Walter Wurster, Et Al. v. Deloitte Et Al.

8/11/2016 3:09:18 PM
16CV25920
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IN THE CIRCUIT COURT OF THE STATE OF OREGON
FOR THE COUNTY OF MULTNOMAH
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WALTER WURSTER, individually;

WALTER WURSTER, as trustee for the
WALTER W. WURSTER REVOCABLE
TRUST; RONALD INOUYE, as trustee
for the WALTER W. WURSTER
IRREVOCABLE TRUST; ZAM
CAPITAL GROUP, LLC, a California
limited liability company; KEITH
BARNES, individually; CUSTOM
STAMPING, INC., a Nevada corporation;
LEE JOHNSON, individually; PAUL
SYLVAN, individually; PAUL GULICK,
individually; PAUL GULICK, as trustee
for GULICK FAMILY TRUST; SHARON
BARNES, individually; JULIE SCHMITZ,
individually; JEFF JOHNSON,
individually;
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COMPLAINT
(Violations of Oregon Securities Laws Under
ORS 59; Violations of Oregon Elder Abuse
Statute Under ORS 124)
CLAIMS NOT SUBJECT TO
MANDATORY ARBITRATION
JURY TRIAL REQUESTED
Amount Claimed: $92,900,000.00

Statutory Fee Authority ORS 21.160(1)(e)
Filing Fee: $1,056
Plaintiffs,
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Case No. _________
v.
DELOITTE & TOUCHE, LLP, a Delaware
limited liability partnership;
EISNERAMPER, LLP, a New York
limited liability partnership; TONKON
TORP, LLP, an Oregon limited liability
partnership; SIDLEY AUSTIN, LLP, an
Illinois limited liability partnership;
DUFF & PHELPS, LLC, a Delaware
limited liability company; and
TD AMERITRADE, INC., a New York
corporation,
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Defendants.
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Complaint
MILLER NASH GRAHAM & DUNN LLP
AT T OR NE YS AT LAW
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3 4 0 0 U. S. B AN CO RP T OW E R
1 1 1 S.W . FI FT H AVEN UE
P ORT L A N D , O RE GO N 9 7 2 0 4
Plaintiffs hereby allege as follows:
I.
STATEMENT OF THE CASE
1.
Defendants Deloitte & Touche, LLP, EisnerAmper, LLP, Tonkon Torp, LLP,
Sidley Austin, LLP, and Duff & Phelps, LLC (collectively, the "Professional Defendants"),
provided audit, legal, and valuation services in furtherance of Aequitas Management, LLC's
("Aequitas") investment scheme. Defendant TD Ameritrade, Inc., encouraged investors to
purchase Aequitas securities, provided assurances to investors about Aequitas, and recommended
Aequitas to investors. Because of the fraud, plaintiffs lost collectively over $44,400,000.00 in
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investments plus unpaid interest.
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2.
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Through promotional materials, private placement memoranda, and audited
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financial statements, which were prepared with the assistance and contributions of the
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Professional Defendants, Aequitas perpetrated an elaborate fraud on its investors that included
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but was not limited to the following:
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Aequitas misled investors that their money was being invested in credit
receivables when most of the money was being used to pay off other
investors, to cover operating expenses, and to provide Aequitas executives
the luxuries of a private jet, lavish parties, plush office renovations, and
substantial compensation. Specifically, on information and belief,
Aequitas Commercial Finance, LLC ("ACF"), invested only 25 percent of
investor money in income-generating assets during 2014 and only
8 percent during 2015.
Aequitas sold investors on its "diversified portfolio" of private credit

investments that included healthcare, student loans, and consumer credit
receivables. Yet Aequitas's business was heavily concentrated in student
loan receivables. For example, as of December 31, 2013, reportedly
$153.5 million of investor money was invested in student loan receivables
compared to only $12.4 million in healthcare receivables and $0 invested
in consumer finance receivables.
Aequitas falsely represented that its investments in student loan

receivables were "risk diversified." In reality, the performance of all its
student loan receivables depended almost exclusively on one educational
institution, Corinthian Colleges, Inc.
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Aequitas falsely represented that its securities were liquid assets, when in
reality the ability of Aequitas to liquidate prior investments was dependent
on getting new investor proceeds.
Aequitas mislead investors into believing that its securities were stable and
secure.
Aequitas concealed from investors Corinthian's precarious business

condition and ultimate collapse. Corinthian lost over $120 million
between June 30, 2011, and June 30, 2013, and defaulted on its obligations
to Aequitas on June 10, 2014. Corinthian filed for bankruptcy on May 4,
2015.
Aequitas sold investments that were purportedly secured by the credit

receivables it purchased (including student loans) and falsely represented
that it made arrangements that provided "substantial overcollateralization."
Aequitas misrepresented the value of its student loan receivables through

inflated valuations that were set at the discretion of Aequitas's top
executives. Specifically, Aequitas executives refused to adjust their
valuation of many student loan receivables, even after Corinthian
defaulted and after it went bankrupt.
Aequitas orchestrated intercompany transactions to conceal its true

financial position and to siphon investor funds that fueled Aequitas
executives' lavish lifestyles. For example, Aequitas engineered an
intercompany loan of ultimately $180 million from ACF to its parent,
Aequitas Holdings, Inc. ("Aequitas Holdings"), that, on information and
belief, was used to pay Aequitas's operating expenses. Aequitas reported
the loan as an asset of ACF at "face value" despite, on information and
belief, the following:
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o Aequitas Holdings lost $22.2 million in 2014 and $46.7 million in

2015 and had little or no chance of repaying the loan.
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o The amount due on the loan exceeded Aequitas Holdings' assets by

$20 million in 2014, $60 million at the end of February 2015, and
$100 million at the end of October 2015.
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By 2014, Aequitas's purported management fees dwarfed its income from

operations and net financing revenue. This imbalance should have alerted
defendants that Aequitas's business was failing.
Aequitas concealed that it lacked the ability to cover over $220 million in
redemptions that came due in 2015. Instead, Aequitas continued to sell its
securities through 2013, 2014, 2015, and early 2016 based on
representations of strength, diversification, and growth.
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Aequitas created new investment funds and convinced investors to move

existing Aequitas investments into the new funds, thereby pushing back
the date that Aequitas would ultimately have to repay investors.
At least as early as November 2015, Aequitas was unable to keep up with

redemption requests from investors. Yet Aequitas continued selling
securities to investors as late as January 2016.
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3.
Aequitas sold its securities through general solicitation and as part of a broad,
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continuous, and integrated offering that included online marketing, presentations to large groups,
pressured arrangements with investment advisors, and one-on-one solicitations to accredited and
unaccredited investors, several of whom shared no preexisting relationship with Aequitas. The
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securities should have been registered.
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4.
Through their advice, audits, and assistance with Aequitas's offering materials,
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agreements, corporate formations, financial information, recommendations, and assurances,
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defendants were instrumental in Aequitas's improper solicitation and fraudulent sale of the
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securities to plaintiffs, several of whom are elderly.
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5.
Investors believed that defendants were reputable firms. Aequitas identified and
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highlighted the role of the Professional Defendants in its promotional materials and financial
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statements as Aequitas's auditors, legal counsel, and advisors. References to defendants gave the
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Aequitas investment scheme credibility and the appearance of quality. This credibility and
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appearance of quality, stability, and security induced investors to entrust their money to
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Aequitas.
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6.
By way of example, EisnerAmper and Deloitte enabled Aequitas to sell its
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securities with "Audited" financial information in promotional materials that concealed
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Aequitas's true financial condition, the actual value of collateral purportedly backing
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investments, and Aequitas's concentration in Corinthian. Duff & Phelps similarly added
credibility to Aequitas's deception by providing asset valuations that were used in Aequitas's
offering materials, while Tonkon and Sidley delivered the legal support necessary to orchestrate
and perpetuate Aequitas's scheme through, among other things, the improper solicitation and sale
of its securities, the preparation of misleading offering materials, and intracompany formation
and manipulation designed to disguise Aequitas's failure. TD Ameritrade facilitated Aequitas's
improper and fraudulent sale of securities by recommending Aequitas to investors and by serving
as custodian of Aequitas investments.
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Through this action, plaintiffs seek to recover damages and attorney fees under
the Oregon Securities Laws and Oregon's Elder Abuse statute.
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II.
A.
PARTIES
Plaintiffs
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8.
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Plaintiffs are a group of investors who all purchased various securities from the
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Aequitas entities in excess of $44,400,000.00. See Exhibit 1, Summary of Plaintiffs'
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Investments, for more information.
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B.
Defendants
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9.
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Defendant Deloitte & Touche, LLP, is a Delaware limited liability partnership
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registered to do business in Oregon. On information and belief, Deloitte performed accounting
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services in the state of Oregon that are the subject of this dispute.
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10.
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Defendant EisnerAmper, LLP, is a New York limited liability partnership
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registered to do business in Oregon. On information and belief, EisnerAmper performed
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accounting services in the state of Oregon that are the subject of this dispute.
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11.
Defendant Tonkon Torp, LLP, is an Oregon limited liability partnership. On
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information and belief, Tonkon performed legal services in the state of Oregon that are the
subject of this dispute.
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Defendant Sidley Austin, LLP, is an Illinois limited liability partnership. On
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information and belief, Sidley performed legal services in the state of Oregon that are the subject
of this dispute.
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Defendant Duff & Phelps, LLC, is a Delaware limited liability company
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registered to do business in Oregon. On information and belief, Duff & Phelps performed
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accounting and valuation services in the state of Oregon that are the subject of this dispute.
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Defendant TD Ameritrade, Inc., is a New York corporation registered to do
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business in Oregon. TD Ameritrade encouraged investors to purchase Aequitas securities,
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provided assurances to investors about Aequitas, and recommended Aequitas investments to
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investors. TD Ameritrade also served as custodian for certain Aequitas securities.

III.
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JURISDICTION AND VENUE

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This court has personal jurisdiction over defendants because, as described below:
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(a) defendants do business and engage in substantial activities in this state; and (b) the injuries to
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plaintiffs arise out of acts and omissions that occurred within the state of Oregon.
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This court has subject matter jurisdiction over defendants and this action under
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ORS 14.030 because this court has personal jurisdiction over all defendants.
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17.
Multnomah County is a proper venue for the claims for relief under ORS 14.080
because defendants Tonkon, Deloitte, and TD Ameritrade conducted regular, sustained business
activity within the county.

