Page 1 –THIRD-PARTY COMPLAINT FOR CONTRIBUTION 

David B. Markowitz, OSB #742046 

DavidMarkowitz@MarkowitzHerbold.com 

Jeffrey M. Edelson, OSB #880407 

JeffEdelson@MarkowitzHerbold.com 

MARKOWITZ HERBOLD PC 

1211 SW Fifth Avenue, Suite 3000 

Portland, OR 97204-3730 

Telephone: (503) 295-3085 

Facsimile: (503) 323-9105 

Brad D. Brian (admitted pro hac vice) 

Brad.Brian@mto.com 

Bruce A. Abbott (admitted pro hac vice) 

Bruce.Abbott@mto.com 

MUNGER, TOLLES & OLSON LLP 

350 South Grand Avenue, Fiftieth Floor 

Los Angeles, CA 90071-3426 

Telephone: (213) 683-9100 

Facsimile: (213) 687-3702 

Attorneys for Defendant and Third-Party 

Plaintiff Sidley Austin LLP

UNITED STATES DISTRICT COURT 

DISTRICT OF OREGON 

PORTLAND DIVISION 

LAWRENCE P. CIUFFITELLI, for himself 

and as Trustee of CIUFFITELLI 

REVOCABLE TRUST, et al., 

 Plaintiffs, 

 v. 

SIDLEY AUSTIN LLP; 

Defendant / Third-Party 

Plaintiff, 

v. 

STRATEGIC CAPITAL GROUP, LLC; RP 

CAPITAL, LLC; and PRIVATE ADVISORY 

GROUP. 

Third-Party Defendants.

Case No. 3:16-cv-00580-AC 

SIDLEY AUSTIN LLP’S THIRD-PARTY 

COMPLAINT FOR CONTRIBUTION 

JURY TRIAL DEMANDED 

 

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 Defendant and Third-Party Plaintiff Sidley Austin LLP (“Sidley”), alleges the following 

in support of its Third-Party Complaint for contribution against Third-Party Defendants Strategic 

Capital Group, LLC; RP Capital, LLC; and Private Advisory Group (collectively, “Third-Party 

Defendants”): 

INTRODUCTION 

1. Plaintiffs filed this action against Sidley and other Defendants on April 4, 2016. 

On September 8, 2017, Plaintiffs filed their Second Amended Class Action Complaint (the 

“SAC”), which is the operative complaint. In their SAC, Plaintiffs purport to represent a 

putative class of investors who bought securities issued by various entities affiliated with 

Aequitas Capital Management, Inc. (“ACM”), Aequitas Holdings, LLC, and related entities. 

According to the United States Securities and Exchange Commission (“SEC”), the Aequitas 

group of companies were founded by Robert J. Jesenik (“Jesenik”) and controlled by, among 

others, Aequitas’s chief fundraiser Brian A. Oliver (“Oliver”) and Chief Financial Officer 

(“CFO”) N. Scott Gillis (“Gillis”). 

2. Plaintiffs allege that the Aequitas entities1

 violated the Oregon Securities Laws 

by, among other things, selling securities without registering them under Oregon law. Plaintiffs 

further allege that the Aequitas entities sold securities by means of materially false or misleading 

statements. Plaintiffs allege that the Aequitas entities misrepresented their financial health, 

 

1

 In what appears to be a strategic choice, Plaintiffs’ SAC consistently refers to “Aequitas” or 

“Aequitas securities”—rather than the individual Aequitas-related entities whose securities sales 

Plaintiffs are challenging. Each Aequitas entity, however, is functionally and legally distinct. 

Moreover, each Aequitas entity sold securities pursuant to different offering documents, which 

contained different representations about, inter alia, their securities, the risks associated with an 

investment in those securities, and other issues. Sidley uses the term “Aequitas” herein only as 

short-hand and not to obscure the important distinctions between the various entities and 

securities offerings. 

