Brogdon Denies Charges in Private Lawsuit

PHOENIX — Christopher Brogdon, the retirement home financier who is facing Securities and Exchange Commission charges, denied being liable for a particularly problematic deal in new filings with a federal court in Georgia.

Brogdon's attorneys filed a response to the lawsuit Nov. 23 in the U.S. District Court for the Middle District of Georgia. Brogdon is being sued by Bank of Oklahoma Financial, which acts as trustee on a number of retirement and nursing home facility deals involving Brogdon that eventually defaulted, and for which Brogdon and members of his family are now facing SEC fraud charges. The suit concerns the 2002 issuance of about $3.6 million of healthcare facility revenue bonds for which Sumner, Ill., was conduit issuer for the National Assistance Bureau Inc., a nonprofit with links to Brogdon. The unrated bonds had coupons up to 8.8%.

BOKF disclosed in August that NAB had filed for bankruptcy in 2006, that the Sumner facility had been sold at a tax sale in December 2008, and that NAB was in default. In October BOKF brought the lawsuit, which seeks judgment against NAB and Brogdon for the just over $3 million outstanding on the bonds, as well as accrued interest and fees as well as the costs of the lawsuit.

In the latest filings, Brogdon's attorneys said their client wasn't personally liable for the Sumner debacle. While both BOKF and the SEC allege that Brogdon used NAB as an instrumentality for improper purposes, Brogdon's defense team said he does not control the company.

"Defendant is not an owner or officer of National Assistance Bureau, Inc., and cannot be liable for that entity's obligations," his attorneys told the court in their response to the complaint. BOKF's filings show that NAB's most recent Form 990 listed four NAB directors spending a combined 13 hours per week working for the organization.

"Regardless of his title and official relationship, Brogdon at all times controlled NAB's actions," BOKF attorneys said.

The suit alleges that Brogdon continued making payments on the defunct facility for years by improperly using funds from other bond issues to do so. The SEC complaint makes more sweeping allegations, accusing Brogdon of improperly commingling millions of dollars of bond funds for at least 15 years. Brogdon has been in the nursing home, assisted living, and retirement home community business for more than 25 years, and owns seven other real estate and restaurant business ventures throughout Georgia and the surrounding states, the SEC said.

Brogdon's answer to the BOKF complaint goes on to deny -- or neither admit nor deny -- virtually every allegation in BOKF's lawsuit, except for indisputable facts such as NAB being in default. Brogdon is demanding a jury trial, but requests that the suit be dismissed with prejudice. Brogdon's team also asked the court to hold BOKF accountable for the costs of the suit, and to return any debt service money paid to it from improper sources to the entities that made the payments.

For reprint and licensing requests for this article, click here.
Enforcement Bankruptcy Law and regulation Washington
MORE FROM BOND BUYER