Anchor ads are not supported on this page.

4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs

$300 million allegedly bilked from investors

Rancho Santa Fe resident linked to Aequitas six years ago

A week ago (March 10), the Securities and Exchange Commission filed suit against a Portland, Oregon, financial firm named Aequitas and three of its high-living, socially prominent executives. They are charged with running a Ponzi scheme that bilked 1500 investors of $300 million and probably more.

On Monday (March 14), one of Aequitas' financial units was supposed to have shown up in federal court in San Diego to face a suit by Solana Beach–based American Student Financial Group. The financial group says that Aequitas cheated it out of commissions it was to have received for providing loans that Aequitas bought, then sold to its investors, who were making 5 to 15 percent on the loans.

"The trial has been postponed," says Robert S. (Bob) Banks, Jr., a Portland securities lawyer who is representing desperate investors. Banks says he spends five hours a day talking with the investors, some of whom weep that they have lost everything. "Their stories are heart-wrenching," says Banks.

Sponsored
Sponsored

The story of Aequitas is one of colossal chutzpah, and more likely colossal ignorance. One of Aequitas' specialties was buying troubled loans, packaging them, and selling them to investors. It also sold notes to finance its operations. Because there was high risk, investors got high interest rates.

But Aequitas bought the troubled loans of an extremely troubled institution — Corinthian Colleges, a string of for-profit colleges, which the parent bought cheaply because the institutions were having difficulties. Aequitas told investors the loans were safe because Corinthian vowed it would buy back loans that were delinquent after 90 days.

But Corinthian went down in flames. In June of 2014 it ceased rebuying the defaulted loans. Why didn't Aequitas suspect that would happen?

In July of 2007, the California attorney general's office said Corinthian "engaged in a persistent pattern of unlawful conduct." Corinthian paid $6.5 million to settle allegations that it had engaged in false advertising. Also in 2007, the U.S. Department of Education seized records of a Florida campus. In 2013, the Securities and Exchange Commission and Consumer Financial Protection Bureau launched investigations of Corinthian. But as Banks points out, during these troubled times, Aequitas opened a posh New York office and spent a bundle to refurbish its Oregon digs.

To stay afloat, Aequitas allegedly kept selling packages of dubious paper and didn't tell investors of its troubles. By last year, almost all the money coming in the door went out the back door to pay off early investors — the classic Ponzi scheme. Last year, Corinthian went out of business, pushed greatly by the federal government.

Kevin Jasper, a San Diego lawyer, predicted that Aequitas would collapse 17 months before it did. Jasper said the bad Corinthian loans would drain Aequitas of $70 million. I could not reach Jasper.

In September of 2010, Aequitas announced that Bill Malloy, whose office is in La Jolla, would become an executive vice president of Aequitas Capital Management. Malloy, who says his family fortune goes back to the early 1800s, appears to be a venture capitalist in emerging tech companies, investing family money. Michael Esler, a Portland lawyer, says, “Based on my 45 years in securities litigation, I have a strong hunch [Malloy] was a money raiser" for Aequitas. Malloy did not respond to a phone call.

In January of 2014, William J. Ruh was named an executive vice president and managing principal of Aequitas. At the time he was named to the post, Ruh was chairman-elect, treasurer, and trustee of the Rancho Santa Fe Foundation. Earlier he had served as an officer of the Rancho Santa Fe Education Foundation. He was associated with Castle Creek, which invested in troubled banks. I was not able to locate Ruh.

Here's something you might be interested in.
Submit a free classified
or view all
Previous article

Top Websites To Buy Instagram Likes + Bonus Tip!

Next Article

Angry Pete’s goes from pop-up to drive-thru

Detroit Pizza sidles into the husk of a shuttered Taco Bell

A week ago (March 10), the Securities and Exchange Commission filed suit against a Portland, Oregon, financial firm named Aequitas and three of its high-living, socially prominent executives. They are charged with running a Ponzi scheme that bilked 1500 investors of $300 million and probably more.

On Monday (March 14), one of Aequitas' financial units was supposed to have shown up in federal court in San Diego to face a suit by Solana Beach–based American Student Financial Group. The financial group says that Aequitas cheated it out of commissions it was to have received for providing loans that Aequitas bought, then sold to its investors, who were making 5 to 15 percent on the loans.

"The trial has been postponed," says Robert S. (Bob) Banks, Jr., a Portland securities lawyer who is representing desperate investors. Banks says he spends five hours a day talking with the investors, some of whom weep that they have lost everything. "Their stories are heart-wrenching," says Banks.