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failed to disclose their growing insolvency, and overvalued the collateral that backed the 

securities they issued to investors. (SAC ¶¶ 3–4.) Plaintiffs further allege that the Aequitas 

entities used new investor funds in a manner that was inconsistent with their representations to 

investors. (SAC ¶ 5.) Plaintiffs further allege that rather than using investor funds to buy 

income-generating assets, the Aequitas entities used proceeds from their securities sales to cover 

operating expenses and repay principal and interest owed to earlier investors. (SAC ¶¶ 70–71.) 

3. Plaintiffs do not bring claims against persons who were directly involved in 

practices Plaintiffs claim were fraudulent or misleading, as a temporary litigation stay in the 

related SEC matter prevents them from doing so. (SAC ¶ 2.) Absent from the SAC are claims 

against Jesenik, Oliver, and Gillis, whom the SEC has accused of operating a “Ponzi-like” 

scheme to mislead investors. Nor do Plaintiffs sue other executives, insiders, and advisors who 

participated in Aequitas’s securities sales. Also absent from Plaintiffs’ SAC are Registered 

Investment Advisors (“RIAs”), like Private Advisory Group and Strategic Capital Group, which 

recommended Aequitas securities to Plaintiffs and other investors. 

4. Instead, Plaintiffs have sued only accounting firms, law firms, and other outside 

service providers.2

 Plaintiffs allege that Defendants are jointly and severally liable with the 

Aequitas entities because they “participated” or “materially aided” in Aequitas’s securities sales. 

Plaintiffs allege that Defendants “materially aided” sales because, in certain cases, the Aequitas 

entities referenced Defendants in their Private Placement Memoranda (“PPMs”). (SAC ¶¶ 189–

92, 195.) According to Plaintiffs’ allegations—which Sidley has denied in its Answer to 

Plaintiffs’ SAC, filed on November 26, 2018—Aequitas’s identification of Defendants in the 

 

2

 Plaintiffs’ SAC names as Defendants Deloitte & Touche LLP; EisnerAmper, LLP; Sidley; 

Tonkon Torp, LLP; TD Ameritrade, Inc.; Integrity Bank & Trust; and Duff & Phelps, LLC. 

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PPMs fostered an illusion of success and legitimacy, which built confidence in prospective 

investors. (SAC ¶¶ 189–90, 192, 195.) Plaintiffs further allege that Defendants “materially 

aided” in the challenged sales by providing legal, accounting, or other services to certain 

Aequitas entities. (SAC ¶¶ 189–95.) Notably, many of the services that Plaintiffs characterize 

as “material aid” have no connection to any of the securities at issue in this litigation. Sidley, for 

instance, is alleged to be secondarily liable because it provided legal services to an Aequitas 

entity to obtain two credit facilities from separate banks. Yet the entity that borrowed money 

under those agreements was not a fund and did not sell securities; it was an operating company 

whose business involved buying and servicing patient debt from partner hospitals.3

5. Sidley has denied in its Answer to Plaintiffs’ SAC that it “participated” or 

“materially aided in” the challenged securities sales. Sidley has also denied that it is in any 

manner responsible for any injuries or damages alleged in Plaintiffs’ SAC.4

 If, and only if, 

Plaintiffs prove that their alleged damages are attributable to Sidley’s alleged participation or 

material aid in the sales of Aequitas securities, then, as described herein, the Third-Party 

Defendants directly participated and materially aided in the sale of Aequitas securities to a far 

greater extent than Sidley is alleged to have done. Further, in that circumstance, any damages 

sustained by Plaintiffs are wholly or partially attributable to conduct by the Third-Party 

 

3

 Plaintiffs assert secondary liability claims relating to other legal services provided by Sidley as 

well. Sidley’s responses to Plaintiffs’ allegations are reflected in Sidley’s recently filed Answer 

to the SAC. 

4

 As reflected in Sidley’s recently filed Answer to Plaintiffs’ SAC, Sidley currently has no 

factual basis to admit or deny Plaintiffs’ allegations concerning Aequitas’s “primary liability”—

i.e., whether Aequitas itself violated the Oregon Securities Laws as alleged. Plaintiffs bear the 

burden of proving these allegations, and discovery necessary to assess the truth of the allegations 

is unavailable because the stay in the SEC Action bars discovery against the Aequitas entities 

that are in receivership or their officers, directors, employees, and agents. 

