Aequitas Management Fraud Scheme Raised $300 M from Unsuspecting Investors
Three former executives of Aequitas Management, LLC, and related companies were sentenced to federal prison following their conviction for their roles in a far-reaching fraud conspiracy, according to a press announcement. The fraud scheme raised nearly $300 million from unsuspecting investors.
The former CEO of Aequitas and a resident of Lake Oswego, Oregon, was reportedly sentenced to 14 years in prison and ordered to forfeit more than $1.5 million, according to a press release this week. The executive vice president and chief compliance officer, previously of Palm Harbor, Florida, received a 70-month prison sentence and was ordered to forfeit $689,662. The executive vice president and president of wealth management, from Portland, was reportedly sentenced to 37 months in prison and ordered to forfeit $116,627. Restitution to defrauded investors will reportedly be determined at a later date.
The case unfolded as one of the largest fraud investigations ever conducted by the Portland FBI, with losses totaling hundreds of millions of dollars. The executives allegedly deliberately deceived investors, both domestically and internationally, through an intricate web of lies. Many of these investors resided in Oregon, where the company was headquartered. The victims of this elaborate fraud experienced devastating consequences, including delayed retirements, lost college savings, and severe financial and emotional hardships.
Aequitas Notes Investment Fraud
The alleged scheme operated from June 2014 through February 2016 when the former executives solicited investments by misrepresenting Aequitas’ use of investor funds, the company’s financial health, and the associated risks. They also failed to disclose critical facts, such as the company’s constant liquidity crises and its use of investor money to repay prior investors and cover operational expenses.
The former CEO, reportedly the mastermind behind the Aequitas group of companies, was intricately involved in day-to-day operations and frequently touted Aequitas as a rival to leading asset management firms. the executive vice president and chief compliance officer, oversaw various functions and established an international fund to attract investors. The executive vice president and president of wealth management, managed investments through registered investment advisors.
Aequitas’ largest holdings included investments in hospital networks, a consumer debt-consolidator, a motorcycle lender, and Corinthian Colleges, one of the nation’s largest for-profit post-secondary school operators. When Corinthian Colleges faced financial trouble, it triggered a chain of events that led to Aequitas’ collapse. During this, the executives committed numerous financial crimes to conceal Aequitas’ dire financial situation. They falsely claimed new investment funds were used to purchase receivables when, in reality, the money went to pay bills and prior investors.
This complex case culminated in a federal grand jury indictment in July 2022, resulting in convictions on charges including conspiracy to commit mail and wire fraud, conspiracy to commit money laundering, and wire fraud. The CEO was also convicted of making a false statement on a loan application.
In addition to the recent sentencing, two other former Aequitas executives previously pleaded guilty to their roles in the conspiracy. The former chief financial officer also pleaded guilty to making a false statement to a bank.
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