IV.
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A.
FACTUAL BACKGROUND
Aequitas's Operation
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Founded in 1993, Aequitas at all relevant times operated out of its central Lake
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Oswego, Oregon, offices under the leadership of its chief executive officer and president, Robert
Jesenik.
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Aequitas purportedly generated revenue through the sale and management of
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various investment products, including promissory notes and participation interests in Aequitas
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equity funds.
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20.
Aequitas sold investors on an investment strategy that consisted primarily of
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subprime investments in "underrepresented" credit markets, including healthcare, student loans,
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and consumer credit. At one point, Aequitas focused on buying healthcare receivables from
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hospitals around the country. Aequitas emphasized the purported safety of its investments based,
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in part, on recourse agreements that required the hospitals to buy back delinquent receivables.
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Beginning in or around 2011, Aequitas expanded its healthcare receivables
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strategy to student loan receivables, investing heavily in student loan receivables from
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Corinthian, a for-profit education company. Over the years that followed, Aequitas acquired a
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substantial position in Corinthian student loan receivables. Many of these loans were subject to
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recourse agreements with Corinthian.
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22.
Aequitas touted that it operated its "business prudently," assuring investors that
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"[w]hen in doubt," Aequitas would "share morenot less with clients." In addition to applying
"faith-based values throughout" its organization, Aequitas "use[d] innovation and imagination to
conceive and achieve things that did not exist before."
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In reality, Aequitas misled investors and used investors' money for its executives'
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personal gain and vanity, including private jets, extravagant parties and trips, and new offices.
B.
Aequitas's Organizational Structure
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Through the design and engineering of Jesenik, other Aequitas employees, and
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outside legal counsel, including Tonkon and Sidley, the Aequitas operation expanded into a web
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of over 75 interrelated companies, many of which shared overlapping management and
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ownership. Aequitas used its control over this corporate infrastructure to orchestrate
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intercompany transactions between various Aequitas entities, including loans and in-kind
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distributions. A depiction of the "Aequitas Entity Structure" filed by the receiver in SEC v.
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Aequitas Management, LLC, et al., Case No. 3:16-cv-00438, is attached as Exhibit 2.
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25.
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Formed in 2007, Aequitas Management, LLC ("Aequitas Management"), is an
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Oregon limited liability company at the top of Aequitas's elaborate structure. On information
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and belief, Aequitas Management held an 84 percent ownership interest in and exercised control
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over Aequitas Holdings.
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Also formed in 2007, Aequitas Holdings is an Oregon limited liability company
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that directly or indirectly owned all the Aequitas entities that issued securities to investors.
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Aequitas Holdings was the sole owner of Aequitas Capital Management, Inc. ("ACM"), which is
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an Oregon corporation that was formed in 1993. ACM served as the manager of several
Aequitas entities that issued securities to investors.
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ACM was the sole owner of Aequitas Investment Management, LLC ("AIM"), an
Oregon limited liability company that was formed in 2006. AIM served as an investment advisor
and as manager of certain Aequitas equity funds.
C.
Aequitas's Investment Products
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Aequitas sold promissory notes and ownership interests through the companies
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listed below. The promissory notes and ownership interests issued by Aequitas through these
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companies are securities under Oregon law.
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Aequitas Commercial Finance, LLC
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Wholly owned by Aequitas Holdings, Aequitas Commercial Finance, LLC
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("ACF"), was formed in 2003 as an Oregon limited liability company. ACF was operated as a
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commercial finance company, purportedly targeting "inefficient market conditions" that were
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"underserved by traditional lenders."
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30.
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ACF raised capital through its "Private Notes Program" by issuing promissory
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notes to investors (the "ACF Notes"), which were marketed and sold through private placement
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memoranda ("PPMs"), promotional materials, and other forms of solicitation. The ACF Notes
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paid interest rates ranging from 5 to 15 percent. Investors had the option of receiving quarterly
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interest payments or reinvesting interest at the same rate and receiving the balance when the
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ACF Notes matured. The ACF Notes generally matured from one to five years after issuance.
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Most, if not all, of the ACF Notes included terms that allowed the investor to extend the maturity
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date and an enhanced interest rate in the event of default.
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31.
The ACF Notes were purportedly secured by the "entire balance sheet of ACF,"
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meaning that investors held a security interest in all of ACF's right, title, and interest in corporate
assets, both existing and after-acquired.
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As part of its solicitation, Aequitas provided potential investors with PPMs that
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purportedly summarized the general terms of the ACF Notes, Aequitas's corporate structure and
management, and associated risks.
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ACF's PPM dated November 30, 2012, included the following statements, among
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others:
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"Coming out of the credit crisis, Aequitas expanded its focus to include corporate
and institutional borrowers. The Company has completed several transactions
structured to limit credit risk to Secured Note holders and the Company by
purchasing/financing its assets at a discount with recourse to large corporate
balance sheets, leading to significant asset coverage."
"The Company uses proceeds from the issuance of Secured Notes to engage in
various specialty financing transactions, and to provide senior and junior debt and
equity funding for the benefit of its affiliates and its related investment programs.
The activities include but are not limited to:
"Funding or financing the purchase of student loan receivables from

educational providers.
"Funding or financing the purchase of patient-pay receivables from

healthcare providers.
"Funding or financing the purchase of receivables and loan portfolios, or

direct collateralized loan and lease obligations.
"Engaging in other debt transactions and equity investments in third party

private credit strategies and companies.
"Providing working capital and operating liquidity lines of credit to the

Company and its affiliates, including making equity investments in funds
managed by Aequitas Investment Management, LLC, an investment
advisor registered with the SEC."
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34.
ACF's PPM dated November 30, 2012, also included a "Financial Information
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Summary" that reflected a purported increase in net revenue from $4,792,200 in 2010 to
$13,540,600 in 2011, in addition to a purported increase in "Investment Assets" of $79,927,400
in 2010 to $136,639,900 in 2011. The PPM identified EisnerAmper as ACF's auditor and
Tonkon as its legal counsel. The PPM also identified the financial information with the headings
"Audited," "INCOME STATEMENT," and "BALANCE SHEET" and included financial data
derived from EisnerAmper's combined 2011 and 2012 ACF audit.
35.
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Aequitas issued a supplemental PPM for ACF dated March 1, 2013, that attached
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and restated the same information contained in ACF's PPM dated November 30, 2012, including
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the statements above. The PPM identified EisnerAmper as ACF's auditor and Tonkon as its
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legal counsel. The PPM also identified the financial information with the headings "Audited,"
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"INCOME STATEMENT," and "BALANCE SHEET" and included financial data that was
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derived from EisnerAmper's combined 2011 and 2012 ACF audit.
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36.
Aequitas issued another PPM for ACF dated November 30, 2013, which included
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the same or similar statements as those quoted in paragraph 33 above.
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37.
ACF's PPM dated November 30, 2013, also included a "Financial Information
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Summary" that reflected a purported increase in "total comprehensive income" from $2,498,000
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in 2012 to $14,483,000 in 2013, in addition to a purported increase in "Investment Assets" from
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$208,863,000 in 2012 to $306,523,000 in 2013. The PPM identified Deloitte as ACF's auditor
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and Tonkon as its legal counsel. The PPM also identified the financial information with the
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headings "Audited," "INCOME STATEMENT," and "BALANCE SHEET" and included
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financial data derived from EisnerAmper's combined 2011 and 2012 ACF audit. For example,
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the PPM represented that Aequitas's "Audited 2011" "Gain/(Loss) on Investments," was
"$3,659," while EisnerAmper's combined 2011 and 2012 ACF audit reflected a "Gain on sale of
investments" in 2011 of "3,659,029" dollars. In addition, some of the financial information
provided to potential investors in the ACF PPM was derived from Deloitte's 2013 ACF audit.
For example, the PPM represented that Aequitas's "Audited 2013" "Loans to Affiliates," in
thousands of dollars, was "$120,539," while the balance sheet from Deloitte's combined 2013
and 2014 ACF audit reflected that "Notes receivable, affiliates" in 2013 was "$120,539,015."
38.
During 2014, Aequitas also provided potential investors with promotional
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material for ACF dated August 28, 2014, that included the following statements under the
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caption "Why Private Credit":
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"Financings are privately negotiated and are secured by significant equity and/or
underlying assets pledged as collateral underneath them. The pool of assets is
often comprised of self-liquidating assets.
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"A diversified portfolio of private credit instruments can provide substantial yield
pickup over public market fixed income securities while still providing strong
collateral and downside protection.
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"Private credit returns are achieved by investing in predetermined, contractual

streams of cash flows at an attractive price. Returns are predictable at the time of
purchase."
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39.
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Touting that "Aequitas' investment vehicles are audited annually by independent
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auditors," the promotional material included the following purported financial information for
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ACF as of June 30, 2014:
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ACF's investment in student loan receivables had a book value of

$137,802,000 that was backed by collateral valued at $280,374,000.
ACF's total assets had a book value of $482,190,000 and were secured by
collateral valued at $646,976,000.
ACF's net assets had a book value of $379,726,000 and were secured by
collateral valued at $544,512,000.
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40.
The student loan receivables were purportedly one of ACF's largest assets. ACF
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purchased the student loan receivables directly, as well as through its subsidiary ASFG, LLC
(later renamed "Campus Student Funding, LLC" ("CSF")). The bulk of the student loan
receivables held by ACF, ASFG, and CSF were subject to a recourse agreement with Corinthian.
41.
At least as early as December 2011, ACF promotional materials sometimes
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included a map of the United States that depicted the nationwide distribution of Corinthian's
campuses. The map made it appear that Aequitas's investments in student loan receivables were
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generated from schools across the country. The map made no mention that all, or nearly all, of
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Aequitas's student loan receivables were purchased from Corinthian and that the "school
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locations" on the map were all, or nearly all, for-profit colleges owned by Corinthian. In fact, the
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map included no mention of Corinthian.
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42.
ACF's purported assets also included debt obligations (through loans or advances)
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owed by various Aequitas entities. For example, ACF funneled money to its parent company,
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Aequitas Holdings, which in turn would provide advances to other Aequitas entities. ACF's
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loans to Aequitas Holdings were purportedly secured by all the assets of Aequitas Holdings.
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43.
In addition, ACF's purported assets included ownership interests that it held in
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various Aequitas entities, including Aequitas Capital Opportunities Fund ("ACOF"); Aequitas
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Income Opportunity Fund ("AIOF"); Aequitas Income Opportunity Fund-II ("AIOF-II");
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CarePayment Holdings, LLC; CarePayment, LLC; Campus Student Funding, LLC; ML
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Financial Holdings, LLC; MotoLease Financial, LLC; and Unigo Student Funding, LLC.
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44.
ACM served as the manager of ACF. As compensation for its services, ACF paid
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ACM an annual fee of 2 percent of ACF's assets, in addition to 20 percent of ACF's annual net
income.
45.
The ACF Notes were not registered as securities. ACF was also not registered as
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an investment company under the U.S. Investment Company Act of 1940 (the "Investment
Company Act").
46.
TD Ameritrade encouraged investors to purchase ACF Notes, provided
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assurances to investors about ACF, and recommended ACF Notes to investors.

2.
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Aequitas Income Opportunity Fund, LP
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47.
Aequitas formed Aequitas Income Opportunity Fund, LP ("AIOF"), in 2009.
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48.
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AIOF raised capital by selling five-year promissory notes to investors (the "AIOF
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Notes"). The AIOF Notes included a provision allowing the noteholder to redeem the note after
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two years. The AIOF Notes were marketed and sold through promotional materials and other
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forms of solicitation. The AIOF Notes carried a fixed 10 percent annual interest rate plus the
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possibility of an enhanced yield. The AIOF Notes were purportedly secured by all assets of
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AIOF and characterized as "senior secured." Some, if not all, of the AIOF Notes included terms
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that allowed the investor to extend the maturity date.
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49.
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According to its audited financial statements, AIOF purchased or participated in
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financing the purchase of student loan and healthcare receivables and purchased or participated
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in financing other senior secured loans and consumer and commercial receivables.
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50.
With respect to AIOF's investment in student loans, AIOF's promotional materials
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stated, "[A]ll delinquent student loans are recoursed back to the school, creating a situation
where the risk of non-performance shifts from the student to the balance sheet of the school. The
estimated recourse amount, when viewed with the cash balance sheet results in an effective
recourse coverage of two times."
51.
AIOF's promotional materials also characterized its investment in student loan
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receivables as "risk diversified." At least as early as June 2011, promotional materials
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sometimes included a map of the United States that depicted the nationwide distribution of
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Corinthian's campuses. The map made it appear that Aequitas's investments in student loan
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receivables were generated from schools across the country. The map made no mention that all,
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or nearly all, of Aequitas's student loan receivables were purchased from Corinthian and that the
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"school locations" on the map were all, or nearly all, for-profit colleges owned by Corinthian. In
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fact, the map included no mention of Corinthian.
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52.
AIOF invested in Aequitas Corporate Lending, LLC ("ACL"), which invested in
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subsidiaries of ACF and ACOF, including EDPlus Holdings, LLC. In addition, AIOF lent
19
money to ACF. ACF's debt obligations to AIOF were purportedly secured by ACF's student
20
loan receivables and the cash flows generated by MotoLease. ACF was also AIOF's sole
21
member.
22
53.
On information and belief, the AIOF Notes were not registered as securities, and
23
24
AIOF was not registered under the Investment Company Act.
25
26
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54.
AIM managed AIOF. AIM received a fee for its services as manager equal to
2
3
2 percent annually of all the assets of AIOF.

