You would think that a Portland-based hedge fund would be doing stuff like investing in renewable energy made from hemp, or having meetings on bicycles, or ordering "Alpha Lattes" from the in-house barista.
But it turns out that one Portlandia fund is doing some decidedly not rad kind of sh!t. Ain't that right, Aequitas Capital Management?
The U.S. Securities and Exchange Commission moved decisively into the Aequitas Capital Management scandal Thursday, suing the Lake Oswego company and three top executives for allegedly running a $350 million Ponzi scheme.
The SEC claims Aequitas defrauded more than 1,500 investors into believing they were making health care, education and transportation-related investments, when their money was really being used in a last-ditch effort to save the firm.
Wow, you guys. Ponzi schemes are not cool at all. In fact, they are the opposite of cool, even if you're doing them ironically.
Why would you do something so terrible in the bosom of Northwestern hipsterdom? Did you take all those bearded, be-flanneled skateboarders for fools?
As first reported by The Oregonian and OregonLive, Aequitas was hurt badly when its deal to buy hundreds of millions of dollars worth of student loans from controversial for-profit college Corinthian Colleges fell apart in January 2014. Though the loans were deemed predatory and illegal by a federal judge, it was Aequitas largest source of revenue. The company continued to try and collect the debt from former Corinthian students long after Corinthian went bankrupt.
The SEC claimed in its lawsuit that Corinthian accounted for 75 percent of Aequitas debt-buying business. Aequitas insisted to the bitter end that losing Corinthian had an "immaterial" impact on the company.
As Aequitas' position grew weaker, it became more desperate to raise investor cash. By late 2014, it offered to pay investors 15 percent interest if they would commit their money for a full year, an extraordinary rate of return in today's low-interest environment.
15% interest?!?! You did take them for fools.
SEC alleges widespread fraud at Aequitas, sues top execs [The Oregonian]