Judge Rules That Aequitas Investors’ Securities Fraud Lawsuit Against TD Ameritrade and Others May Proceed

In Oregon, a district court judge has refused to dismiss a proposed class action lawsuit accusing TD Ameritrade (AMTD), Integrity Bank & Trust, Deloitte & Touche LLP, Eisner Amper LP, and law firms Tonkon Torp and Sidley Austin of playing a part in the alleged securities fraud committed by Aequitas Management LLC, which is now defunct.

Over 1500 investors entrusted over $350M to Aequitas. They each invested amounts ranging from about $60K to over $1M in Aequitas funds, including the Aequitas Income Opportunity Fund II LLC that they now claim was a Ponzi scam.

Last year, in its civil securities case, the US Securities and Exchange Commission accused the Oregon-based investment group and three of its executives of concealing the firm’s financial woes while still raising millions of dollars. Investors thought they were backing investments involving transportation, education, and healthcare when their funds were allegedly being used to save Aequitas. Meantime, newer investors’ funds were also used to pay earlier investors in a Ponzi-like scam.

The SEC’s complaint noted that Aequitas raised investor funds through promissory notes that claimed high return rates of 8.5-10%. Although some of investor funds were used for trade receivables in the sectors that had been touted, most of the money went to student loan receivables for Corinthian Colleges, a for-profit education provider. When Corinthian defaulted on its obligations for recourse to the investment fund in 2014, this worsened Aequitas’ money woes. Meantime, the investment firm’s executives kept earning their healthy salaries while maintaining their expensive lifestyles.

Now, investors are accusing the law firms, auditors, and banks of contributing to Aequitas’ alleged misconduct while the investment firm was raising investor funds and selling securities. For example, according to The American Lawyer, Sidley gave counsel to Aequitas about selling securities and putting together offering documents and risk disclosures. This paperwork purportedly helped the firm to deceive investors. As Deloitte and Eisner were the ones that audited the investment company’s financial statements while the alleged fraud was taking place, the plaintiffs are blaming both companies for their investment losses, too.

At The SSEK Partners Group, we are here to help investors recoup their securities fraud losses. Contact us today to request your free, no obligation, case consultation with an experienced Aequitas investment fraud lawyer.

Sidley Can’t Avoid Suit Accusing It of Ties to Investment Fund Fraud, The American Lawyer, July 10, 2017

The SEC Complaint Against Aequitas (PDF)