3.
Aequitas Capital Opportunities Fund, LP
55.
In late 2013, Aequitas formed Aequitas Capital Opportunities Fund, LP
6
7
("ACOF"). ACOF raised capital by selling ownership interests. ACOF, in turn, used investor
capital to purchase equity interests in certain companies that had previously been held by other
Aequitas entities. ACOF's portfolio companies have included but not been limited to the
10
following:
(a)
11
12
healthcare accounts receivable servicing business;

(b)
13
14
CarePayment Technologies, Inc. ("CPYT"), a company that operated a
EDPlus, a company that partnered with CSF to finance purchases of
student loan receivables from Corinthian and at various times did business as Unigo;
(c)
15
ETC Global Group, LLC ("ETC"), a company that facilitated high
16
frequency trading, profiting from transaction fees paid by clients and rebates paid by securities
17
exchanges;
(d)
18
MotoLease, LLC ("MotoLease"), a company that offered leasing to near-
19
prime and subprime consumers to acquire recreational vehicles, such as ATVs and motorcycles;
20
and
(e)
21
22
model portfolios for smaller investment managers and advisors.
23
56.
ACOF's purported profits and value derived primarily from its ownership interests
24
25
Strategic Capital Alternatives, LLC ("SCA"), a company that developed
in CPYT, EDPlus, ETC, MotoLease, and SCA.
26
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57.
Aequitas marketed and sold ACOF ownership interests (the "ACOF Interests")
2
3
through PPMs, promotional materials, and other forms of solicitation. The ACOF Interests
offered a "preferred return" of 8 percent annually. The ACOF partnership expired after seven
years, and limited partners, including private investors, could not withdraw from the partnership
before that expiration.
58.
As part of its promotion of ACOF, Aequitas provided potential investors with
PPMs that summarized the general terms of the investment opportunity, Aequitas's corporate
10
structure and management, and associated risks.
11
59.
ACOF issued a PPM dated February 2014 that informed investors that "capital
12
13
committed to [ACOF] will be allocated to both existing and new investments, with a significant
14
portion of invested capital funding growth investments in [ACOF's] portfolio companies."
15
60.
With respect to EDPlus, ACOF's PPM provided the following statements:
16
17
"Relative to the finance function of the company, EDPlus partners with Campus
Student Funding, LLC[], which finances purchases of new and seasoned private
student loans on both full-recourse and non-recourse bases.
18
19
"Today, all of the recourse loans that are purchased are cross-collateralized with
all other loans purchased from the respective educational institution. If an
educational institution is unable to honor its recourse obligation, [Campus Student
Funding] would be entitled to all of the cash flows from the loans until all of the
remaining individual loans were fully repaid. By structuring the purchase of the
loans at a significant discount that provides substantial over-collateralization, CSF
is able to mitigate the risk of an educational institution not meeting its obligation
to repurchase severely delinquent loans."
20
21
22
23
24
61.
All, or nearly all, of the student loan receivables that EDPlus was involved with
25
26
were from Corinthian.
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62.
ACOF's February 2014 PPM included valuations for its various portfolio
2
3
companies and "Performance Metrics" supposedly supporting those valuations. The
performance metrics purporting to support the valuation of EDPlus reflected a purported increase
in assets under management from $247,675,768 as of December 31, 2012, to $300,759,670 as of
November 30, 2013. These figures were based on the "face value of outstanding receivables."
63.
ACOF's February 2014 PPM advertised that Duff & Phelps had been engaged to
"provide an estimated range of fair values" for some of ACOF's portfolio companies, including
10
EDPlus. Duff & Phelps's valuation ranges were provided to investors in the PPM.
11
64.
ACOF's February 2014 PPM and other promotional materials provided to
12
13
investors also touted Deloitte as its auditor and Sidley as the legal advisor to ACOF's general
14
partner (Aequitas Capital Opportunities GP, LLC) and its investment advisor (AIM).
15
65.
16
ACOF's February 2015 PPM supplement explained that the December 31, 2013,
17
valuations in the PPM were "audited by an independent auditor." This independent auditor was
18
Deloitte.
19
66.
20
In addition, the February 2015 PPM supplement explained that "Duff and Phelps
21
provided an estimated range of fair values for" CPYT, Unigo, and ETC, and that "the valuations
22
listed [in the PPM] are within the estimated ranges provided by Duff and Phelps."
23
67.
The ACOF Interests were not registered as securities. ACOF was not registered
24
25
as an investment company under the Investment Company Act.
26
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68.
AIM served as the investment advisor for ACOF. AIM received a fee for its
2
3
services as the investment advisor equal to 2 percent annually of all capital commitments from
limited partners.
4.
Aequitas Income Opportunity Fund II, LLC
69.
Aequitas formed Aequitas Income Opportunity Fund II, LLC ("AIOF-II"), in
7
8
2014.
70.
AIOF-II raised capital by issuing notes to investors (the "AIOF-II Notes"), which
10
11
were marketed and sold through PPMs, promotional materials, and other forms of solicitation.
12
The AIOF-II Notes paid 10 percent annual interest on 12-month notes. Investors could receive
13
quarterly interest payments or reinvest interest at the same rate and receive the balance at
14
maturity. The AIOF-II Notes were for a 12-month minimum, but no note could have a term
15
extending beyond September 30, 2024. Most, if not all, of the AIOF-II Notes included terms that
16
allowed the investor to extend the maturity date.
17
71.
The AIOF-II Notes were purportedly secured by a lien on all assets of AIOF-II.
18
19
The AIOF-II Notes were characterized as "senior secured" with first priority security interest in
20
all assets of the fund. The AIOF-II Notes were subordinate to certain "senior lenders."
21
72.
According to AIOF-II's PPM dated October 1, 2014, AIOF-II was formed to
22
23
"purchase or finance the purchases of receivables, loans and leases from various credit strategy
24
programs, including but not limited to, hospitals, educational institutions and other businesses."
25
Aequitas's strategy included AIOF-II's lending money to ACF and its subsidiaries, which would
26
then use those proceeds to "acquire portfolios of Credit Strategy Receivables."
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73.
AIOF-II's PPM dated October 1, 2014, included the following statement relating
2
3
to the AIOF-II investment in student loan receivables:
"All of the recourse loans that are purchased are cross-collateralized with all other
loans purchased from the respective school. If a school is unable to honor its
recourse obligation, Aequitas would be entitled to all of the cash flows from the
loans until all of the remaining individual loans were fully repaid. By structuring
the purchase of the loans at a significant discount which provides substantial overcollateralization, Aequitas is able to mitigate the risk of a school not meeting its
obligation to repurchase severely delinquent loans."
74.
5
6
All, or nearly all, of the student loan receivables were from Corinthian.
9
10
75.
AIOF-II's PPM identified Deloitte as its auditor and Tonkon as its legal counsel.
11
12
76.
The AIOF-II Notes were not registered as securities. AIOF-II was not registered
13
14
under the Investment Company Act.
15
77.
AIM managed AIOF-II. AIM received a fee for its services as manager equal to
16
17
2 percent annually of all the assets of AIOF-II.

5.
18
Aequitas Private Client Fund, LLC
19
78.
20
Aequitas Private Client Fund, LLC ("APCF"), was formed in 2015.
21
79.
APCF raised capital by issuing notes to investors (the "APCF Notes"), which
22
23
were marketed and sold through PPMs, promotional materials, and other forms of solicitation.
24
The APCF Notes carried either a fixed interest rate of 12 percent or a fixed interest rate of
25
8 percent, with an enhanced yield of up to 7 percent based on the annual profits of the fund.
26
Investors had the option of receiving quarterly interest or reinvesting interest at the same rate and
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receiving the balance when the APCF Notes matured. The APCF Notes were for a minimum
three-year term. Most, if not all, of the APCF Notes included terms that allowed the investor to
extend the maturity date.
80.
The APCF Notes were purportedly secured by all assets of APCF. The APCF
Notes supposedly held a "priority security interest" with priority status over certain collateral.
The APCF Notes were also subordinate to certain "senior creditors."
81.
APCF's PPM dated July 31, 2015, marketed its investment strategy, which
10
included the acquisition, purchase, or financing of "credit strategy receivables," including student
11
loan and healthcare receivables. APCF invested in ACOF and its subsidiaries, including EDPlus,
12
by financing and purchasing equity interests.
13
82.
14
To attract investors, Aequitas presented APCF as an exclusive investment
15
opportunity available only to Aequitas's "best clients" that provided more security and stability
16
through better-quality assets and collateral.
17
83.
18
APCF's PPM identified Deloitte as its auditor and Tonkon as its legal counsel.
19
84.
20
21
The APCF Notes were not registered as securities. APCF was not registered
under the Investment Company Act.
22
85.
23
24
AIM managed APCF. AIM received a fee for its services as manager equal to
2 percent annually of all outstanding notes issued by APCF.
25
26
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6.
Portfolio Companies
86.
In addition to the Aequitas entities identified above, ACF and ACOF owned in
part or in whole a variety of companies that supposedly performed services related to the
processing of healthcare or student loan receivables, as well as unrelated finance services (the
"Portfolio Companies").
87.
8
9
10
Aequitas raised capital by issuing equity interests in the Portfolio Companies and
by causing the Portfolio Companies to issue promissory notes (the "Portfolio Securities").
Examples include:
11
CarePayment Holdings, LLC ("CarePayment Holdings"), which was

wholly owned by ACF, issued promissory notes directly to investors
CarePayment Holdings purchased healthcare receivables. ACF
guaranteed millions in loans made by CarePayment's.
ETC Founders Fund, LLC ("ETC Fund"), which was partially owned by
ACF, sold ownership interests directly to investors.
12
13
14
15
88.
16
On information and belief, the Portfolio Securities were not registered as
17
securities, and the Portfolio Companies were not registered as investment companies under the
18
Investment Company Act.
19
D.
Aequitas's General Solicitation and Sale of Its Securities
20
89.
21
22
Aequitas sold promissory notes and partnership interests by pitching itself as a

successful, rapidly expanding, growth-oriented company with a bright future.
23
90.
24
25
From 2012 through 2015, Aequitas solicited and sold its products to thousands of
investors through a broad and multifaceted marketing campaign that included the following:
26
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1.
Online Marketing
91.
3
4
Aequitas operated a website that it used to generally advertise opportunities to

invest with Aequitas in several respects, including but not limited to the following content:
Aequitas touted that "[w]e have created a number of new and innovative
investment opportunities that can add real value to your portfolio."
Aequitas advertised that "[i]ndividuals, advisors and institutions choose

Aequitas because of our deep expertise, impressive track record and
investor-focused solutions."
The website emphasized Aequitas's "focus on high yielding strategies with

education, healthcare and private credit."
Aequitas's website dedicated separate webpages to descriptions of the

markets for healthcare and student loan receivables and included
descriptions of Aequitas's affiliates and partners in those markets.
The website invited potential investors to connect with Aequitas and

provided an online form to obtain more information regarding Aequitas's
"investment opportunities," in addition to a phone number to call.
6
7
8
9
10
11
12
13
14
Through its website, Aequitas engaged in the general solicitation of unaccredited investors.
15
2.
Opening Access to Investment Advisors' Clients
16
92.
17
Aequitas expanded the pool of potential investors significantly by soliciting and
18
making presentations to hundreds, if not thousands, of clients of numerous investment advisors.
19
For example, Aequitas formed networks of investment advisorsincluding Aequitas Capital
20
Partners ("ACP") and Aequitas Financial Services Network ("AFSN")through which Aequitas
21
marketed its products in presentations, seminars, and other communications. On information and
22
belief, Aequitas further formed, owned, paid, and/or lent money to several investment advisors
23
and conditioned its financial support on the sale of a certain number of Aequitas products.
24
Through these activities, Aequitas engaged in general solicitation of accredited and unaccredited
25
investors with whom it had no substantive pre-existing relationship.
26
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3.
Presentations to Groups of Potential Investors
93.
Aequitas pitched its investment opportunities at meetings and events that were
attended by large groups of potential investors. For example, Aequitas presented to a group of
approximately 50 to 100 people in Sun Valley, Idaho during a seminar put on by the
motivational speaker and author Tony Robbins. On information and belief, Aequitas executives
also made the following presentations to the Palm Beach Investment Research Group:
On July 11, 2011, Aequitas made a presentation regarding its "niche in

financing patient-pay hospital receivables in order to increase low
recovery rates."
On May 29, 2014, Aequitas presented regarding its private note program,
which it described as a "high yielding secured debt offering that comprises
a diversified portfolio of private credit investments providing substantial
yield pickup over public market fixed income securities while still
providing strong collateral and downside protection."
On June 26, 2014, Aequitas again made a presentation regarding

"Aequitas Private NoteA high yielding secured debt offering that
comprises a diversified portfolio of private credit investments providing
substantial yield pickup over public market fixed income securities while
still providing strong collateral and downside protection."
On April 30, 2015, Aequitas pitched its "niche credit strategies which
deliver high levels of stable, non-correlated income by way of consistent
quarterly interest payments. Key strategies in healthcare, education, and
financial services feature consumer level financing with contractual risk
mitigation agreements with financially strong institutions."
9
10
11
12
13
14
15
16
17
18
19
Through these presentations, Aequitas engaged in general solicitation of investors with whom it
20
had no substantive preexisting relationship before the solicitation.
21
4.
Hosting Lavish Events
22
94.
23
Aequitas hosted all-expense-paid events, impressing its most valued targets by
24
flying them around on Aequitas's private jet. For example, during at least 2011, 2013, 2014, and
25
2015, Aequitas arranged for travel, golf, dining, and lodging at an exclusive resort in Palm
26
Springs. As part of the event, the attendees were pitched Aequitas investment opportunities.
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5.
By Enlisting Its Executives as Unlicensed Sellers
95.
Aequitas marketed the sale of its securities through presentations and direct
solicitations conducted by its executives. For example, Aequitas executives Bob Jesenik and
Brian Oliver engaged in the regular solicitation and sale of Aequitas securities through numerous
phone calls, presentations, meetings, golf outings, and dinners with investors during 2013, 2014,
and 2015. Neither Jesenik nor Oliver was licensed as a seller or broker of such securities.
96.
9
10
On information and belief, AIOF and ACF securities were marketed and sold to
unaccredited investors, without providing PPMs or subscription agreements.
11
97.
12
On information and belief, Aequitas also solicited and sold its securities to
13
investors with whom it had no substantive preexisting relationship before the solicitation and
14
sale.
15
98.
16
Through the activities listed above and others, Aequitas engaged in a broad,
17
continuous, and integrated offering of its products, as part of the same plan of financing and for
18
the same purpose of selling sub-prime investments in under-represented credit markets, including
19
healthcare, student loans, and consumer credit.
20
E.
Aequitas Is Crippled by Its Overconcentration in Student Loan Receivables
21
99.
22
23
From 2011 through 2014, Aequitas purchased hundreds of millions of dollars of

