Judge Mary Wiseman issued a temporary restraining order Friday against Essex and the companies, barring them from selling or offering to sell securities, returning money to investors, engaging in any deceptive, fraudulent or manipulative acts, or from destroying or altering any records. A preliminary injunction hearing is scheduled for Jan. 13.
Wiseman also appointed local attorney James Swaim on Friday to serve as receiver, who will work to recover Essex’s business assets for distribution as approved by the court.
The state’s complaint alleges that Essex sold securities without a license, sold unregistered securities, and engaged in securities fraud. Essex sold promissory notes in the Dayton Small Business Capital Fund, which he told investors would be invested in Dayton-area small businesses, the complaint states.
Twenty investors bought about $1.1 million in the fraudulent investment between July 6, 2010 and Nov. 23, 2011, but Essex never used that money to make loans to small businesses or invest in them, according to the complaint.
Instead, Essex mixed those funds with his business funds and used them to support his personal lifestyle, according to the commerce department.
Essex allegedly did not tell investors he was not licensed to sell securities and that the securities were not properly registered, according to the commerce department. He also told investors that the funds were guaranteed and that they would receive annual returns of 5 percent, 7 percent or 10 percent, with higher rates to those who invested larger dollar amounts, according to the commerce department.
Essex said Friday that he was “disappointed and a bit dismayed” by the commerce department’s position. He said that earlier this month, after state officials approached them, company officials began the steps to properly liquidate the fund.
“The majority of investors have already received all of their initial investments, with the full amount of interest promised,” Essex’s statement said. “Any remaining investors have received the significant majority of their initial investment, and we expect that in the very near future, once all liquidation efforts are complete, every investor will receive not only their initial principal investment, but all promised interest as well.”
Contact this reporter at (937) 225-2057 or lgrieco@DaytonDailyNews.com.
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