Stiff penalty adds up to $1.5 million judgment in Brogdon-related case

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Dwayne Edwards, charged with fraud in a string of deals linked to Christopher Brogdon, must pay out more than $1.5 million in restitution and penalties, a federal judge has ruled.

Judge Steve Mannion’s order filed in U.S. District Court for the District of New Jersey late last week will require Edwards to pony up even more than initially thought. Under the order, Edwards will pay just over $828,000 in disgorgement of ill-gotten gains and interest plus a civil penalty of $725,000. The amount of the civil penalty had not previously been disclosed.

The order all but brings to a close the 2017 enforcement action, in which the SEC accused Edwards and co-defendant Todd Barker with borrowing some $62 million through nine different conduit municipal bond offerings between July 2014 and September 2015, claiming that they would be used to purchase and renovate senior living facilities in Georgia and Alabama.

The SEC alleged that Edwards improperly commingled the funds, a charge he disputed. Eight of the nine offerings cited in the case against Edwards involved facilities purchased from Brogdon, an Atlanta-based businessman who is in the process of trying to repay millions of dollars to investors under court order stemming from his own SEC enforcement charges.

Barker settled his charges for $460,000 late last year, without admitting or denying the SEC’s charges. Edwards likewise entered into no admit or deny language upon acceptance of his judgment in 2017.

The amount of the civil penalty the court imposed indicates that Mannion took a fairly severe stance on Edwards’ conduct, as previous court filings had indicated that the judge had wide latitude to apply the penalty.

The SEC had asked that the court make Edwards pay a “third-tier” penalty of $160,000 per violation, noting in its sentencing that filing that the number of such penalties could range from two to eight depending on how Mannion chose to count them.

The court also granted the SEC’s request that Edwards’ frozen funds be turned over as part of his penalty.

The legal process that remains in the case has primarily to do with the finalizing of the efforts to retrieve as much money as possible for investors. Even following the efforts of a court-appointed receiver who sold the facilities and recovered as much money as possible, the SEC has said investor losses would probably be about $30 million.

They may not see much money from the final Edwards judgment, either, based on Edwards’ own court filings indicating that he was in financial ruin and unable even to afford a lawyer to represent him against the SEC.

Edwards portrayed himself as a well-meaning veteran of the retirement housing business who made a mistake in trusting Brogdon.

Brogdon also owes investors more than $60 million, which it also appears unlikely he will be able to pay even after the sales of his assets. He is currently attempting to negotiate a new repayment plan in his own case, but the SEC has said it no longer supports giving him more time to repay investors on his own terms.

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Securities law SEC enforcement Financial crimes Primary bond market SEC Washington DC Georgia