Corinthian student loans, hitching Aequitas's survival to Corinthian's.
24
100.
25
At the end of 2010, Aequitas reported that it owned $2.7 million in healthcare
26
receivables and no student loan receivables. By the end of 2011, these reported amounts had
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increased to $40.2 million in student loan receivables, compared with $19.6 million in healthcare
receivables. One year later, Aequitas's outstanding student loan receivables had exploded to
reportedly $124.8 million, compared with $27.9 million in healthcare receivables, a ratio of
nearly 4.5 to 1. And at the end of 2013, Aequitas reported that it was carrying $153.5 million in
Corinthian student loan receivables compared with only $12.4 million in healthcare receivables.
Heading into 2014, Aequitas was 12 times more concentrated in student loan receivables than
healthcare receivables.
101.
Aequitas acquired most of the student loan receivables through ASFG, LLC, and
10
CSF. Corinthian agreed to pay Aequitas a "discount" fee on each loan, and the parties' recourse
11
agreement required Corinthian to buy back loans that were delinquent for 90 days.
12
102.
13
14
Starting at least as early as 2010, Corinthian became the subject of public

scrutiny, raising serious concerns about Corinthian's future:
15
In 2010, the U.S. Government Accountability Office (the "GAO")

investigated and testified at congressional hearings regarding the student
recruitment and enrollment practices employed by for-profit colleges. The
GAO released a report in 2010 that publicized its findings that such
collegeswhich included Corinthianused "fraudulent practices" and
encouraged applicants to falsify their financial-aid forms.
At least as early as 2012, state attorneys general had joined Congress in

investigating illegal business practices at Corinthian and other for-profit
colleges. Regulators warned that such a high percentage of students at
these schools were experiencing difficulty paying off their loans that the
schools could lose access to federal student aid. Corinthian's students
were among the worst, defaulting at a rate that was 64 percent higher than
the industry average.
A U.S. Senate investigation in 2012 was particularly critical of Corinthian.

The report stated, "[I]t is unclear that Corinthian delivers an educational
product worth the rapidly growing Federal investment taxpayers and
students are making in the company." The public report further added that
"[i]t is unclear whether taxpayers or students are obtaining value from the
$1.7 billion investment that taxpayers made in Corinthian in 2010."
16
17
18
19
20
21
22
23
24
25
26
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The news media reported extensively regarding Corinthian's predatory

tactics and the growing regulatory pressure. Investors had also taken
notice. From April 2010 to April 2013, Corinthian's share price plunged
nearly 90 percent.
By at least as early as June 2013, the SEC was investigating Corinthian's

business practices, defaults on student loans, and compliance with
U.S. Department of Education financial requirements.
Corinthian lost over $120 million between June 30, 2011, and June 30,
2013.
2
3
4
5
6
7
103.
Meanwhile, Aequitas was experiencing its own significant developments,
8
9
including the following:
10
On information and belief, Aequitas's collection rate on student loan

receivables declined drastically from 2012 to 2013.
Aequitas was defending two lawsuits filed by its partner in the student
loan financing business, American Student Financial Group, Inc.
American Student Financial Group, Inc., claimed that Aequitas had
breached agreements and engaged in other wrongdoing in connection with
an agreement to finance Corinthian student loans. (Tonkon represented
Aequitas in this litigation.)
Several key managers and professionals abandoned Aequitas, including

managing director Thomas Sidley, chief operating officer Steve Hedberg,
and assistant general counsel Jessica Morgan.
17
Aequitas changed its auditors from EisnerAmper to Deloitte.
18
Aequitas formed new entities to attract more investor money, including

ACOF, AIOF-II, and APCF.
11
12
13
14
15
16
19
104.
20
At least as early as August 2012, Corinthian reported to investors that "[t]otal
21
22
losses associated with the program recourse [student loan receivables agreement with Aequitas],
23
inclusive of the discount paid to ASFG, are estimated to be approximately 50% of the amount
24
funded." In other words, Corinthian forecasted that it would have to spend tens of millions of
25
dollars buying back loans from Aequitas that were made to delinquent borrowers.
26
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105.
On June 10, 2014, Corinthian defaulted on its obligations to ACF and Aequitas.
2
3
106.
On July 3, 2014, the U.S. Department of Education issued a press release
4
5
announcing its imposition of certain conditions on Corinthian while "Corinthian works to either
sell or close its campuses across the country in the next six months."
107.
On September 16, 2014, the U.S. Consumer Financial Protection Bureau sued
8
9
Corinthian for misrepresenting job placement data and violating debt collection laws.
10
108.
Aequitas purchased only $8.2 million in student loan receivables during all of
11
12
2014, a 92 percent decline from the prior year. Despite this dramatic drop in new student loan
13
receivables purchases, Aequitas continued to aggressively market its investment products
14
throughout 2014 and 2015, touting its diversification and "substantial over-collateralization" of
15
student loan receivables.
16
109.
On May 4, 2015, Corinthian filed for bankruptcy.
17
18
F.
19
Aequitas Responds to Corinthian's Collapse, and $220 Million in Anticipated

Redemptions Owed to Aequitas Investors, by Selling More Securities
110.
20
21
On information and belief, by 2014 at the latest, Aequitas was using most of the
22
investor proceeds it received to pay other investors and to cover operating expenses rather than
23
using money from investors to purchase credit receivables. On information and belief, ACF
24
invested only 25 percent of investor money in income-generating assets during 2014 and only
25
8 percent during 2015.
26
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111.
In 2015, Aequitas had over $220 million in debt to investors coming due. Rather
2
3
than adjusting its valuations and acting to inform and protect its investors, Aequitas persuaded
investors to extend or roll over their investments. Aequitas misled investors about the health of
Aequitas's business, convincing investors to extend the maturity date of their notes in exchange
for additional interest payments. When Aequitas began missing interest payments in 2015, it
provided false explanations and vague commitments to delay or make up the missed interest
payments.
112.
In 2015, Aequitas created APCF and persuaded investors to roll their existing
10
11
Aequitas securities into it. APCF was marketed as an exclusive opportunity for high-end
12
investors. In reality, APCF was a ploy to avoid making payments to investors by enticing them
13
into rolling their money into a new investment with a later maturity date.
14
113.
Throughout 2014, 2015, and early 2016, Aequitas continued to sell securities by
15
16
touting its investment strategies in credit markets, including Corinthian's student loan
17
receivables.
18
G.
The SEC Sues Aequitas; Aequitas Is Placed Into Receivership
19
114.
By at least as early as June 2015, the SEC was investigating Aequitas.
20
21
115.
In February 2016, Aequitas sent a letter to investors, including plaintiffs, stating
22
23
that it was unable to pay interest or redemptions on the outstanding Aequitas securities.
24
25
26
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116.
On March 10, 2016, the SEC filed a lawsuit, entitled Securities and Exchange
2
3
Commission v. Aequitas Management, LLC, et al., USDC Oregon Case No. 3:16-cv-00438-PK,
against Aequitas and its top executives for securities fraud.
117.
On March 16, 2016, the U.S. District Court for the District of Oregon placed
6
7
Aequitas in receivership.
8
9
118.
H.
Aequitas Concealed Its Deteriorating Financial Condition

With the assistance of defendants and through its control over the many Aequitas
10
11
issuers, lenders, managers, advisors, and holding companies, Aequitas concealed and
12
exacerbated its financial deterioration by, among other misconduct, the following:
1.
13
Inflated Valuations of Trade Receivables and Collateral
14
119.
15
Aequitas's Investment Committee, consisting of Aequitas executives Jesenik,
16
Oliver, and Andrew MacRitchie, controlled and set the value of the receivables. At least by
17
2013, Aequitas used inflated valuations of these purported assets to manipulate Aequitas's true
18
financial condition, thereby falsely presenting a far more successful business than actually
19
existed.
20
120.
For example, Aequitas refused to adjust its asset valuations to account for
21
22
Corinthian's freefall. Aequitas's 2011 and 2012 financial statements, audited by EisnerAmper,
23
stated that Aequitas would not suspend revenue recognition on delinquent student receivables
24
subject to recourse agreements because Aequitas was "reasonably assured" that it would be able
25
to collect on the delinquent receivables through recourse, despite Corinthian's financial struggles.
26
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121.
Similarly, the Investment Committee continued to apply the same misleading
methodology with Deloitte's knowledge and approval, even after Corinthian defaulted on its
recourse obligation in May 2014.
122.
Aequitas reported in its financial statements that its right to retain cash collections
6
7
owed by student borrowers to Corinthian would cover Aequitas's investment and future fees
associated with the student loan receivables. On information and belief, the students who
Aequitas claimed it would collect from were high-risk borrowers that had already defaulted.
10
123.
Deloitte audited the ACF financial statements in which Aequitas made these
11
12
claims.
13
124.
On information and belief, Aequitas also committed its credit receivables as
14
15
collateral to multiple obligations, which had the effect of impairing and overstating the value of
16
the collateral supporting Aequitas investments.
17
125.
Valuations set by the Investment Committee, and included in Aequitas's audited
18
19
financial statements, PPMs, and promotional materials, were false and misleading.
2.
20
Inflated Valuations of the Portfolio Companies
21
126.
22
According to Aequitas's audited financial statements as of December 31, 2011,
23
the purported total value of Aequitas's nonmarketable common stock and private equity funds
24
was $15.7 million. By the next year, this value had purportedly more than doubled to
25
$31.8 million. As of December 31, 2013, Aequitas reported an asset value of $93 million, which
26
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the Investment Committee increased significantly again to $142.5 million as of December 31,
2014.
127.
Despite claiming rapid growth in the value of Aequitas's equity holdings, many, if
not all, of Aequitas's investments, including CPYT, MotoLease, and ETC, were losing money.
For example, Aequitas reported that CPYT lost $4.8 million in 2011, $14.4 million in 2012, and
$6.2 million in the first 11 months of 2013.
128.
On information and belief, Aequitas also calculated the value of its equity
10
interests in one or more portfolio companies by improperly applying excessive multiples to the
11
company's earnings, thereby engineering valuations that were, in at least one instance, twice the
12
company's actual value. On information and belief, these inflated valuations were made during
13
the years when EisnerAmper and Deloitte were hired to conduct independent audits.
14
3.
Manufacturing Overvalued Assets Through Intercompany Transactions
15
129.
16
Aequitas exercised its control over the various Aequitas entities to orchestrate
17
intercompany transactions, including loans that had the effect of overstating assets. These
18
transactions enabled Aequitas to pay excessive compensation to executives and fund their lavish
19
lifestyles.
20
130.
21
For example, at the beginning of 2012, ACF reported $77.7 million in assets from
22
notes receivable issued by Aequitas's affiliate companies. By the end of 2014, that amount had
23
ballooned to $184.7 million. Aequitas caused ACF to make at least 21 intercompany loans,
24
ranging from $250,000 to $16 million, including a multimillion-dollar loan to "Members of
25
Management."
26
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131.
Aequitas's largest intercompany loan was madewith no maturity dateby ACF
2
3
to Aequitas Holdings (the "Holdings Note"). Aequitas Holdings distributed the proceeds
throughout the Aequitas organization, including payments to Aequitas Management, ACM,
ACOF, and other subsidiaries. On information and belief, Aequitas also used the loan proceeds
to pay for lavish perks, including private jets, office renovations, and extravagant parties.
132.
From 2011 through 2014, Aequitas Holdings siphoned increasingly more and
8
9
10
more investor money out of ACF, generating a balance due on the Holdings Note of
$120.8 million by the end of 2014.
11
133.
Aequitas Holdings' inability to cover its debt to ACF was increasingly obvious
12
13
and more severe. On information and belief, by treating and recording the Holdings Note at its
14
face value, Aequitas significantly overstated ACF's assets.
15
134.
On information and belief, Aequitas Holdings lost over $22 million in 2014 and
16
17
$46 million in 2015.
18
135.
On information and belief, along with these massive losses, the collateral backing
19
20
the Holdings Note was not keeping pace with the ballooning loan balance. At the end of
21
February 2015, Aequitas Holdings had $67 million in assets backing $127.6 million due on the
22
Holdings Note. The collateral fell to $65.3 million by June 2015, compared to a loan balance
23
that had increased to $147.4 million. By the end of October 2015, Aequitas Holdings held only
24
$69.8 million in collateral to secure a balance due of $169 million.
25
26
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136.
On information and belief, Aequitas further demonstrated its awareness of the
perilous state of ACF and Aequitas Holdings during July 2015 when it magically reduced the
value of the Holdings Note from $147 million to $65 million to comply with requirements
imposed by a lender and the Investment Company Act. On information and belief, Sidley
provided legal advice to ACF in connection with this adjustment.

