The Securities and Exchange Commission has filed a civil action against Nicholas D. Skaltsounis, AIC, Inc., Community Bankers Securities, LLC (“CB Securities”), John B. Guyette, and John R. Graves, all of Virgina (the “Defendants”), for the fraudulent sale of more than $7.7 million in AIC promissory notes and stock.
Skaltsounis is CEO and president of AIC Inc., a financial services holding company for three broker-dealers and an investment advisor that were all involved in the scheme. AIC’s three subsidiary broker-dealers?Allied Beacon Partners Inc., Advent Securities Inc. and CBS Advisors LLC?were also named as “Relief Defendants” in the complaint. The complaint was filed in U.S. District Court for the Eastern District of Tennessee.
The Complaint alleges that from at least January 2006 through November 2009, Skaltsounis fraudulently offered and sold AIC promissory notes and stock to at least 74 investors in at least 14 states, many of whom were elderly, unsophisticated brokerage customers of CB Securities. Skaltsounis, 66, and at least one other defendant, are apparently seniors themselves.
Investors were promised interest and dividends ranging from 9 to 12.5 percent on the promissory notes and stock. The Defendants made those promises knowing that they did not have the ability to pay those returns.
According to the complaint, Skaltsounis used $2.5 million of the money raised from new investors to pay back principal and returns to existing investors in the nature of a Ponzi scheme; he paid himself $952,258; and approximately $3.6 million was used to keep the subsidiary broker-dealers solvent and to allow them to meet “net capital” requirements.
The scheme collapsed in early December 2009 when Skaltsounis could no longer solicit investments and recruit new investors to pay back existing investors.
The SEC is seeking permanent injunctions, civil penalties and disgorgement of funds received from the fraudulent scheme.
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