Sponsored
Sponsored

The story of Aequitas is one of colossal chutzpah, and more likely colossal ignorance. One of Aequitas' specialties was buying troubled loans, packaging them, and selling them to investors. It also sold notes to finance its operations. Because there was high risk, investors got high interest rates.

But Aequitas bought the troubled loans of an extremely troubled institution — Corinthian Colleges, a string of for-profit colleges, which the parent bought cheaply because the institutions were having difficulties. Aequitas told investors the loans were safe because Corinthian vowed it would buy back loans that were delinquent after 90 days.

But Corinthian went down in flames. In June of 2014 it ceased rebuying the defaulted loans. Why didn't Aequitas suspect that would happen?

In July of 2007, the California attorney general's office said Corinthian "engaged in a persistent pattern of unlawful conduct." Corinthian paid $6.5 million to settle allegations that it had engaged in false advertising. Also in 2007, the U.S. Department of Education seized records of a Florida campus. In 2013, the Securities and Exchange Commission and Consumer Financial Protection Bureau launched investigations of Corinthian. But as Banks points out, during these troubled times, Aequitas opened a posh New York office and spent a bundle to refurbish its Oregon digs.

To stay afloat, Aequitas allegedly kept selling packages of dubious paper and didn't tell investors of its troubles. By last year, almost all the money coming in the door went out the back door to pay off early investors — the classic Ponzi scheme. Last year, Corinthian went out of business, pushed greatly by the federal government.

Kevin Jasper, a San Diego lawyer, predicted that Aequitas would collapse 17 months before it did. Jasper said the bad Corinthian loans would drain Aequitas of $70 million. I could not reach Jasper.

In September of 2010, Aequitas announced that Bill Malloy, whose office is in La Jolla, would become an executive vice president of Aequitas Capital Management. Malloy, who says his family fortune goes back to the early 1800s, appears to be a venture capitalist in emerging tech companies, investing family money. Michael Esler, a Portland lawyer, says, “Based on my 45 years in securities litigation, I have a strong hunch [Malloy] was a money raiser" for Aequitas. Malloy did not respond to a phone call.

In January of 2014, William J. Ruh was named an executive vice president and managing principal of Aequitas. At the time he was named to the post, Ruh was chairman-elect, treasurer, and trustee of the Rancho Santa Fe Foundation. Earlier he had served as an officer of the Rancho Santa Fe Education Foundation. He was associated with Castle Creek, which invested in troubled banks. I was not able to locate Ruh.

Comments
Sponsored
Here's something you might be interested in.
Submit a free classified
or view all
Previous article

SDSU pres gets highest pay raise in state over last 15 years

Union-Tribune still stiffing downtown San Diego landlord?
Next Article

San Diego Reader 2024 Music & Arts Issue

Favorite fakers: Baby Bushka, Fleetwood Max, Electric Waste Band, Oceans, Geezer – plus upcoming tribute schedule
Comments
Ask a Hipster — Advice you didn't know you needed Big Screen — Movie commentary Blurt — Music's inside track Booze News — San Diego spirits Classical Music — Immortal beauty Classifieds — Free and easy Cover Stories — Front-page features Drinks All Around — Bartenders' drink recipes Excerpts — Literary and spiritual excerpts Feast! — Food & drink reviews Feature Stories — Local news & stories Fishing Report — What’s getting hooked from ship and shore From the Archives — Spotlight on the past Golden Dreams — Talk of the town The Gonzo Report — Making the musical scene, or at least reporting from it Letters — Our inbox Movies@Home — Local movie buffs share favorites Movie Reviews — Our critics' picks and pans Musician Interviews — Up close with local artists Neighborhood News from Stringers — Hyperlocal news News Ticker — News & politics Obermeyer — San Diego politics illustrated Outdoors — Weekly changes in flora and fauna Overheard in San Diego — Eavesdropping illustrated Poetry — The old and the new Reader Travel — Travel section built by travelers Reading — The hunt for intellectuals Roam-O-Rama — SoCal's best hiking/biking trails San Diego Beer — Inside San Diego suds SD on the QT — Almost factual news Sheep and Goats — Places of worship Special Issues — The best of Street Style — San Diego streets have style Surf Diego — Real stories from those braving the waves Theater — On stage in San Diego this week Tin Fork — Silver spoon alternative Under the Radar — Matt Potter's undercover work Unforgettable — Long-ago San Diego Unreal Estate — San Diego's priciest pads Your Week — Daily event picks
4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs
Close

Anchor ads are not supported on this page.