4.
Intercompany Fee Agreements
137.
Aequitas's entities were linked through complicated layers of intercompany fee
9
10
and service agreements that made it difficult to track the distribution of proceeds; to understand
11
how Aequitas was charging investors and compensating its various entities, individuals, and
12
partners; and to determine actual value. Examples of such arrangements are the following:
(a)
13
14
ACF paid millions of dollars each year in "management fees" and
"program management fees" to ACM, AIM, and other Aequitas entities.

(b)
15
ACF entered agreements with CPYT and EDPlus to manage ACF's
16
student loan receivables and healthcare receivables businesses. In 2014 alone, ACF paid CPYT
17
and EDPlus collectively over $11.5 million in management fees. The payment of these fees
18
increased the perceived value of ACOF (owner of CPYT and EDPlus), which in turn increased
19
the perceived value of ACF (an owner of ACOF).

(c)
20
ACF executed a "servicing arrangement" with CP Technologies, a
21
subsidiary of CPYT, and another Aequitas entity in the healthcare receivables business.
22
CP Technologies was eventually dissolved, and the "servicing arrangement" was extended to
23
CPYT. ACF paid "one-time" fees to CPYT calculated as a percentage of the face amount of
24
receivables bought from hospitals. In both 2013 and 2014, these "one-time" fees exceeded
25
$4 million. In addition to the "servicing arrangement" and "one-time" fees, ACF paid CPYT
26
"servicing fees" each year. In both 2013 and 2014, these "servicing fees" exceeded $2 million.
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(d)
In 2011 and 2012, Aequitas "deferred" over $2 million each year in
"origination fees" paid from ACF to CP Technologies, the parent company of CPYT that was
later dissolved. CP Technologies also charged ACF "servicing fees" in 2011 and 2012. These
servicing fees exceeded $3 million each year.
(e)
In 2011 and 2012, ACF paid fees to Capio Partners, LLC, ("Capio").
Capio serviced healthcare receivables. In 2011, ACF paid Capio $7.2 million in "servicing" fees
and $619,000 in interest. In 2012, ACF paid Capio $4.9 million in "servicing" fees and an
additional $1.3 million in "interest."
9
10
138.
I.
Aequitas's Deception Through Misrepresentations and Omissions
11
By no later than 2013 and unbeknownst to plaintiffs, Aequitas was misleading
12
investors through representations made in PPMs, promotional materials, and oral statements, as
13
well as through its omission of critical facts. In addition to the deception alleged above,
14
Aequitas's material misrepresentations and omissions included the following:
15
1.
The Use of Investor Proceeds
16
139.
17
18
Aequitas made material misrepresentations and omissions relating to how investor

money would be used in the following respects:
19
(a)
Aequitas represented that hundreds of millions of dollars received from
20
investors would be invested in credit receivable markets, including healthcare, student loan, and
21
consumer credit.
22
(b)
According to ACF's PPM dated November 30, 2012, ACF would use
23
"proceeds from the issuance of Secured Notes to engage in various specialty financing
24
transactions, and to provide senior and junior debt and equity funding for the benefit of its
25
affiliates and its related investment programs."
26
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(c)
ACF promotional materials, dated August 2014, stated that "[p]roceeds
from the sale of [ACF] Notes are used by ACF to provide capital directly or indirectly to
borrowers or niche third party credit providers."
(d)
ACOF's PPMs represented that investments in the ACOF Interests would
be used primarily for "making privately-negotiated investments in equity, equity-related and
other securities of growth oriented companies generally in the financial services arena."
(e)
AIOF-II's PPM dated October 2, 2014, stated that AIOF-II had been
formed to "purchase or finance the purchase of receivables, loans and leases from various credit
strategy programs, including but not limited to, hospitals, educational institutions and other
10
businesses."
11
(f)
APCF's PPM dated July 31, 2015, marketed a strategy of investing in
12
Aequitas-affiliated funds (including ACOF and ACL) as part of its strategy to "acquire, purchase
13
or finance * * * interests in select funds pursuing private equity strategies in healthcare,
14
education, financial technology, consumer finance and business finance markets"; "corporate
15
lending" within Aequitas; and "credit strategy receivables" that included "[e]ducation
16
receivables."
17
(g)
On information and belief, contrary to these representations, Aequitas
18
diverted millions of dollars of investor money to pay earlier investors, cover expenses, enrich
19
Aequitas executives, and fund Aequitas's extravagances, including lavish parties and a private
20
jet.
21
22
(h)
investor money went toward purchasing receivables or other investment assets.
23
24
(i)
On information and belief, less than 8 percent of new investor money went
toward purchasing receivables or other investment assets during 2015.
25
26
On information and belief, during 2014, less than 25 percent of new
(j)
Aequitas executives further represented to some ACF investors that their
money would be invested in healthcare receivables only. Aequitas represented to investors, at
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least as early as 2012, that their investment in ACF would be used solely to buy healthcare
receivables. Aequitas instead used proceeds invested through the ACF Notes to invest across a
variety of credit markets other than healthcare, in addition to paying other investors and Aequitas
itself.
2.
The Diversification of Investments
140.
7
8
Aequitas made material misrepresentations and omissions relating to the

concentration of its investments in the following respects:
(a)
In promotional materials and other representations, Aequitas touted its
10
"diversified portfolio of private credit instruments," which included its investments in healthcare
11
receivables, student loan receivables, and consumer credit. Aequitas's investments through its
12
affiliates in the healthcare credit market was a core part of the investment strategy that Aequitas
13
sold to investors.
14
(b)
By the end of 2012, Aequitas was purportedly holding $124.8 million in
15
student loan receivables, compared with only $27.9 million in healthcare receivables. By the end
16
of 2013, Aequitas was purportedly holding $153.5 million in student loan receivables, compared
17
with only $12.4 million in healthcare receivables.
18
19
(c)
Aequitas failed to fully and adequately disclose this overconcentration in
student loan receivables.
20
(d)
Aequitas's promotional materials further misrepresented that its
21
investment in student loan receivables was diversified among educational institutions. Aequitas
22
touted that its investments in student loan receivables were "risk diversified," and its PPMs and
23
promotional materials typically referred only to "educational institutions" and "schools"
24
generally, without identifying Corinthian.
25
26
(e)
In addition, certain promotional materials depicted these educational
institutions on a map of the United States, creating the impression that Aequitas purchased
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student loan receivables from educational institutions located in no fewer than 16 states across
the country. These promotional materials made no mention of Corinthian, nor did they disclose
that all, or nearly all, the schools were owned by Corinthian.
4
5
(f)
For years, Aequitas failed to disclose that all, or nearly all, its student loan
receivables were acquired from Corinthian.
(g)
Aequitas's 2013 and 2014 financial statements, audited by Deloitte,
specifically noted a "concentration risk" based on the fact that a majority of its healthcare
receivables were acquired from a small number of healthcare facilities supplying such
receivables. Aequitas's far greater concentration in student loan receivables from Corinthian
10
which was under investigation and in defaultwas not disclosed in the financial statements or
11
Aequitas's promotional materials.
12
(h)
Aequitas's concentration in student loan receivables began in 2011, and
13
continued through 2012, while EisnerAmper was Aequitas's auditor. EisnerAmper, like Deloitte
14
in 2013 and 2014, did not require Aequitas to disclose a concentration risk based on Aequitas's
15
student loan receivables holdings.
16
(i)
As of June 30, 2014, Aequitas represented that 31 percent of ACF's
17
balance sheet was allocated to "corporate debt" and another 24 percent to "corporate equity." On
18
information and belief, as much as 84 percent of ACF's assets consisted of student loan
19
receivables from Corinthian and equity and debt tied to companies affiliated with Aequitas.
20
(j)
In October 2014, Aequitas represented to investors that ACF and its
21
subsidiaries' ownership of Corinthian student loan receivables represented only 19 percent of
22
ACF's consolidated assets. On information and belief, Aequitas failed to disclose that Aequitas
23
Holdings, which was indebted to ACF for over $120 million, was also heavily invested in
24
Corinthian student loan receivables.
25
26
(k)
On information and belief, Aequitas also failed to disclose that the value
of its private equity interests, including ACOF, was also heavily tied to student loan receivables.
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3.
Asset and Collateral Value
141.
3
4
Beginning at least by mid-2013, Aequitas made material misrepresentations and

omissions relating to the value of its assets and underlying collateral in the following respects:
(a)
In its PPMs, promotional materials, and audited financial statements,
Aequitas provided "fair value" valuations of its credit receivables that, on information and belief,
were overstated and false. For example, Aequitas's valuations of its student loan receivables
from 2011 forward did not account for the negative developments surrounding Corinthian,
including the investigations, regulatory changes, Corinthian's default, or even Corinthian's
10
bankruptcy. These student loan receivables valuations also affected the value of EDPlus, one of
11
ACOF's equity holdings, and were reflected in ACOF's PPMs.
12
(b)
On information and belief, Aequitas's valuations were overstated and
13
constituted material misrepresentations because they failed to account for the overconcentration
14
in Corinthian's student loan receivables.
15
(c)
16
constituted material misrepresentations because they failed to account for its commitment of
17
collateral to multiple conflicting and overlapping obligations.
18
(d)
19
constituted material misrepresentations because they failed to account for the severe shortfall of
20
collateral to support its obligations to lenders, investors, and others.
21
22
(e)
On information and belief, Aequitas made material misrepresentations
regarding the value of its affiliate loans, including the following:
23
(i)
24
Aequitas Holdings had a value of over $78 million. On information and
25
belief, this balance exceeded Aequitas Holdings' assets by $20 million.
In early 2014, Aequitas represented to investors that ACF's loan to
26
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(ii)
Aequitas Holdings had a value of over $120 million. On information and
(iii)
to affiliate companies were valued at $180 million. On information and
4.
In early 2015, Aequitas represented to investors that ACF's loan to
In early 2016, Aequitas represented to investors that ACF's loans
Material Risks Relating to Aequitas Investments
142.
Beginning at least by 2013, Aequitas made material misrepresentations and
10
omissions relating to the risks associated with Aequitas investment products in the following
11
respects:
12
(a)
Aequitas assured investors that its "[p]rivate credit investments can offer
13
considerably higher yields [than other fixed income investments] without a commensurate
14
increase in risk."
15
(b)
Without identifying Corinthian, Aequitas represented to investors that an
16
investment in Corinthian student loan receivables was "within the expected risk profile" because
17
"the risk of default [was] mitigated by balancing the quality of the assets with institutional credit
18
support, through a guaranty to repurchase any severely delinquent loans."
19
(c)
Aequitas represented to investors that it "approaches each new program
20
offering by evaluating the historical level of risk in the asset class, the financial strength of the
21
originator and servicer as well as the quality of the systems and procedures. Aequitas evaluates
22
the level of risk of each of the factors and structures its reliance on the collateral and the
23
institutional guaranty as appropriate."
24
(d)
Aequitas represented that its "[f]inancings are privately negotiated and are
25
secured by significant equity and/or underlying assets pledged as collateral underneath them.
26
The pool of assets is often comprised of self-liquidating assets."
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1
2
(e)
Aequitas represented that it had structured its student loan receivable
investments in a manner that provided "substantial over-collateralization."
(f)
On information and belief, Aequitas failed to fully and adequately disclose
that it had committed the same collateral to multiple obligations and that it lacked sufficient
collateral to cover those obligations.
6
7
(g)
Aequitas failed to disclose the extent to which it had concentrated investor
money in Corinthian's student loans.
(h)
Aequitas failed to properly disclose Corinthian's severe and rapid
deterioration, Corinthian's inability to satisfy its recourse obligations, and the resulting impact on
10
the value of Aequitas's assets, collateral, and investment performance. Material facts that should
11
have been properly and timely disclosed include but are not limited to the following:
12
(i)
13
of student loan receivables;
14
(ii)
15
Corinthian's lending practices and operations;
16
(iii)
17
to cut off the flow of federal aid to Corinthian studentsaid on which
18
Corinthian's existence depended;
19
(iv)
20
regarding student loan receivables;
21
(v)
22
2014; and
23
(vi)
24
(j)
Corinthian's identity as the sole source, or nearly the sole source,
The regulatory, congressional, and legal developments relating to
The announcement of proposed federal regulations that threatened
American Student Financial Group, Inc.'s lawsuit against Aequitas
Corinthian's default on its obligations to Aequitas on June 10,
Corinthian's bankruptcy on May 4, 2015.
Aequitas failed to disclose material information regarding the Portfolio
25
Companies that would affect the value of ACF and ACOF. Specifically, Aequitas failed to
26
disclose that:
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(i)
sanctioned by the SEC for providing investors with false and misleading
disclosures about investment performance and for violating the Investment
Advisers Act;
(ii)
risk management systems; and
(iii)
value of Corinthian student loan receivables.
(k)
Strategic Capital Group, LLC, a subsidiary of SCA, was
ETC was sanctioned by regulators for inadequate supervisory and
On information and belief, EDPlus's value depended largely on the
Aequitas failed to disclose that its intercompany transactions and
10
overlapping ownership rendered the performance and viability of each Aequitas issuer (and
11
consequently each investment) dependent on the financial health of ACF and Aequitas Holdings.
12
(l)
Aequitas failed to disclose that by 2014, the Holdings Note was severely
13
under collateralized and that Aequitas Holdings' losses and shrinking assets presented serious
14
risks to Aequitas's survival and ability to fulfill its obligations to investors.
15
(m)
During 2014 and 2015, Aequitas failed to disclose that the performance of
16
the investments it sold was threatened by over $220 million in redemptions that were coming due
17
in 2015, including the fact that Aequitas did not have enough cash to satisfy those redemptions.
18
(n)
Aequitas and its auditors (including Deloitte) was obligated to evaluate
19
and consider the need for a going concern qualification that would reveal Aequitas's financial
20
distress. On information and belief, based on the information available to it at least as early as
21
2015, the going concern issue should have been raised and disclosed. No such disclosure was
22
made to investors.
23
(o)
24
investigation by the SEC.
25
26
Aequitas failed to adequately and timely disclose that it was under
(p)
Aequitas failed to disclose that it was required by law to register its
securities.
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5.
Priority of Investments
143.
3
4
Aequitas misled investors about the priority of their investments by making

