SEC urges court to force accused fraudster to pay up
WASHINGTON - Dwayne Edwards should be made to pay for his role in a string of fraudulent nursing home deals despite his portrayal of himself as a victim of Christopher Brogdon, the Securities and Exchange Commission told a federal court this week.
Edwards, charged in 2017 with improperly commingling funds in nine municipal bond offerings tied to Brogdon, traded arguments with the SEC in court filings this month. Edwards is seeking to avoid paying the potentially more than $1 million possible for his role in the Brogdon deals. A court already ordered Brogdon, an Atlanta-area businessman, to repay $86 million to investors for his alleged role as the mastermind of a string of disastrous deals that left investors looking at millions of dollars of losses.
While Edwards’ former partner Todd Barker has reached a pending agreement to settle with the SEC for $460,000, Edwards told the federal court in New Jersey that he shouldn’t have to pay anywhere near the possible maximum.
Representing himself, the 56 year-old Edwards told the court that he grew up working in the family nursing home business with his grandfather, and went on to be successful in his own right before his experience began to “sour” after his 2014 introduction to Brogdon. Edwards said he trusted Brogdon and the people working with him because of Brogdon’s “vast empire” of hundreds of facilities and “ostensible success.”
Edwards is now in financial ruin, he told the court, because he has had no work in two years and his wife lost her job or any chance at future employment when she was also named in the SEC’s lawsuit. Edwards said he can no longer afford a lawyer to represent him, but is willing to hand over his last $49,000 in savings if it will go to the bondholders who lost money rather than to some other purpose.
“The defendant respectfully asks how much punishment is enough,” Edwards wrote.
But the SEC, which has said investors might lose as much as $30 million in the deals tied to Edwards, urged the court not to go easy on him and order him to disgorge more than $800,000 of ill-gotten gains and interest. Edwards is improperly attempting to “re-litigate” facts already conceded in the consent judgment he signed, the SEC told the court, a judgment that also stated that the court “shall order disgorgement of ill-gotten gains, prejudgment interest thereon, and a civil penalty.”
The SEC urged the court to order Edwards to pay a civil penalty on top of the disgorgement, despite his dire financial straits.
“While the court may take the defendant’s current financial difficulties into account, these circumstances alone cannot negate the need for a severe civil penalty,” the SEC wrote, quoting from a previous court decision.
The SEC is not seeking any specific amount for Edwards’ penalty.
The case appeared headed for its end some weeks ago, but a Jan. 22 hearing date ended up canceled because a partial federal government shutdown left SEC lawyers unable to work. The 35-day shutdown ended last month when President Trump agreed to sign legislation reopening the government for three weeks to allow further negotiations over a southern border wall, and the SEC was able to resume operations at that time.