June 18--A judge denied defense motions to dismiss and transfer venue in the latest lawsuit against Compass Academy founder Jonathan "Jay" Brooks.
Brooks is accused by two Aiken County residents and two residents of Denton County, Texas, of convincing them, as their financial adviser, to invest their retirement savings with him; however, Brooks allegedly invested the money in a private school, Compass Academy, which he planned to start with his wife.
The complaint lists Brooks, his wife Tracy, their companies J. Brooks Financial, Brooks Real Estate and Compass Academy, as well as High Street Securities of Arkansas and Sterling Trust, a division of Equity Trust Co., as defendants.
Ohio-based Equity Trust in April filed motions to dismiss the case and to have the venue changed to Ohio. Circuit Court Judge Doyet "Jack" Early denied both motions on Friday.
Equity Trust moved to dismiss the case because the complainant "fails to allege facts sufficient to support the claims" against the firm, according to the document. It also said litigating the case in Lorain County, Ohio, would be "more convenient for the parties and potential witnesses."
"Accordingly, this case should be dismissed with leave for the Plaintiffs to refile in the proper forum," the document stated.
Attorneys for the plaintiffs responded, saying the complaint makes a sufficient case against Equity Trust, and that Aiken County is the appropriate venue for the case because the fraud Equity Trust allegedly aided and abetted was "substantially perpetuated" in Aiken by individuals who lived in Aiken and corporate entities organized under South Carolina law with their principle place of business in Aiken County.
Early was brief in his comments.
"As to Defendant's Motion to Dismiss ... I find sufficient facts were plead in the Complaint to entitle Plaintiffs to relief if proven," he wrote. "As to Defendant's Motion to Transfer Venue, I find the Motion should be denied."
In his decision to deny the motion to change venue, Early cited S.C. Code 15-7-120, which deals with the application of contract and arbitration agreements relative to venue of actions.
The original complaint, filed in February, alleges that High Street Securities was inattentive to Brooks' alleged fraud, and that Sterling Trust "aided and abetted the ongoing fraud" by using its IRA assets to purchase unregistered, illiquid shares of Brooks Real Estate Holdings.
The amounts Brooks allegedly swindled out of the plaintiffs range from $75,000 to $358,000, according to court documents. The plaintiffs seek actual damages, punitive damages, court costs and attorney fees.
Brooks was arrested in July 2013 on allegations of securities fraud. He was granted bond but was alleged to have violated it while living in Texas. He remains in the Aiken County detention center awaiting a new bond hearing.
Teddy Kulmala covers the crime and courts beat for the Aiken Standard and has been with the newspaper since August 2012. He is a native of Williston and majored in communication studies at Clemson University.
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