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U.S. Securities and Exchange Commission


Litigation Release No. 22850 / October 22, 2013

Securities and Exchange Commission v. AIC, Inc., et al., Civil Action No. 3:11-cv-00176 (E.D. Tenn.)

SEC Obtains Jury Verdict in Its Favor Against All Defendants On All Counts

The Securities and Exchange Commission announced today that, on October 10, 2013, a jury in the Eastern District of Tennessee, Knoxville Division, returned a verdict against AIC, Inc., Community Bankers Securities, LLC, and Nicholas D. Skaltsounis on all counts.  Defendant AIC was a financial services holding company for three broker-dealers and an investment adviser based in Richmond, Virginia.  Defendant Community Bankers Securities was one of the subsidiary broker-dealers.  Defendant Skaltsounis was the founder, President, and Chief Executive Officer of AIC and Community Bankers Securities.  The Commission’s complaint, which was filed in April 2011, alleged that Skaltsounis devised and orchestrated an offering fraud by offering and selling millions of dollars of AIC promissory notes and stock. 

The complaint alleged that, from at least January 2006 through November 2009, Skaltsounis, directly and through registered representatives associated with Community Bankers Securities, offered and sold AIC promissory notes and stock to numerous investors across multiple states, many of whom were elderly, unsophisticated brokerage customers of CB Securities.  The Defendants misrepresented and omitted material information to investors relating to, among other things, the safety and risk associated with the investments, the rates of return on the investments, and how AIC would use the proceeds of the investments.  AIC and its subsidiaries were never profitable.  AIC earned de minimis revenue, and its subsidiaries did not earn sufficient revenue to meet their expenses.  The Defendants used money raised from new investors to pay back principal and returns to existing investors.    

Prior to trial, the United States District Court for the Eastern District of Tennessee granted the Commission’s motion for partial summary judgment and found in favor of the Commission on its claims against AIC, Community Bankers Securities, and Skaltsounis under Sections 5(a) and 5(c) of the Securities Act of 1933.  The court also found in favor of the Commission on its claims against three relief defendants, Allied Beacon Partners, Inc. (f/k/a Waterford Investor Services, Inc.), Advent Securities, Inc., and Allied Beacon Wealth Management, LLC (f/k/a CBS Advisors, LLC), all of which were subsidiaries of AIC and all of which received proceeds from the Defendants’ illegal and fraudulent conduct.  In addition, prior to trial, two co-defendants, John B. Guyette, of Greeley, Colorado, and John R. Graves, formerly of Pensacola, Florida, and now incarcerated at the Federal Detention Center at Oakdale, Louisiana, both of whom were participants in the scheme, entered into settlement agreements with the Commission.  A final judgment ordering injunctive relief, disgorgement of ill-gotten gains, and civil penalties was entered against Guyette, and a final judgment ordering injunctive relief and civil penalties was entered against Graves.

At the conclusion of the almost three-week trial, the jury returned a verdict for the Commission and against Defendants AIC, Community Bankers Securities, and Skaltsounis on all of the remaining claims.  In particular, the jury found in favor of the Commission on its claims under Section 17(a) of the Securities Act and under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  In addition, the jury found in favor of the Commission on its claims against Defendants AIC and Community Bankers Securities under Section 20(a) of the Exchange Act and against Skaltsounis under Section 20(e) of the Exchange Act.

The trial team from the Commission’s Philadelphia Regional Office consisted of trial attorneys Michael J. Rinaldi, John V. Donnelly III, G. Jeffrey Boujoukos, and Scott A. Thompson and trial paralegal Nichelle Pridgen.



Modified: 10/22/2013