misrepresentations and omissions in the following respects:
(a)
Aequitas misled investors into believing that their notes had a priority
claim on Aequitas's assets. Aequitas described promissory notes as "secured," including using
the word prominently in the title of promissory notes. But buried deep within promissory notes,
Aequitas stated that this security interest was subordinate to any security interest granted by
Aequitas to secure "Senior Indebtedness." "Senior Indebtedness" could include obligations
10
incurred by Aequitas after the promissory notes were issued to investors. And the notes included
11
no limit on the obligations that Aequitas could incur after issuing them.
12
(b)
On information and belief, Aequitas pledged the same assets as collateral
13
for multiple loans and lines of credit originated by both Aequitas-controlled entities and third-
14
party lenders.
15
144.
16
As reflected by the allegations above, Aequitas acted with a guilty state of mind
17
while marketing and selling its securities. For example, Aequitas continued to actively market
18
and sell its securities despite knowing, or acting in deliberate disregard of, the following:
19
The "diversified portfolio" that Aequitas marketed and sold to investors

was overly concentrated in student loan receivables from Corinthian
Colleges.
Plagued by investigations that threatened its viability, Corinthian's

share price had plunged nearly 90 percent from April 2010 to
April 2013, and it had lost over $120 million between June 30, 2011,
and June 30, 2013.
Corinthian defaulted on its obligations to Aequitas in 2014 and filed for

bankruptcy in 2015.
Aequitas's assets were grossly overvalued by its Investment Committee

without adjustments to account for Corinthian's freefall or Aequitas
Holdings' inability to repay the Holdings Note.
20
21
22
23
24
25
26
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Meanwhile, Aequitas was not generating enough revenue to cover its

operating expenses and liabilities, which included redemption requests
for the $220 million in notes that were becoming due in 2015.
Buckling under the weight of its failed investment strategy, Aequitas

used new investor money to pay other investors and to cover operating
expenses, rather than investing it in the credit markets Aequitas
advertised.
2
3
4
5
6
145.
Aequitas's material misrepresentations and omissions operated to toll any statute
of limitations for violations of ORS 59.115(1)(a) and (b) because (a) defendants aided Aequitas
in actively concealing violations of Oregon securities law; and (b) plaintiffs exercised due
10
diligence in preserving their legal claims.
11
J.
12
Aequitas's Attorneys, Accountants, and Valuation Specialist Were Instrumental in

Its Sale of Securities
13
146.
14
The participation and assistance of Aequitas's outside auditors, attorneys, and
15
valuation specialist were critical to Aequitas's solicitation and sale of securities to plaintiffs,
16
which necessarily included, among other things, the formation of the Aequitas entities and
17
affiliates; preparation of PPMs, promotional materials, and quarterly reports; preparation of
18
agreements with investors, affiliates, partners, and other Aequitas entities; the design and
19
performance of audits; the preparation of audited financials, valuations, and other financial
20
information provided to investors; legal and accounting advice relating to the operation of the
21
various Aequitas entities; legal advice relating to compliance with securities laws, including
22
registration requirements; and general legal and accounting advice relating to risks and
23
obligations surrounding the Aequitas operation.
24
147.
25
26
Through their assistance with these and others matters, Deloitte, Tonkon,
EisnerAmper, Sidley, and Duff & Phelps participated in and materially aided Aequitas's sales of
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securities to plaintiffs. Aequitas's ability to hold out these professionals as its auditors, legal
counsel, advisors, and business partners in the PPMs and promotional materials provided to
investors, and in communications with plaintiffs and other investors, was sufficient alone to give
Aequitas the perception of credibility and quality that induced investors to entrust their
substantial investments to Aequitas. Examples of each professional firm's involvement are
alleged below.
1.
Deloitte
148.
As Aequitas advertised in its PPMs, promotional materials, and audited financial
10
statements, Deloitte served as the "auditor/tax advisor" for the Aequitas companies, including
11
ACF, ACOF, AIOF, AIOF-II, and APCF, from the fall of 2013 to at least mid-2015.
12
149.
13
ACF's PPMs provided financial information with the headings "Audited,"
14
"INCOME STATEMENT," and "BALANCE SHEET" that included financial data derived from
15
Deloitte's 2013 ACF audit.
16
150.
17
By assuming the professional responsibilities of Aequitas's independent auditor,
18
Deloitte undertook an obligation to ensure that its audits and audit reports complied with
19
applicable industry standards, including requirements governing the design and performance of
20
its audits; the audit of valuations; the inclusion of notes and adequate disclosures in Aequitas's
21
financial statements; and the obligation to evaluate and consider the need for a going concern
22
qualification. Deloitte was also obligated to ensure that it was and remained independent.
23
151.
24
25
Deloitte explained in an appendix to an engagement letter with Aequitas dated

October 10, 2013, that generally accepted auditing standards required Deloitte to conduct an
26
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audit to obtain reasonable assurance about whether Aequitas's financial statements were free
from material misstatement caused by fraud or error.
152.
In the October 10, 2013, engagement letter, under the heading, "Inclusion of D&T
Reports or References to D&T in Other Documents or Electronic Sites," Deloitte explained that
if Aequitas intended to refer to Deloitte in a document, including a PPM, containing audited
financial statements as well as other information, "thereby associating D&T with such
document," Aequitas agreed to "provide D&T with a draft of the document to read and obtain
our approval for the inclusion or incorporation by reference of any of our reports, or the
10
reference to D&T, in such document before the document is printed and distributed." Nearly
11
identical language appeared in Deloitte's engagement letter with Aequitas dated September 8,
12
2014.
13
153.
14
Deloitte had copies of Aequitas's PPMs in its audit work paper files, including
15
PPMs for ACF, ACOF, and AIOF-II. PPMs in Deloitte's files identified Deloitte as Aequitas's
16
auditor. The ACF PPM in Deloitte's files even identified financial data in the PPM as "Audited."
17
Aequitas used these and similar PPMs to solicit investors and sell its securities. Investors knew
18
that Deloitte was Aequitas's auditor because PPMs identified Deloitte as the auditor.
19
154.
20
After commencing its audit of Aequitas in the fall of 2013, Deloitte issued an
21
"Independent Auditors' Report" dated May 23, 2014, that included consolidated financial
22
statements for the following entities: ACF; AIOF; AIOF-II; Aequitas CarePayment Fund, LLC;
23
Aequitas Income Protection Fund, LLC; ACOF; Aequitas North American Finance, LLC;
24
CarePayment, LLC, and its subsidiary CP Funding I, LLC; CA Medical, LLC; Campus Student
25
Funding, LLC; CP Leverage I, LLC; CSF Leverage I, LLC; Destination Capital Equipment
26
Finance, LLC; EC Hanger LLC; Motolease Financial, LLC; and Hill Land Company, LLC.
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155.
Aequitas's audited financial statements, included as part of Deloitte's report dated
2
3
May 23, 2014, address the financial condition of the Aequitas entities; Aequitas's investment in
credit receivables (including student loan receivables); related-party relationships and
transactions; and the valuation of ACF's assets, including the credit receivables, ACF's loans, and
its equity interests.
156.
Aequitas's financial statements for fiscal year 2013, audited by Deloitte, also
8
9
include a risks and uncertainties section. Under the subheading "Concentration risk," Aequitas
10
disclosed that approximately 60 percent of Aequitas's healthcare receivables originated from
11
only 5 of the 27 healthcare facilities that sold those receivables to Aequitas. No note is made
12
regarding Aequitas's concentration in student loan receivables.
13
157.
Deloitte's audit report included Deloitte's independent opinion that ACF's
14
15
consolidated financial statements "present fairly, in all material respects, the consolidated
16
financial position of [ACF] as of December 31, 2013, and the results of its operations and its
17
cash flows for the year then ended in accordance with accounting principles generally accepted
18
in the United States of America." Deloitte's audit report stated that "the audit evidence we have
19
obtained is sufficient and appropriate to provide a basis for our audit opinion."
20
158.
21
Deloitte's audit report dated May 23, 2014, also noted the following:
22
23
24
25
"[T]he consolidated financial statements include investments valued at

$257,285,732 (55.6% of total assets) as of December 31, 2013, whose fair values
have been estimated by management in the absence of readily determinable fair
values. Management's estimates are based on comparable market data, or
information provided by the fund managers or the general partners. Our opinion
is not modified with respect to this matter."
26
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159.
On May 29, 2015, Deloitte issued an "Independent Auditors' Report" to ACF that
included consolidated financial statements for fiscal years 2013 and 2014. The audited financial
statements included a "prior period adjustment" because Aequitas had "incorrectly calculated the
fair value of its student loan receivables." The audited financial statements also noted that
$220,614,727 in senior and subordinated debt would mature in 2015.
160.
Deloitte's audit report dated May 29, 2015, provided its opinion that ACF's
8
9
consolidated financial statements "present fairly, in all material respects, the financial position of
10
[ACF] as of December 31, 2014 and 2013, and the results of its operations and its cash flows for
11
the years then ended in accordance with accounting principles generally accepted in the United
12
States of America."
13
161.
14
Deloitte's audit report noted that Aequitas's management set the value of
15
41.9 percent and 55.6 percent of ACF's assets, and Deloitte took Aequitas's word for it.
16
162.
Under SEC rules, Aequitas was required to provide Deloitte's annual audited
17
18
financial statements of the various Aequitas funds to investors.
19
163.
In addition to its audits, Deloitte assisted Aequitas with the preparation of the
20
21
financial information that was provided to investors through PPMs, promotional materials, and
22
quarterly reports. Deloitte also participated in and assisted with the valuations of ACOF's
23
portfolio companies and the performance metrics information for those companies. This
24
information was included in PPMs and promotional materials that Aequitas used to solicit
25
potential investors and sell securities. Aequitas also touted to investors that Deloitte "reviewed"
26
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the valuations. In an October 10, 2013, letter to Aequitas, Deloitte estimated that its audit of
"beginning equity balances" would cost $85,000.
164.
On information and belief, in September 2015, Deloitte hired Chelsea Jesenik as
an audit associate. Also on information and belief, she had interned with Aequitas during 2013.
Ms. Jesenik brought any knowledge she had developed of Aequitas's operations with her to
Deloitte.
165.
Deloitte had an obligation to review Aequitas's ability to continue as a going
10
concern. Deloitte was obligated to include a going concern qualification in its opinion of
11
Aequitas's financial statements if Deloitte had substantial doubt regarding Aequitas's ability to
12
continue for one year.
13
166.
14
15
Deloitte estimated that its audit fee for 2013 would be $900,000, not including
"[e]ngagement-related expenses."
16
167.
17
18
Deloitte estimated that its audit fee for 2014 would be $1,267,000, not including
"[e]ngagement-related expenses."
19
2.
Tonkon
20
168.
21
As Aequitas advertised in its PPMs, Tonkon served as legal counsel for ACF and
22
AIOF-II at all relevant times. In addition, it served as counsel to ACM, including service as
23
defense counsel in the lawsuit filed against Aequitas by American Student Financial Group, Inc.
24
On information and belief, Tonkon provided legal services to other Aequitas entities.
25
26
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169.
Tonkon had "extensive experience representing companies, underwriters,
borrowers, lenders, investors, private investment firms, private equity firms and venture
capitalists in public offerings, commercial loans and private placements of debt and equity
securities."
170.
On information and belief, Tonkon participated in and assisted with company
7
8
formation and governance; legal advice relating to the operation of CarePayment Founders Fund,
ACF, AIOF-II, ACM, and Aequitas Management, including legal compliance issues; and the
10
drafting and modification of PPMs, subscription agreements, promissory notes, and other
11
documents related to the sale of Aequitas securities, including the ACF Notes and the AIOF-II
12
Notes.
13
171.
On information and belief, in the course of advising Aequitas, Tonkon reviewed,
14
15
or reasonably should have reviewed, Aequitas's audited financial statements.
16
172.
By undertaking the professional responsibilities of legal counsel to ACF, ACM,
17
18
AIOF-II, and Aequitas Management, Tonkon had an obligation to familiarize itself with
19
Aequitas's securities offerings and sales methods along with information that Aequitas reported
20
in PPMs, offering materials, and promotional materials.
21
173.
In or about December 2013, Tonkon hired Jessica Morgan, Aequitas's assistant
22
23
general counsel. While working at Aequitas, Morgan advised the company about investment
24
advisor and investment company compliance, governance, and regulatory matters for new funds
25
and products. Morgan brought the extensive knowledge she had developed of Aequitas's
26
operations with her to Tonkon.
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174.
In or about December 2015, Tonkon hired another assistant general counsel at
2
3
Aequitas, David Myers. Myers also brought the knowledge he had developed of Aequitas's
operations with him to Tonkon.