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Defendants, upon whom Plaintiffs relied in buying the relevant securities. As alleged more fully 

below, the Oregon Securities Laws require that any liability imposed on Sidley in connection 

with Plaintiffs’ Aequitas investments be borne, in whole or in part, by Third-Party Defendants 

under principles of contribution. 

JURISDICTION AND VENUE 

6. This Court has subject matter jurisdiction over Plaintiffs’ claims in this action 

pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d). The amount in controversy 

exceeds $5,000,000, exclusive of interest and costs, and there is a diversity of citizenship 

between certain Plaintiffs and certain Defendants. This Court has subject matter jurisdiction 

over the claims asserted in this Third-Party Complaint pursuant to 28 U.S.C. § 1367(a). The 

claims in this Third-Party Complaint are so related to the claims asserted by Plaintiffs in this 

action that they form part of the same case or controversy. 

7. Venue in the District of Oregon is proper under 28 U.S.C. § 1391 because a 

substantial part of the events and omissions giving rise to Plaintiffs’ claims, and to Sidley’s 

claims against the Third-Party Defendants, occurred in this District. 

PARTIES 

8. Sidley is a law firm with offices in the United States and abroad, which has been 

named as a Defendant in the SAC. Plaintiffs allege that Sidley “participated” or “materially 

aided” in the sale of Aequitas securities. 

9. Strategic Capital Group, LLC (“SCG”) was an RIA firm headquartered in Gig 

Harbor, Washington. SCG was founded by N. Gary Price (“Price”), Ron Robertson 

(“Robertson”), and Timothy Feehan, Jr. (“Feehan”), in 1997, and was registered with the SEC in 

2004. SCG began its relationship with Aequitas in or around 2009 and advised up to 330 

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persons, including at least five of the seven named Plaintiffs in this action (Plaintiffs Larry 

Ciuffitelli, Greg Julien, James MacDonald, RF MacDonald Co., and William Ramstein), to 

purchase Aequitas securities. On September 18, 2014, the SEC issued an Order Instituting 

Administrative and Cease-and-Desist Proceedings against SCG and its founder, Price, in an 

administrative proceeding, In the Matter of Strategic Capital Group, LLC and N. Gary Price, 

SEC Administrative Proceeding, File No. 3-16138 (the “SEC Cease-and-Desist Order”). At or 

around the time of this Order, SCG sold its assets to Private Advisory Group, and terminated its 

registration with the SEC in March 2015. SCG was administratively dissolved by the 

Washington Secretary of State on April 3, 2018 due to failure to file its annual report due on 

November 3, 2017 

10. RP Capital, LLC (“RP Capital”) was a SEC registered broker-dealer located in 

Gig Harbor, Washington, that was affiliated with SCG through common ownership. Price 

owned 50% of RP Capital and is one of its managing members. RP Capital was registered with 

the SEC as a broker-dealer in 2005. On information and belief, RP Capital worked closely with 

SCG, executing many of its trades. RP Capital terminated its registration with the SEC in 

February 2017 and was administratively dissolved by the Washington Secretary of State on 

April , 2018 due to failure to file an annual report. 

11. Private Advisory Group, LLC (“PAG”) is an RIA firm headquartered in 

Redmond, Washington that was created in or around September 2014, by a transaction, described 

in more detail below, whereby PAG acquired all of SCG’s assets (including its customer 

relationships) and accepted a substantial capital contribution from the Aequitas-related entity 

Aspen Grove Equity Solutions (“Aspen Grove”). Following the transaction, Aspen Grove 

owned 68% of PAG and Bean Holdings, LLC, and Aaron Douglas Maurer (“Doug Maurer”) 

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owned the remaining equity. Aspen Grove was in turn majority owned by ACM along with 

Price, Feehan, and Robertson. ACM was further owned in part by Aequitas insiders, including 

Jesenik, Oliver, Chief Compliance Officer Andrew MacRitchie (“MacRitchie”), and President of 

Aequitas Consumer Services Craig Froude. PAG was managed by S. Christopher Bean (“Chris 

Bean”), its Chief Executive Officer, Douglas R. Bean (“Doug Bean”), its Chief Operating 

Officer, and Jon Bishopp, its General Manager. Both Chris Bean and Doug Bean were members 

of Bean Holdings, LLC. 

