Securities and Exchange Commission v. AIC, Inc., et al., Civil Action No. 11-cv-00176 (E.D. Tenn.)

SEC obtains nearly $70 million judgment against firms and CEOs found liable for defrauding investors.

In April 2011, the SEC filed a complaint against a number of Richmond, Virginia-based firms and CEOs, alleging that they devised and orchestrated a fraud-related offering of millions of dollars of promissory notes and stock sold to numerous investors across multiple states, many of whom were elderly and unsophisticated. It was further alleged that the defendants misrepresented and omitted material information to investors relating to, among other things, the safety and risk associated with the investments, the rates of return on the investments and how the proceeds of the investments would be used. In reality, the defendants used the money raised from new investors to pay back principal and returns to existing investors. On October 10, 2013, a jury returned a verdict against the defendants. On August 1, 2014, Chief Judge Thomas Varlan issued the final judgment, which included monetary sanctions of nearly $70 million, as well as permanent injunctions against the defendants.

Case Law Alerts, 4th Quarter, October 2014