
Housing, LLC
(DE)
100%
Portland Seed
Fund II, LLC
(DE)
The Hill
Land, LLC
(OR)
100%
CP Funding
I Trust
(DE)
CP Funding I
Holdings, LLC
(DE)
Aequitas Wealth
Hickory Growth
Management
Partners, LLC
Partner Fund, LLC
(DE)
(DE)
100%
Aequitas
Corporate
Lending, LLC
(OR)
100%
100%
Aequitas
Holdings, LLC
(OR)
Aequitas
Management, LLC
(OR)
Filed 03/14/16
ACC Funding
Series Trust
2015-5
(DE)
ACC
Holdings 5, LLC
(DE)
~5.5%
CarePayment,
LLC
(OR)
~7.1%
100%
ACC
CarePayment Campus Student
F Plus
Holdings, LLC
Funding, LLC
Holdings, LLC
(DE)
(OR)
(DE)
100%
100%
100%
100%
Aequitas
Commercial
Finance, LLC
(OR)
100%
83.6% Ownership
100% Control
Document 13-1
100%
ACC Funding
Trust 2014-2
(DE)
ACC
Holdings 2, LLC
(DE)
Aequitas
Private Client
Fund, LLC
Aequitas
Peer-To-Peer
Funding, LLC
(DE)
ACC
C Plus
Holdings, LLC
(DE)
100%
100%
100%
Ownership Relationship
Trust Beneficiary Relationship
Investment Advisory Relationship
January 4, 2016
Case 3:16-cv-00438-PK
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