FACTUAL ALLEGATIONS 

12. On March 10, 2016, the SEC initiated a securities fraud action against Aequitas 

Management, LLC and related entities, as well as three Aequitas executives: Jesenik, Oliver, and 

Gillis. See SEC v. Aequitas Management, LLC, et al., No. 3:16-cv-00438-PK (D. Or.) (the “SEC 

Action”). The SEC’s Complaint alleges that the Aequitas defendants operated “a scheme to 

defraud and misuse client assets in connection with investments offered through the Aequitas 

group of companies.” 

13. The SEC obtained a preliminary injunction and the appointment of a Receiver 

over the Aequitas entities. Since his appointment, the Aequitas Receiver has been consolidating 

control of the Aequitas entities, liquidating their assets, and verifying the claims of creditors 

against the Aequitas estate. Securities issued by various Aequitas entities are now in default, and 

the Receiver estimates that approximately $617.6 million in principal and interest payments 

remain due to investors in those securities. 

14. Recently, the Receiver concluded an investigation concerning the Aequitas 

entities. On November 21, 2018, the Receiver filed a “Report Regarding the Investigation of the 

Receivership Entity’s Business Conduct” (the “Forensic Report”). The Forensic Report alleges, 

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in part, that the Aequitas entities were insolvent “from at least July 3, 2014 onward” and 

operated in a “Ponzi-like” manner. The Forensic Report further alleges that, at times, Aequitas’s 

“only source of capital was new investor funds,” and Aequitas was incapable of generating 

sufficient profits to pay returns it promised to investors. The Receiver also identified alleged 

“instances of self-dealing” and preferential treatment afforded to executives and other insiders 

and advisors. 

Aequitas Executives 

15. A stay issued in the SEC Action enjoins Sidley from initiating litigation against 

any of the Aequitas entities or their officers, directors, employees, or agents. This order 

currently prevents Sidley from asserting claims against the individual defendants in the SEC 

Action—Jesenik, Oliver, and Gillis—or other insiders and advisors who were involved in 

Aequitas’s securities sales. Sidley includes the following allegations regarding the Aequitas 

insiders and advisors for background purposes only and not to assert claims against these 

individuals in this litigation until further order of the Court overseeing the SEC Action. Sidley 

reserves the right to seek leave of Court to assert claims against the Aequitas executives after the 

stay and injunction are lifted. 

Bob Jesenik 

16. Jesenik was the founder of the Aequitas group of entities formed in 1993 and 

served as its President and Chief Executive Officer for over two decades. Jesenik was a 35% 

owner of Aequitas Management, LLC, which owns 84% of Aequitas Holdings, LLC (“Aequitas 

Holdings”). Aequitas Holdings was the sole owner and member of Aequitas Commercial 

Finance, LLC (“ACF”), an entity which sold securities to Plaintiffs in this litigation. Aequitas’s 

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marketing materials touted Jesenik’s “over 30 years of experience in corporate finance and 

investment management.” 

17. Jesenik served in Aequitas’s leadership at all times, and was involved in every 

aspect of Aequitas’s business operations. He effectively controlled the entire Aequitas 

enterprise, including Aequitas Management (the ultimate parent company for the Aequitas group 

of entities), Aequitas Holdings, and ACF. Jesenik drove Aequitas’s business decisions and 

strategy. Jesenik was aided in this endeavor by various Aequitas insiders, including Oliver and 

Gillis—both of whom are discussed below. 

