Brogdon seeks new repayment plan
A week after the Securities and Exchange Commission told a federal judge it does not support giving Christopher Brogdon any more extensions on his court-monitored endeavor to repay millions to investors, attorneys for the Atlanta-area financier have proposed creating an amended plan under new leadership.
Brogdon's attorneys filed a letter in a New Jersey federal court Tuesday, urging Judge Kevin McNulty not to yield to the SEC's desire that the court enter a money judgment against Brogdon when the current court-appointed monitorship expires June 30. The monitorship was meant to supervise Brogdon's and his wife's efforts to sell off his assets and repay investors following the court's 2015 finding that he was liable for fraudulently raising $168 million from 54 conduit municipal bond deals and $22 million from private placements over 25 years.
"Although the Brogdons disagree with the SEC's proposed plan of action if the plan concludes," Brogdon's attorneys wrote, "the Brogdons agree that a continuation of the current monitorship is not in the best interest of investors and has been a substantial drain on plan resources that otherwise would have gone to investors," wrote Lauren Warner of the New Jersey firm Carella, Byrne, Cecchi, Olstein, Brody & Agnello.
In 2016 the court ordered Brogdon to submit a plan to repay bondholders in full, and Brogdon said he could achieve that by the end of 2017. Soneet Kapila, a Fort Lauderdale, Florida, CPA, was assigned a monitor to oversee Brogdon’s progress in converting his personal assets into money for investors.
But in an April 30, 2019, report, Kapila told the court that Brogdon was uncooperative and appeared to be dragging his feet on the sales of his personal property while continuing to spend lavishly on himself and his family.
Brogdon’s attorneys disputed Kapila’s version of events in their own letter to the judge, asserting that their client was making a good-faith effort to sell two expensive homes and an aircraft. Brogdon exited personal bankruptcy last year.
Though investors have been paid nearly $33 million under the monitorship plan, they are still owed more than $65 million, the SEC said. That means that regardless of the court's actions, the chance is slim that investors will be made whole.
Warner told the court investors would not be served if McNulty were to choose to default to the 2015 judgment, which would include a to-be-determined financial penalty against Brogdon in addition to his obligation to repay investors. Instead, Warner suggested, the court should order a 60-day extension of the status quo to allow the Brogdons to complete the sales of several properties expected to close in July and August. In addition, during that time period, the the Brogdons propose to submit an "amended or alternative plan" under the helm of a new monitor.
In its own letter last week, the SEC told McNulty that Brogdon's slow progress under the existing monitorship and continued projections of personal expenses totaling some $70,000 a month indicated that a continuation would be unlikely to benefit investors.
The decision is McNulty's to make, but allowing the plan to expire would only harm investors by incurring additional legal fees and disrupting the repayment efforts already underway, according to Warner.