Buckhead executive at center of alleged bond fraud

A prominent Buckhead businessman and developer of senior care facilities and retirement communities, has found himself at the center of an alleged financial fraud that has left a trail of jilted investors and at least some of the senior projects financially strapped.

Christopher F. Brogdon, 66, faces a web of litigation, including a lawsuit from the Securities and Exchange Commission that claims he used investor money improperly, including to pay debts on unrelated facilities, to prop up other business ventures and for personal expenses, such as the use of private aircraft.

Investors also are suing for repayment of defaulted loans, and Brogdon also faces a suit from an Oklahoma bank which acted as a trustee in many of Brogdon’s bond offerings.

The allegations rank among the more convoluted and expansive securities cases involving a Georgia executive in recent memory. The various litigation involves senior facilities in several states, including Georgia, South Carolina and Alabama.

The SEC, in announcing its lawsuit last month against Brogdon, said a judge has frozen Brogdon’s assets.

An attorney for Brogdon did not return messages left before and after the Thanksgiving holiday seeking comment.

“Brogdon secretly diverted a portion of the proceeds to either pay for his and his wife’s lavish lifestyles or to prop up his entire business enterprise, which included other facilities, restaurants, and commercial real estate holdings,” the SEC said in civil lawsuit filed in November in U.S. District Court in Newark, N.J.

The SEC claims Brogdon misappropriated a portion of more than $190 million he raised from investors since 1990. The co-mingling of assets starting in as early as 2000, the suit said.

Brogdon and his businesses raised funds through conduit bonds issued by government entities such as development authorities in Georgia and other states, as well as through in private offerings.

Investors were to earn interest from revenue from the senior facilities. Local municipalities were not on the hook for the debt.

Prolific businessman

Brogdon has a prolific, if checkered history of business dealings. He was a founder in the 1990s of the J. Christopher’s breakfast chain. He and a partner sold the chain in 2009, though Brogdon continues to be the operating partner of numerous outlets through licensing agreements. A J. Christopher’s spokeswoman did not return messages seeking comment.

Brogdon also has faced past censures by securities watchdogs and an indictment in Florida for alleged Medicaid fraud, yet he has served on the boards of public companies and managed to be part of dozens of bond and other investment offerings.

Brogdon formerly served as chairman of Retirement Care Associates, Contour Medical and NewCare Health Corp., and recently announced his resignation from the board of Georgia-based AdCare Health Systems. He’s also the CEO of Global Healthcare REIT, according to the SEC.

Brogdon in recent years served as an officer of AdCare and also once made an offer to buy most of the Roswell-based company.

Bill McBride, CEO of AdCare, said Brogdon “is no longer involved with the company and is a shareholder only and has no other capacity with the company.”

Alleged co-mingling funds

In one instance, cited in the SEC lawsuit, Brogdon and a related company raised money through a bond issuance from two Georgia development agencies and a private placement of debt for a Conyers active adult community called Acadia Landing.

About $1.4 million in proceeds were to be used to build the project, and investors in the private placement were to be paid interest and principal from the project’s operations.

Instead, about $178,000 in proceeds were used to pay back investors in the private placement, and more than $640,000 was used to pay expenses unrelated to the Conyers project, which was not disclosed in the investment offerings, according to the SEC.

In separate depositions with the SEC in October, Brogdon and an employee described internal workings of his senior facility businesses. If one nursing facility was short on funds from operations to pay its debts, “loans” would be issued from other facilities he controlled and money transferred to bank accounts of those facilities to make payments on the bonds or other debts.

Money from investment proceeds also paid for credit card bills and to maintain and operate aircraft, according to information contained in court documents.

Brogdon ran afoul of an industry watchdog group in the 1980s as a former broker and later as a former officer in a company called Harbor Town Securities Corp.

According to reports from the AJC at the time, Brogdon was fined for making unauthorized bond purchases while he was a broker and barred from any association with a National Association of Securities Dealers (now known as FINRA) member for conducting municipal bond transactions when Harbor Town had insufficient net capital.

According to depositions reviewed by the AJC, the SEC is also examining whether Brogdon failed to have enough money set aside in reserve as spelled out in various bond offerings — some of the same alleged behavior that led to censure by watchdogs in the 1980s.

Brogdon’s business past is also at the center of a complaint by a financial industry watchdog against a New Jersey firm.

Last month, FINRA filed a complaint against Cantone Research, which issued loans to Brogdon-related companies, alleging the Cantone failed to disclose material information to buyers of pieces of those loans.

The omissions, according to the FINRA complaint, included that “Brogdon had twice been barred from the securities industry, once for ‘egregious misconduct’ involving unauthorized transactions, and later for a separate ‘scheme’ involving financial misconduct,” according to a news release.

Brogdon also had previously faced an indictment for Medicaid fraud in Florida, according to news reports from the 1990s and the FINRA complaint.

A lawyer for that firm, Cantone Research, said Cantone Research and its investors have sued Brogdon and related companies seeking repayment of defaulted loans involving several care facilities.

The lawyer, Keith Hasson, said that though he does not represent Cantone Research in the FINRA case, he denied his client has done anything wrong.