18. In addition to serving as Aequitas’s President and CEO, Jesenik was involved in 

nearly every committee responsible for conducting Aequitas’s business operations. Jesenik was 

the Chief Investment Officer of ACM and Aequitas Investment Management, LLC (“AIM”). 

Jesenik also served as the Chair of Aequitas’s Investment Committee. The Aequitas Receiver 

has described the Investment Committee as “Aequitas’s primary decision-making body.” 

Among other things, the Investment Committee was responsible for selecting and approving the 

investments Aequitas made with investor money. It also approved valuations of Aequitas’s 

equity positions—valuations which Aequitas disclosed to existing and prospective investors. By 

chairing the Investment Committee, Jesenik played a critical role in deciding how Aequitas 

valued its assets and deployed capital that it received from the individuals who bought Aequitas 

securities. 

19. The SEC alleges that in exchange for his services, Jesenik was paid a salary of 

$685,000 with a bonus target of 100% of his salary. In September 2014, Jesenik revised this 

salary amount from $450,000, and made this adjustment retroactive to January 1, 2014, as 

described in the Forensic Report. 

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20. The SEC also alleges that Jesenik was closely involved in the solicitation and sale 

of Aequitas securities to investors. Jesenik met regularly with investors and potential 

investors—both at Aequitas’s Lake Oswego headquarters and at destinations across the country. 

Such in-person investor meetings were both formal and informal and included expensive dinners, 

wine tastings, charity events, golf outings, sports events, and a range of other activities. In 

addition to in-person meetings, Jesenik responded to questions about Aequitas’s securities 

through letters to investors, email communications, and phone calls. At the same time, Jesenik is 

alleged to have tightly controlled the diligence information that Aequitas provided to investors, 

forcing investors to sign non-disclosure agreements to access certain facts and data, and—even 

then—allowing investors to receive only limited information. 

21. Jesenik participated personally in sales of securities to Plaintiffs in this action, 

including Larry Ciuffitelli, Andrew Nowak, James MacDonald, and William Ramstein, each of 

whom made substantial investments in various securities over time. Jesenik directed other 

Aequitas personnel, such as Oliver and others on Aequitas’s sales team to sell or solicit the sale 

of securities to these Plaintiffs. Jesenik was regularly apprised of the status of these sales efforts 

and became personally involved when necessary to convince these Plaintiffs to invest. As just 

one example, when Plaintiff Nowak (a long-time “business client” of Jesenik) “struggle[d] with 

pulling the trigger” on a securities purchase in 2012, Aequitas sales personnel requested that 

Jesenik personally contact Nowak to close the investment. Oliver played a critical role in this 

effort as well, authorizing special terms to Nowak based on his prior relationship to Jesenik. On 

information and belief, Nowak would not have invested in this particular security had Jesenik not 

personally intervened, and had Oliver not offered him special terms. On information and belief, 

Jesenik engaged in similar conduct with other Aequitas investors. 

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22. More generally, Jesenik was identified as Aequitas’s Chief Executive Officer in 

every PPM alleged in the SAC to have been materially false or misleading: June 9, 2010 ACF 

PPM, December 1, 2011 ACF PPM, November 30, 2012 ACF PPM, November 30, 2013 ACF 

PPM, September 9, 2015 ACF PPM, October 27, 2015 ACF PPM, July 11, 2011 Aequitas 

Income Opportunity Fund (“AIOF”) PPM, March 1, 2012 AIOF PPM, December 31, 2012 AIOF 

PPM, February 15, 2012 Aequitas Income Opportunity Fund II (“AIOF-II”) PPM, October 1, 

2014 AIOF-II PPM, October 31, 2014 AIOF-II PPM, February 2014 Aequitas Capital 

Opportunities Fund (“ACOF”) PPM, September 30, 2011 Aequitas Income Protection Fund 

(“AIPF”) PPM, December 12, 2014 AIPF PPM, February 15, 2012 AIPF PPM, June 1, 2012 

AIPF PPM, December 31, 2012 AIPF PPM, October 1, 2014 Aequitas Enhanced Income Fund 

(“AEIF”) PPM, January 1, 2015 AEIF PPM, December 14, 2015 AEIF PPM, and the July 31, 

2015 Aequitas Private Client Fund (“APCF”) PPM. Each of these PPMs touted Jesenik’s “over 

30 years of experience in corporate finance and investment management,” his “business 

background” in “commercial lending at U.S. Bancorp” and as “VP Finance/CFO in technology 

and distribution firms,” and his accounting degree and MBA. 

