Financial Services Firm Ordered To Pay $70M For Fraud

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Financial Services Firm Ordered To Pay $70M For Fraud

The SEC got a big win last week when a jury found a Virginia-based subsidiary brokerage firm and its CEO collectively liable for $70 million. The SEC sued AIC Inc., Community Bankers Securities LLC and Nicholas D. Skaltsounis in 2011 for fraud and engaging in a Ponzi scheme executed by selling millions of dollars of AIC promissory notes and stock. The companies sold these investments through falsifications that hid AlC’s financial issues and inability to come through on returns.

According to the SEC some of the material information about the investments the company omitted or falsified when pitching them to investors were the safety and risk associated with the investments, the rates of return, and how the proceeds would be used by AIC. The companies were never profitable, and they used money from new investors to pay back existing ones. At least 74 investors in at least 14 states were scammed as part of the scheme.

After nearly three weeks of trial in a Tennessee federal court, U.S. District Judge Thomas Varlan ordered AIC to pay $35.6 million in disgorgement, pre-judgment interest, and penalties. He ordered Community Bankers Securities pay $31.2 million and Skaltsounis pay $2.6 million.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies.

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