Executive indicted at defunct Lake Oswego firm Aequitas
The legal fallout continues for former executives of the now-defunct Lake Oswego company Aequitas Management, LLC.
On Tuesday, May 5, U.S. Attorney Billy J. Williams announced that 66-year-old Nelson Scott Gillis, of Lake Oswego, was indicted for conspiring to submit false statements to a federally insured creditor in order to secure a $4.2 million loan for Aequitas as it struggled to stay afloat in January 2016. Gillis was a senior executive and chief financial officer for Aequitas and other Aequitas-owned entities.
According to court documents cited in a press release, Aequitas used its investment funds to purchase what are known as "trade receivables" in education, health care, transportation and other consumer credit areas. Those purchases were funded in part by soliciting investors through the issuance of promissory notes, according to the press release, but Aequitas also borrowed funds from other financial institutions.
Wells Fargo Bank was one of those institutions, according to the U.S. Attorney's Office, and in January 2015 Aequitas created a $100 million line of credit with that bank. That loan agreement was amended in June 2015, through documents signed by Gillis on Aequitas' behalf.
It was at this point that, according to the U.S. Attorney's Office, Gillis made false statements belying the true state of his company.
"To receive advances on this line of credit, Aequitas had to certify several things, including that it was not experiencing an 'event of default' or 'potential event of default' on more than $2.5 million in debt held by third parties," the press release stated. "In early January 2016, Gillis and other Aequitas executives were advised that Aequitas was already in default on Private Note obligations exceeding $2.5 million. Despite that advice, on or about January 15, 2016, Gillis signed and, with others, submitted to Wells Fargo an 'advance notice,' requesting that Wells Fargo advance $4.2 million to Aequitas under the terms of their loan agreement. As part of this 'advance notice,' Gillis certified that 'no potential event of default or event of default has occurred or is occurring.'"
The company collapsed and was shut down by the SEC about two months later. In a separate settlement that was reached with investors in 2019, Aequitas companies were revealed to have been operating a ponzi scheme dating back to 2010.
That settlement, which resulted in $234.6 million being awarded to about 1,600 investors, was believed to be the largest settlement of a securities lawsuit in Oregon history.
Earlier in 2019, Brian Oliver, a former owner and executive vice president of Aequitas Management, LLC, pleaded guilty to conspiring to commit mail and wire fraud and laundering; Olaf Janke, another former owner and chief financial officer at Aequitas, pleaded guilty in June 2019 to the same charges as Oliver.
If found guilty, Gillis faces a maximum sentence of 90 years in prison, fines of $3 million or twice the gross monetary gains or losses resulting from his crimes, and 5 years of supervised release. He will be arraigned on May 15.
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