A Richmond businessman and two of his financial firms were ordered last week to pay combined penalties of nearly $70 million related to what the Securities and Exchange Commission called a $7 million offering fraud and Ponzi scheme.
The ruling against Nicholas D. Skaltsounis, AIC Inc. and Community Bankers Securities LLC was announced Friday by the SEC and is the result of a three-week trial held last year in Tennessee federal court. The defendants were first accused by the SEC of running the scheme in April 2011.
The trial found Skaltsounis, AIC and Community Bankers Securities liable for a fraud in a scheme against at least 74 investors in at least 14 states. The trial was held in Tennessee because a large number of the victims live there.
AIC billed itself as a financial services holding company that acquired small broker-dealers such as Community Bankers SEC, CBS Advisors, Waterford Investor Services and Advent Securities. Most of those firms had been headquartered at an office on Boulders View Drive.
Skaltsounis and his enterprise sold stakes in the companies and promised dividends of between 9 percent and 12.5 percent, particularly targeting the elderly and unsophisticated brokerage customers, the SEC’s case alleged.
“In reality, AIC and its subsidiaries were never profitable, and Skaltsounis and the companies used money raised from new investors to pay back principal and returns to existing investors,” the SEC said in its announcement of the penalties last week.
The SEC had asked for civil penalties and for the defendants to repay any ill-gotten gains, known as disgorgement.
As a result of last week’s judgment, AIC is being forced to disgorge $6.64 million, plus interest, and a penalty of $27.95 million.
Community Bankers Securities must disgorge $2.83 million plus interest and a penalty of $27.95 million.
Skaltsounis personally must pay a total $2.59 million in disgorgement and penalties.
No criminal charges were filed against any of the defendants.
Skaltsounis, who is in his late 60s, filed for Chapter 7 bankruptcy in August 2010.
Skaltsounis and the other defendants were represented by Charlottesville attorney Steve Biss, who did not return a call for comment by press time.
Attorneys Michael Rinaldi, John Donnelly III, G. Jeffrey Boujoukos and Scott Thompson worked the case for the SEC.