SEC Seeks Brog­don Case Fines

The Bond Buyer - - Front Page - BY KYLE GLAZIER

WASHINGTON —The Se­cu­ri­ties and Ex­change Com­mis­sion is near­ing a mon­e­tary set­tle­ment with one man the com­mis­sion said en­gaged in a fraud­u­lent se­nior hous­ing bond scheme tied to con­victed fraud­ster Christo­pher Brog­don. An­other de­fen­dant has told the SEC he plans to fight its ef­forts to make him pay up.

SEC at­tor­ney Lee Green­wood wrote to a fed­eral judge in New Jer­sey ear­lier this week to re­port that the SEC has reached a set­tle­ment-in-prin­ci­ple with Todd Barker, while Dwayne Edwards has in­di­cated his in­tent to op­pose the SEC’s mo­tion for mon­e­tary re­lief.

The two men were busi­ness part­ners who set up com­pa­nies and bor­rowed some $62 mil­lion through nine dif­fer­ent con­duit mu­nic­i­pal bond of­fer­ings be­tween July 2014 and Septem­ber 2015, claim­ing that they would be used to pur­chase and ren­o­vate se­nior liv­ing fa­cil­i­ties in

Ge­or­gia and Alabama.

The SEC al­leged that Edwards im­prop­erly com­min­gled the funds, a charge the de­fen­dants dis­puted. Eight of the nine of­fer­ings cited in the case against Edwards in­volved fa­cil­i­ties pur­chased from Christo­pher Brog­don, an At­lanta-based busi­ness­man who was forced to re­pay $86 mil­lion to in­vestors af­ter a judge found him guilty of SEC charges that he com­min­gled in­vestor funds in se­nior liv­ing projects.


Barker set­tled the charges with the SEC early in the case, and Edwards agreed in June 2017 to set­tle and be banned from the mu­nic­i­pal mar­ket. Green­wood told the court in Au­gust that the SEC would ne­go­ti­ate mon­e­tary set­tle­ments with both de­fen­dants fol­low­ing the sale of the fa­cil­i­ties by the court-ap­pointed re­ceiver.

Last month the court ap­proved about $15.5 mil­lion of pay­ments by the re­ceiver to the trustee on those deals, but the SEC has said in­vestors would still take a ma­jor hit.

In to­tal the re­ceiver man­aged to re­cover about $26.7 mil­lion through the sales of the fa­cil­i­ties, ac­cord­ing to a re­port filed with the court. That re­port also said that the re­ceiver has hired an out­side law firm, White­ford Tay­lor Pre­ston, as a spe­cial coun­sel to pur­sue claims against third par­ties.

Green­wood had pre­vi­ously asked the court not to sched­ule mo­tions for mon­e­tary re­lief un­til the SEC had a bet­ter idea of how badly in­vestors were harmed in the scheme.

He asked the court this week to set a sched­ule that would have the SEC file its mo­tion for mon­e­tary re­lief by Dec. 18, with Edwards fil­ing his op­po­si­tion by Jan. 8, 2019.

Edwards, who is cur­rently rep­re­sent­ing him­self, Green­wood wrote, is pre­cluded by the con­sent judg­ment against him from claim­ing that he did not vi­o­late the se­cu­ri­ties laws.

The judg­ment against him in­cluded a stip­u­la­tion that he would pay an asyet un­der­mined amount in fines and dis­gorge­ment of ill-got­ten gains. It is not clear if Edwards will con­test the pro­posed sched­ule.


“As of the date of this let­ter, Edwards has not re­sponded to the SEC’s re­quest as to whether or not he con­sents to the SEC’s pro­posed brief­ing sched­ule,” Green­wood told the court.

Barker’s pro­posed mon­e­tary set­tle­ment, the size of which is un­known, is sub­ject to ap­proval by the SEC and then by the court.

If Barker’s set­tle­ment does gain ap­proval from the com­mis­sion, his fi­nal judg­ment could be pre­sented to the court by Dec. 18, Green­wood wrote.

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