The securities attorneys of Gana Weinstein LLP are investigating potential recovery options for investors of Christopher Brogdon’s (Brogdon) nursing home investment scheme who suffered losses as a result of the fraud. Recently, the Securities and Exchange Commission (SEC) filed a complaint against Brogdon and affiliated entities alleging that Brogdon amassed nearly $190 million through dozens of municipal bond and private placement offerings to investors who would earn interest from revenues generated by nursing homes, assisted living facilities, or other retirement community projects. Instead, the SEC found that Brogdon secretly commingled investor funds in typical Ponzi scheme like fashion and diverted investor money to other business ventures and personal expenses.
Investors should be asking how Brogdon could have possibly been allowed to conduct this scheme. The Federal Industry Regulatory Authority (FINRA) has noted in a related action (FINRA No. 2013035130101) against brokerage firm Cantone Research and its majority owner Anthony Cantone that Brogdon had twice been barred from the securities industry. FINRA describes the two Brogdon actions – once for “egregious misconduct” involving unauthorized transactions and the second for a “scheme” involving financial misconduct. In addition, Brogdon had also been indicted for racketeering, theft, and Medicaid fraud, and had been found liable for breaching a stock repurchase guarantee agreement. Furthermore several entities Brogdon controlled had filed for bankruptcy.
These complaints against Brogdon enablers like Cantone are just starting to be filed. The Bank of Oklahoma Financial has also been alleged to be the trustee for many of the Brogdon deals and faces investor scrutiny. The bank has filed its own suit against Brogdon.
The SEC alleged that since 1992, Brogdon has raised over $190 million for these projects through 54 conduit municipal bond and private placement offerings. See below list of entities. The SEC alleged that Brogdon conducted his fraud through at least 43 entities he controls. According to the SEC, for 40 conduit municipal bond offerings Brogdon stated that the trustee bank would set aside a portion of the investment proceeds in a debt service reserve fund to be used only if needed to satisfy debt service obligations. However, instead of using investor proceeds from a particular offering for the facility or project that was the subject of the offering, Brogdon secretly diverted a portion of the proceeds to either pay for his and his wife’s lavish lifestyles or to prop up his entire business enterprise, restaurants, and commercial real estate holdings.
The SEC also alleged that Brogdon consistently failed to file required financial statements and drew down on the trustee funds in order to make interest payments to investors without disclosure or replenishment of the fund as required by the conduit municipal bond offering documents. As a result, the SEC found that when payments of interest or principal came due on certain offerings, often neither facility revenues nor the trust accounts were available to make those payments. Brogdon then relied upon third parties to make loans to his companies in order to cover these payments to investors.
The SEC cited several examples of Brogdon’s misappropriation of offering proceeds in this fashion. For instance, in the spring of 2013 Brogdon raised money through two offerings for the “Arcadia Project” in Conyers, Georgia. The confidential disclosure memorandum provided to investors said that $1.4 million of the proceeds would be used to construct the Arcadia Project and that the private placement investors would be paid interest and principal from the revenues of the project. Instead the SEC found that $177,936 of the proceeds were used to make quarterly interest payments back to the investors in the Cherokee Financial private placement and $644,158 of the proceeds financed undisclosed expenses and payments that included Brogdon’s restaurants and his wife’s personal account.
The attorneys at Gana Weinstein LLP are experienced in representing investors in cases where banks and brokerage firms help facilitate securities frauds on investors. Our consultations are free of charge and the firm is only compensated if you recover.
The Brogdon entities involved in the SEC complaint include: Arcadia Partners, LLC, Attalla Nursing ADK, LLC, Bama Oaks Retirement, LLC, Bleckley NH LLC, Cedala, LLC, Chattahoochee Nursing, LLC, Chelsea Investments, LLC, Chestnut Independent Living, LLC, Chulio Assisted Living, LLC, Coosa Nursing ADK, LLC, Country Club Road ALF, LLC, Eaglewood Property Holdings, LLC, Edwards Redeemer Property Holdings, LLC, Golden Monroe, LLC, Goodwill Healthcare & Rehab, LLC, Gordon Jensen Healthcare Association, Inc., Green Street LLC, Greene County Health Care, LLC, Harrah Whites Meadows Nursing, LLC, High Street Nursing, LLC, Highlands Assisted Living, LLC, MCL Nursing, LLC, Meeker North Dawson Nursing, LLC, Knollwood NH LLC, Limestone Assisted Living, LLC, LV Medical Properties III, LLC, Mobama Nursing, LLC, Morris Landing, LLC, National Assistance Bureau, Inc., Oak Partners Two, LLC, Oklahoma Operating LLC, PHNH LLC, Polo Road Assisted Living, LLC, Ridgeview Assisted Living, LLC, Riverchase Village ADK, LLC, Saint Simons Healthcare, LLC, Senior Care, Inc., Southeastern Cottages, Inc., Southern Tulsa, LLC, Veranda ALF, LLC, Water Oaks Partners, LLC, Waters of Scottsburg II, LLC, and Winter Haven Homes, Inc.