3.
Sidley
175.
As Aequitas advertised in its PPMs, Sidley served as the corporate counsel for
7
8
ACM and AIM from at least 2012 to 2016. Sidley acted as the corporate counsel for ACOF
from 2014 to 2016. Sidley was also legal counsel for Aequitas Capital Opportunities GP, LLC
10
("ACOGP"), the general partner of ACOF.
11
176.
By undertaking the professional responsibilities of legal counsel to AIM, ACM,
12
13
ACOF, and ACOGP, Sidley had an obligation to familiarize itself with Aequitas's securities
14
offerings and sales methods along with information that Aequitas reported in PPMs, offering
15
materials, and promotional materials. On information and belief, Sidley should have
16
familiarized itself with ACF and the ACF assets that Aequitas transferred to ACOF.
17
177.
On information and belief, Sidley prepared legal opinions and analysis regarding
18
19
the registration requirements of Aequitas entities and securities and compliance with the
20
Investment Company Act. Specifically, on information and belief, Sidley provided legal advice
21
to Aequitas in connection with isolating certain assets to help facilitate obtaining a line of credit
22
from Wells Fargo, and advised ACF in connection with the manipulation of the valuation of the
23
Holdings Note to satisfy regulatory requirements. These legal opinions and analysis allowed
24
Aequitas to obtain and maintain financing and lines of credit from financial institutions, enabling
25
Aequitas to continue to sell securities and conceal the matters alleged above.
26
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4.
EisnerAmper
178.
As Aequitas advertised in ACF's PPMs, EisnerAmper acted as the "auditor/tax
advisor" for ACF from at least March 2012 to the fall of 2013. EisnerAmper also audited AIOF
and Aequitas Income Protection Fund. Investors knew that EisnerAmper was Aequitas's auditor
because PPMs identified EisnerAmper as the auditor.
179.
8
9
10
ACF's PPMs provided potential investors with financial information under the
headings "Audited," "INCOME STATEMENT," and "BALANCE SHEET" that included
financial data derived from EisnerAmper's combined 2011 and 2012 ACF audit.
11
180.
12
By assuming the professional responsibilities of ACF's independent auditor,
13
EisnerAmper undertook an obligation to ensure that its audits and audit reports complied with
14
applicable industry standards, including requirements governing the design and performance of
15
its audits; the audit of Aequitas's financial statements and valuations; and the inclusion of notes
16
and disclosures in audit reports. EisnerAmper was also obligated to ensure that it was
17
independent.
18
181.
19
EisnerAmper issued its Independent Auditors' Report for ACF dated April 30,
20
2013, that included consolidated audited financial statements for 2011 and 2012. In the report,
21
EisnerAmper provided its opinion that ACF's consolidated financial statements "present fairly, in
22
all material respects, the consolidated financial position of [ACF] as of December 31, 2012 and
23
2011 and the consolidated results of its operations, changes in member's equity and cash flows
24
for each of the years then ended in accordance with accounting principles generally accepted in
25
the United States of America." EisnerAmper further stated that "the audit evidence we have
26
obtained is sufficient and appropriate to provide a basis for our audit opinion." In its
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Independent Auditors' Report, EisnerAmper did not address the fact that substantially all of
ACF's assets were reported at "fair value." Aequitas determined the "fair value" of student loan
and healthcare receivables and other assets, and EisnerAmper took Aequitas's word for it.
182.
EisnerAmper's audit addressed the financial condition of the Aequitas entities;
Aequitas's investment in credit receivables (including student loan receivables); related party
relationships and transactions; and the valuation of ACF's assets, including credit receivables,
ACF's loans, and ACF's equity interests.
183.
10
11
Under SEC rules, Aequitas was required to provide EisnerAmper's annual audited
financial statements of the various Aequitas funds to investors.
12
5.
Duff & Phelps
13
184.
14
ACOF's February 2014 PPM advertised that Duff & Phelps had been engaged to
15
"provide an estimated range of fair values" for several of ACOF's portfolio companies, including
16
CPYT, EDPlus, and ETC Global Holdings, Inc. Duff & Phelps's valuation for each of these
17
companies was included in ACOF's PPM with language that clearly identified it as "Duff &
18
Phelps Estimated Fair Value Range."
19
185.
20
Duff & Phelps's engagement and the valuation estimates it provided added
21
credibility to Aequitas's investment program and materially aided Aequitas's solicitation and sale
22
of the ACOF Interests.
23
186.
24
By assuming the professional responsibility of an independent valuation
25
specialist, Duff & Phelps was obligated to ensure that it complied with applicable industry
26
standards and that it obtained sufficient information to reliably support its valuation estimates.
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With respect to EDPlus, this obligation included understanding EDPlus's total assets under
management calculations, which, according to the ACOF PPM, was based primarily on the "face
value of outstanding receivables." On information and belief, these included Corinthian student
loan receivables.
K.
TD Ameritrade Was Instrumental in Aequitas's Sale of Securities
187.
No later than June 2013, TD Ameritrade encouraged investors to purchase the
ACF Notes, provided assurances to investors about Aequitas, and recommended Aequitas
investments to investors. Through these and other means, TD Ameritrade participated in and
10
materially aided Aequitas's sales of securities to plaintiffs.
11
188.
12
TD Ameritrade representatives met with investors in person to promote Aequitas
13
securities. TD Ameritrade provided promotional materials to investors, including PPMs and
14
financial statements.
15
189.
16
TD Ameritrade advised investors that it had conducted "due diligence" on
17
Aequitas before agreeing to do business with Aequitas and before encouraging investors to
18
invest with Aequitas. TD Ameritrade assured potential Aequitas investors that because TD
19
Ameritrade had done "due diligence," the potential investors should trust TD Ameritrade's
20
judgment and purchase Aequitas's investments.
21
190.
22
TD Ameritrade representatives reassured investors about the low-risk nature of
23
Aequitas securities by suggesting that the representative or his or her family member had
24
successfully invested with Aequitas.
25
26
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191.
In addition, TD Ameritrade referred investors to registered investment advisors to
2
3
facilitate purchases of Aequitas's promissory notes. In exchange for referring investors, TD
Ameritrade received a percentage of the fee that an investor paid to his or her registered
investment advisor.
192.
From at least June 2013 to November 2015, TD Ameritrade acted as custodian for
7
8
Aequitas securities. Upon information and belief, TD Ameritrade also received compensation
directly from Aequitas for acting as custodian for Aequitas securities.
10
193.
TD Ameritrade provided investors with quarterly statements detailing the value of
11
12
their investment, but rarely provided any updates or additional information regarding Aequitas,
13
the business model, or the security for the investments. In other words, TD Ameritrade
14
controlled the flow of information from Aequitas to investors.

V.
15
16
DAMAGES
194.
A summary of plaintiffs' investments with Aequitas, including the issuer, date of
17
18
investment, and interest rate, is attached as Exhibit 1 and incorporated by reference. Plaintiffs
19
reserve the right to amend and supplement this Complaint with additional plaintiffs who invested
20
with Aequitas.
VI.
21
FIRST CLAIM FOR RELIEF
22
(Violations of Oregon Securities LawORS 59)
23
(Count OneORS 59.115(1)(a) and ORS 59.055)
24
195.
25
Plaintiffs reallege the foregoing paragraphs and incorporate them by reference.
26
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196.
Aequitas sold unregistered securities in violation of ORS 59.055.
197.
Aequitas executives, including Robert Jesnick, were not licensed under the
Oregon Securities Laws and solicited and sold securities in violation of ORS 59.055 and
ORS 59.165.
198.
8
9
Aequitas is consequently liable under ORS 59.115(1)(a) for violating the Oregon
Securities Laws.
10
199.
11
Defendants Deloitte, EisnerAmper, Sidley, Tonkon, Duff & Phelps, and TD
12
Ameritrade are liable to plaintiffs pursuant to ORS 59.115(3) because they participated in or
13
materially aided in Aequitas's unlawful sale of unregistered securities.
14
200.
15
Under ORS 59.115(2)(a) and 59.115(3), upon tender of the securities, defendants
16
Deloitte, EisnerAmper, Sidley, Tonkon, Duff & Phelps, and TD Ameritrade are jointly and
17
severally liable for the consideration paid for the securities, plus interest from the date of
18
payment equal to the greater of 9 percent or the interest rate provided in the securities, less any
19
amount plaintiffs received on the securities.
20
201.
21
Pursuant to ORS 59.115(10), defendants Deloitte, EisnerAmper, Sidley, Tonkon,
22
Duff & Phelps, and TD Ameritrade should be required to pay plaintiffs' reasonable attorney fees.
23
(Count TwoORS 59.115(1)(b))
24
202.
25
26
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203.
Aequitas unlawfully sold securities by (a) making untrue statements of material
facts and (b) omitting material facts that were necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading.
204.
6
7
Aequitas is consequently liable under ORS 59.115(1)(b) for violating Oregon

Securities Laws.
205.
10
11
materially aided in Aequitas's unlawful sale of securities.
12
206.
13
14
15
16
17
18
207.
19
20
21
(Count ThreeORS 59.115(1)(a) and ORS 59.135(1) and (3))
22
208.
23
24
25
26
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209.
Aequitas sold securities, in violation of ORS 59.135(1) and (3) by (a) employing a
scheme to defraud investors and (b) engaging in a course of business which operated as a fraud
or deceit upon investors.
210.
6
7
Aequitas is liable to plaintiffs under ORS 59.115(1)(a) for violating the Oregon
Securities Law, specifically ORS 59.135(1) and (3).
211.
10
11
materially aided in Aequitas's fraudulent scheme and deceptive business operations.
12
212.
13
14
15
16
17
18
213.
19
20
21
(Count FourORS 59.115(1)(a) and ORS 59.135(2))
22
214.
23
24
25
26
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215.
Aequitas unlawfully sold securities by (a) making untrue statements of material
facts and (b) omitting material facts that were necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading.
216.
6
7
Aequitas is consequently liable under ORS 59.135(2) for violating Oregon

Securities Laws.
217.
10
11
materially aided in Aequitas's unlawful sale of securities.
12
218.
13
14
15
16
17
18
219.
19
20

21
VII.
SECOND CLAIM FOR RELIEF
22
(Violation of Oregon's Elder Abuse StatuteORS 124)
23
220.
24
25
26
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221.
Plaintiffs Paul Gulick, as trustee for the Gulick Family Trust, Lee Johnson, Paul
Sylvan, Walter Wurster, Walter Wurster, as trustee for the Walter W. Wurster Revocable Trust,
and Ronald Inouye, as trustee for the Walter W. Wurster Irrevocable Trust (collectively, the
"Elderly Plaintiffs)" were at all material times vulnerable persons as set forth in
ORS 124.100(1)(g) because each of the Elderly Plaintiffs was an elderly person as defined in
ORS 124.100(1)(b).
222.
The Elderly Plaintiffs were each entitled to the protections of ORS 124.
10
223.
11
12
As provided in ORS 124.100(4), Aequitas's conduct constituted financial abuse of

the Elderly Plaintiffs as set forth in ORS 124.110.
13
224.
14
In violation of ORS 124.100(5), defendants Deloitte, Eisner, Tonkon, and TD
15
Ameritrade permitted Aequitas to engage in financial abuse of the Elderly Plaintiffs by
16
knowingly acting or failing to act under circumstances in which a reasonable person should have
17
known of the financial abuse.
18
225.
19
Under ORS 124.100(2), defendants Deloitte, Eisner, Tonkon, and TD Ameritrade
20
are liable for an amount equal to three times all economic and noneconomic damages resulting
21
from the financial abuse or $500, whichever amount is greater.
22
226.
23
24
Pursuant to ORS 124.100(2)(c), defendants Deloitte, Eisner, Tonkon, and TD

