Lawyers for Christopher Brogdon, who was found liable for fraud in a series of nursing home defaults, disputed the claims of a court-appointed officer who accused Brogdon of dragging his feet on his agreement to repay bondholders.
Brogdon’s attorneys filed a letter last week telling a federal judge in New Jersey that the quarterly report filed April 30 by court-appointed monitor Soneet Kapila painted an inaccurate picture of Brogdon’s and his wife’s efforts to raise money to repay investors. At issue is whether the Atlanta-based financier is working in good faith to sell millions of dollars’ worth of personal assets to fulfill his agreement to make whole investors in his nursing home transactions.
“The monitor reports that there were ‘no transactions consummated,’ ‘not a single asset sale or re-financing was consummated’ during the first quarter of 2019, and ‘the last pay down occurred some 10 months ago, in July 2018,’ "Brogdon’s legal team told the court. “This language suggests that no work is being done and ignores the complexity of the sales in this case.”
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. Kapila, a Fort Lauderdale, Florida, CPA tasked by the court with monitoring Brogdon’s progress in reaching that goal told the court that investors probably are looking at losses of some $20 million given the “snail’s pace” of the progress and what he characterized as Brogdon’s lavish lifestyle.
Among Kapila’s complaints was that Brogdon had failed to sell 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. But Brogdon’s lawyers pushed back on Kapila’s gripes, telling the court that the monitor was oversimplifying and misrepresenting the situation. One property sale was halted by a tax lien issue, Brogdon’s team said, while another simply fell through and a new buyer is currently in negotiations for it.
“The inference in the report is that the Brogdons and their professional realtors and brokers are not working to sell plan assets, but that is not accurate,” they told the court. “Indeed, the fact that one deal has stalled and another has fallen through simply proves that any number of factors can cause a delay or even a back-to-the-drawing-board situation given the nature of the assets being sold. Add to that a very limited market of potential purchasers, and it is not difficult to understand why the sale of assets at times moves at a slow pace, which does not automatically mean the Brogdons are the cause of any purported delay at this time.”
The letter also flatly denies a portion of Kapila’s report that appeared to accuse Brogdon of fabricating an offer to purchase his home in order to receive another extension on his repayment schedule. The buyer had not and never did put down an earnest money deposit, Brogdon’s lawyers wrote, which was why further developments were not provided to Kapila after the initial offer.
“The monitor’s insinuation that Mr. Brogdon fabricated the offer in order to obtain a plan extension is simply untrue. The unfounded accusation against Mr.Brogdon in the current Report is gratuitous and prejudicial to Mr. Brogdon.
Brogdon also disagrees with Kapila’s characterization of his lifestyle as being lavish and excessively expensive, his lawyers added, claiming that more than half of Brogdon’s monthly expenses are just mortgage payments without considering upkeep.
The repayment plan is currently officially set to run through June 30, but could be extended again.
