Brogdon living large while bondholders lose out
WASHINGTON — Christopher Brogdon, who was found liable for fraud in a series of nursing home defaults, has been dragging his feet on court orders to repay millions of dollars to bondholders, while continuing to live in luxury himself, a court-appointed monitor said.
Soneet Kapila, a Fort Lauderdale, Florida, CPA tasked by the court with monitoring Brogdon’s progress in paying back bondholders, detailed Brogdon’s noncompliance with court orders and the losses investors are likely to face in a quarterly report filed last week.
Brogdon was charged by the Securities and Exchange Commission in 2015 with fraudulently raising $168 million from 54 conduit municipal bond deals and $22 million from private placements over 25 years, using the money for personal expenses and other business pursuits while the nursing homes they financed defaulted on the payments.
In 2016 a federal judge ordered Brogdon to submit a plan to repay bondholders in full, and Brogdon initially said he could achieve that by the end of 2017. Multiple extensions later, Kapila reported that Brogdon’s investors are still far from being made whole and the man himself is living large. The sale of facilities has resulted in repayments to bondholders totaling almost $33 million, but as of the end of March investors are still owed more than $65 million.
“Brogdon's substantial and ongoing failure to comply with the plan and court orders are egregious and ongoing,” Kapila told the court. “Because Brogdon has suffered no consequences as a result of such noncompliances, it is not surprising that he has not hesitated to disobey orders of the court, repeatedly and knowingly.”
Kapila’s report detailed a variety of noncompliances he said he discovered, as well as listing the personal assets he said Brogdon has maintained despite the court modifying the repayment plan to include any assets owned by either Brogdon or his wife. Among those assets are a home that Brogdon values at $5 million, a vacation home valued at $2 million, a Beechcraft King Air 300 airplane valued at $1.5 million, four cars, and an equity stake in a restaurant chain.
Some of those properties have been listed for sale, but have not sold.
Kapila informed the court that he discovered, sometimes well after the fact, that Brogdon had transferred large sums of money from accounts being used in the repayment plan to make other payments and personal expenses.
“In September, 2017, in order to forestall Miami Capital as judgment creditor from seizing the Brogdon's household goods and furnishings at their St. Regis residence, Brogdon paid Miami Capital $75,000, which Brogdon represented to the Monitor were ‘borrowed' funds," Kapila wrote. “Thereafter, the monitor learned that the source of the funds was actually from Chattahoochee Nursing LLC,” he told the court.
Brogdon has consistently failed to maintain specified minimum account balances, obtain monitor approval for transactions per the court’s orders, and other violations, Kapila reported. He concluded that bondholders are probably looking at losses of some $20 million, given the “snail’s pace” of the progress and the “channeling of personal income and assets away from the plan.”
The repayment plan is currently officially set to run through June 30, but could be extended again. Brogdon's attorneys have not filed any response to Kapila's report, though a conference is scheduled for next month. His attorney did not immediately respond to a request for comment.