Ameritrade are liable for reasonable attorney fees incurred by the Elderly Plaintiffs.
25
26
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PRAYER FOR RELIEF
WHEREFORE, plaintiffs pray for judgment as follows:
1.
An award of damages in favor of plaintiffs, under ORS 59.115(2)(a),
against all defendants, in an amount to be proved at trial, plus applicable pre- and post-judgment
interest, in an amount no less than $44,400,000.00;
2.
An award of damages in favor of the Elderly Plaintiffs, under
ORS 124.100(2), against defendants Deloitte, Eisner, Tonkon, and TD Ameritrade for three
times the amount of their economic and noneconomic damages, in an amount to be proved at
trial, but no less than $72,800,000.00;
10
3.
Reasonable attorney fees under ORS 59.115(10) and 124.100(2)(c);
11
4.
Plaintiffs' costs and disbursements; and
12
5.
Any other further relief that the court deems just, equitable, and proper.
13
DATED this 11th day of August, 2016.
14
15
16
22
s/ Alexander M. Naito
Dennis P. Rawlinson, OSB No. 763028
dennis.rawlinson@millernash.com
Joshua M. Sasaki, OSB No. 964182
josh.sasaki@millernash.com
Justin C. Sawyer, OSB No. 014057
justin.sawyer@millernash.com
Alexander M. Naito, OSB No. 124046
alexander.naito@millernash.com
111 S.W. Fifth Avenue, Suite 3400
Portland, Oregon 97204
Phone: (503) 224-5858
Fax: (503) 224-0155
23
Attorneys for Plaintiffs
24
Trial Attorney: Dennis P. Rawlinson

OSB No. 763028
17
18
19
20
21
25
26
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PLAINTIFFS' SUMMARY OF INVESTMENTS

Plaintiff
Keith Barnes
Keith Barnes1
Keith Barnes2
Keith Barnes3
Sharon Barnes4
Paul Gulick5
Paul Gulick6
Paul Gulick, as trustee for the Gulick
Family Trust
Paul Gulick, as trustee for the Gulick
Family Trust
Jeff Johnson7
Lee Johnson8
Julie Schmitz9
Julie Schmitz10
Julie Schmitz11
Custom Stamping, Inc.12
Paul Sylvan
Walter Wurster16
Walter Wurster, as trustee for the Walter
W. Wurster Revocable Trust17
Ronald Inouye, as trustee for the Walter
W. Wurster Irrevocable Trust18
Zam Capital Group, LLC
Zam Capital Group, LLC
*Statutory interest rate
Investment Type
ACF
PCF
ACOF
ACOF
PCF
ACF
AIOF
ACF
Interest Rate
13 %
12 %
9 %*
9 %*
12 %
11 %
10 %
9%
Investment Date
6/25/2014
12/31/2015
5/1/2014
6/19/2014
12/31/2015
10/22/2014
9/30/2014
5/16/2014
ACF
9%
11/11/2014
ACF
ACF
PCF
PCF
PCF
PCF
PCF
PCF
PCF
ACF
PCF
PCF
10 %
11 %
12 %
12 %
12 %
12 %
12 %
12 %
12 %
11 %
12 %
12 %
4/23/2015
8/11/2015
7/31/2015
7/31/2015
7/31/2015
7/31/2015
7/31/2015
7/31/2015
7/31/2015
9/14/2015
7/31/2015
7/31/2015
PCF
12 %
7/31/2015
PCF
ACOF
12 %
9 %*
7/31/2015
3/25/2014
Original investment in ACF on 4/25/2014.

3
4
5
6
Original investment in AIOF on 8/28/2009.
7
8
Original investments in ACF in 2010, 2011, 2012, 2013, and 2014.
9
10
11
12
13
14
15
16
17
Original investments in ACF and CarePayment Founders Fund in 2010 and 2011.
18
Original investments in ACF on 1/1/2011 and 6/1/2011.
2
70117075.1
EXHIBIT 1
Exhibit 1
Page 1
100%
80%
Aequitas
Wealth
Management, LLC
(DE)
100%
Exhibit 2
Page 1
NOTE: Does note include inactive

and non-operating entities
LP
Private Advisory
Group, LLC
(WA)
68.2%
Aspen Grove
Equity
Solutions, LLC
(OR)
60%
100%
ML Financial
Holdings, LLC
(DE)
100%
17.9%
Aequitas
International
Opportunities LP
(Cayman Islands)
GP
Aequitas
International
Holdings, LLC
(DE)
100%
Innovator
Management, LLC
(DE)
Innovator
Holdings, LLC
(DE)
51%
AAM Fund
Investment, LLC
(DE)
100%
100%
92.1%
100%
100%
Executive
Falcon, LLC
(OR)
79%
23%
32.9%
Ledgestone
Property
(DE)
100%
Ledgestone
Ledgestone
Management, LLC Holdings, LLC
(DE)
(DE)
32.9%
Aequitas
Senior Housing
Operations, LLC
(DE)
29.2%
MOGL Loyalty
Services, Inc.
(DE)
7.1%
100%
100%
100%
<.1%
9.9%
80.3%
Ivey
Performance
Marketing, LLC
(OR)
100%
100%
95.4%
5.9%
Cloudward, Inc.
(DE)
~3%
~3%
Syncronex, LLC
(DE)
100%
46.3%
Aequitas
Income
Protection
Fund, LLC
(DE)
8%
Campus
Student
Funding, LLC
Certified Security
Solutions, Inc.
(OR)
Canas Feast
Winery, L.L.C.
(OR)
Aequitas
Partner Fund, LLC
(OR)
83.6%
APF
Holdings, LLC
(OR)
Skagit
Gardens, Inc.
(WA)
Gridbox
Media, LLC
(DE)
100%
Aequitas 8.1%
Holdings, LLC
Marketing Services
Platform, Inc.
(DE)
10%
Window Rock/
Aequitas EIF
Aequitas Residential
Debt Fund, LLC
Recovery Fund, L.P.
(DE)
(DE)
Independence
Bancshares, Inc.
(SC)
ETC Global
Group, LLC
(DE)
24.3%
Aequitas 11%
Aequitas
ETC Founders
WRFF I, LLC
Fund, LLC
(DE)
(DE)
LP
28.9%
15.4%
Aequitas
Enhanced
Income Fund, LLC
(DE)
100%
Aequitas
Income
Opportunity
Fund, LLC
(OR)
100%
Aequitas
Investment
Management, LLC
(OR)
100%
Aequitas
Private Client
Fund, LLC
(DE)
Aequitas
Commercial
Finance, LLC
Argentus
Partners, LLC
75%
SCA
Holdings, LLC
(WA)
25%
Aequitas
Income
Opportunity
Fund II, LLC
(DE)
12.6%
Strategic
Capital
Alternatives, LLC
Alternative
Capital
Advisers, LLC
(DE)
4.9%
Aequitas
Hybrid Fund, LLC
(OR)
Aequitas 14%
Holdings, LLC
EDPlus
MotoLease, LLC
Holdings, LLC
(DE)
(OR)
100%
75%
Aequitas
Enterprise
Services, LLC
(DE)
100%
FOR INTERNAL PURPOSES ONLY; DO NOT DISTRIBUTE
25%
Spouting
Aequitas Capital
Rock Financial
Opportunities GP, LLC
Partners, LLC
(DE)
(DE)
GP; 1% LP
2.7%
Aequitas Capital
Management, Inc.
(OR)
Aequitas Capital
Opportunities
Fund, LP
(DE)
51.9%
3.6%
Executive
Citation, LLC
(OR)
CarePayment
Technologies, Inc.
(OR)
Aequitas Asset
Management
Oregon, LLC
(DE)
100%
100%
QuarterSpot, Inc.
(DE)
ACC Funding
Trust 2014-1
(DE)
ACC
MotoLease
Holdings 1, LLC Financial, LLC
(DE)
(OR)
Aequitas Senior
Housing, LLC
(DE)
100%
Portland Seed
Fund II, LLC
(DE)
The Hill
Land, LLC
(OR)
100%
CP Funding
I Trust
(DE)
CP Funding I
Holdings, LLC
(DE)
Aequitas Wealth
Hickory Growth
Management
Partners, LLC
Partner Fund, LLC
(DE)
(DE)
100%
Aequitas
Corporate
Lending, LLC
(OR)
100%
100%
Aequitas
Holdings, LLC
(OR)
Aequitas
Management, LLC
(OR)
Filed 03/14/16
ACC Funding
Series Trust
2015-5
(DE)
ACC
Holdings 5, LLC
(DE)
~5.5%
CarePayment,
LLC
(OR)
Pipeline Health Unigo Student

Holdings, LLC
Funding, LLC
(DE)
(DE)
~7.1%
100%
ACC
CarePayment Campus Student
F Plus
Holdings, LLC
Funding, LLC
Holdings, LLC
(DE)
(OR)
(DE)
100%
100%
100%
100%
Aequitas
Commercial
Finance, LLC
(OR)
100%
Aequitas Operating Entity

Aequitas Managed Fund
Private Credit
Private Equity
Other
On Chart in Other Area
83.6% Ownership
100% Control
Document 13-1
100%
ACC Funding
Trust 2014-2
(DE)
ACC
Holdings 2, LLC
(DE)
Aequitas
Private Client
Fund, LLC
Aequitas
Peer-To-Peer
Funding, LLC
(DE)
ACC
C Plus
Holdings, LLC
(DE)
100%
100%
100%
Ownership Relationship
Trust Beneficiary Relationship
Investment Advisory Relationship
January 4, 2016
Aequitas Entity Structure
Case 3:16-cv-00438-PK
Page 2 of 2

Walter Wurster, Et Al. v. Deloitte Et Al.

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Walter Wurster, Et Al. v. Deloitte Et Al.

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8/11/2016 3:09:18 PM

IN THE CIRCUIT COURT OF THE STATE OF OREGON

FOR THE COUNTY OF MULTNOMAH

WALTER WURSTER, individually;

Amount Claimed: $92,900,000.00

Case No. _________

Plaintiffs hereby allege as follows:

STATEMENT OF THE CASE

("Aequitas") investment scheme. Defendant TD Ameritrade, Inc., encouraged investors to

investments plus unpaid interest.

Through promotional materials, private placement memoranda, and audited

but was not limited to the following:

Aequitas sold investors on its "diversified portfolio" of private credit

Aequitas falsely represented that its investments in student loan

Aequitas concealed from investors Corinthian's precarious business

Aequitas sold investments that were purportedly secured by the credit

Aequitas misrepresented the value of its student loan receivables through

Aequitas orchestrated intercompany transactions to conceal its true

o Aequitas Holdings lost $22.2 million in 2014 and $46.7 million in

o The amount due on the loan exceeded Aequitas Holdings' assets by

By 2014, Aequitas's purported management fees dwarfed its income from

Aequitas created new investment funds and convinced investors to move

At least as early as November 2015, Aequitas was unable to keep up with

securities should have been registered.

agreements, corporate formations, financial information, recommendations, and assurances,

securities to plaintiffs, several of whom are elderly.

securities with "Audited" financial information in promotional materials that concealed

and manipulation designed to disguise Aequitas's failure. TD Ameritrade facilitated Aequitas's

as custodian of Aequitas investments.

Aequitas entities in excess of $44,400,000.00. See Exhibit 1, Summary of Plaintiffs'

Investments, for more information.

Defendant Deloitte & Touche, LLP, is a Delaware limited liability partnership

registered to do business in Oregon. On information and belief, Deloitte performed accounting

Defendant EisnerAmper, LLP, is a New York limited liability partnership

registered to do business in Oregon. On information and belief, EisnerAmper performed

subject of this dispute.

Defendant TD Ameritrade, Inc., is a New York corporation registered to do

business in Oregon. TD Ameritrade encouraged investors to purchase Aequitas securities,

provided assurances to investors about Aequitas, and recommended Aequitas investments to

investors. TD Ameritrade also served as custodian for certain Aequitas securities.

JURISDICTION AND VENUE

activity within the county.

subprime investments in "underrepresented" credit markets, including healthcare, student loans,

recourse agreements with Corinthian.

conceive and achieve things that did not exist before."

Aequitas's Organizational Structure

of over 75 interrelated companies, many of which shared overlapping management and

Aequitas Management, LLC, et al., Case No. 3:16-cv-00438, is attached as Exhibit 2.

Formed in 2007, Aequitas Management, LLC ("Aequitas Management"), is an

over Aequitas Holdings.

Aequitas entities that issued securities to investors.

and as manager of certain Aequitas equity funds.

Aequitas's Investment Products

companies are securities under Oregon law.

Aequitas Commercial Finance, LLC

Wholly owned by Aequitas Holdings, Aequitas Commercial Finance, LLC

"underserved by traditional lenders."

date and an enhanced interest rate in the event of default.

assets, both existing and after-acquired.

management, and associated risks.

"Funding or financing the purchase of student loan receivables from

"Funding or financing the purchase of patient-pay receivables from

"Funding or financing the purchase of receivables and loan portfolios, or