23. On information and belief, Jesenik played a critical role in reviewing, 

commenting on, and approving the contents of the PPMs at issue in the SAC. The SEC alleges 

that Jesenik maintained final approval of the contents of the PPMs, giving him final say over 

Aequitas’s publication of the statements that Plaintiffs allege to have been false or materially 

misleading. Jesenik also maintained authority over their distribution and, on information and 

belief, personally distributed certain of these PPMs to investors to solicit additional investment in 

the Aequitas entities. 

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24. In addition to PPMs, Aequitas developed and distributed other marketing 

materials, such as quarterly reports known as “tear sheets,” some of which are alleged in the 

SAC to have been materially false or misleading. On information and belief, Jesenik was also 

responsible for approving the content of these materials. 

25. The SEC sued Jesenik in the SEC Action, and its complaint alleges that Jesenik 

perpetrated a scheme to defraud investors and misuse their assets. The SEC further alleges that 

since 2014, Jesenik, together with his longtime chief fundraiser, Oliver, has defrauded investors 

into thinking that they were investing in a portfolio of trade receivables in the healthcare, 

education, transportation, or consumer credit sectors. In reality, Jesenik, Oliver, and—after he 

joined Aequitas in early 2015, Gillis—allegedly used the majority of investor funds to repay 

prior investors and to pay the operating expense of the Aequitas enterprise, which allegedly 

exceeded the fees Aequitas told investors they would charge for managing investments. The 

SEC further alleges that Jesenik is personally liable for violating the antifraud provisions of the 

Securities Act of 1933 (“Securities Act”), the Securities Exchange Act of 1934 (“Exchange 

Act”), and the Investment Advisers Act of 1940 (“Advisers Act”) in connection with the offer 

and sale of Aequitas securities, and for the conduct described in this paragraph. 

Brian Oliver 

26. Oliver joined Aequitas in 1997. According to the SEC, Oliver, along with 

Jesenik, played an instrumental role in Aequitas’s formation and development, serving as 

Aequitas’s Executive Vice President and participating in every aspect of Aequitas’s business 

operations and fundraising. 

27. The SEC alleges that Oliver was the primary fundraiser for the Aequitas entities. 

Oliver allegedly worked closely with investors, potential investors, and investment professionals, 

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including RIAs to solicit the Aequitas securities. Oliver allegedly met frequently with investors, 

potential investors, and their RIAs to recommend the Aequitas offerings, to answer questions, 

and to oversee the distribution of Aequitas offering documents and marketing materials. At 

times, Oliver allegedly distributed offering documents to investors, including PPMs and 

subscription agreements. The SEC alleges that, like Jesenik, Oliver was involved in Aequitas’s 

investor appreciation and outreach events, which included expensive dinners, charity events, golf 

outings, sports games, and a range of other activities. 

28. Oliver worked closely on the sales for certain of the named Plaintiffs. For 

example, Oliver communicated with Plaintiff Lawrence P. Ciuffitelli, both in person and over 

email, prior to his investment. Similarly, Oliver communicated with Plaintiff Greg Julien and 

worked to close his initial Aequitas investment. Regarding Julien’s investment in 2012, Doug 

Maurer, a PAG representative, acknowledged that Oliver was giving Julien a “break on the yield 

and liquidity” and agreed that Oliver “backdate” the investment date to make the “accounting life 

a little easier.” Oliver also discussed potential Aequitas investments with Plaintiff James 

MacDonald and Michael MacDonald from Plaintiff R.F. MacDonald Co. Finally, Oliver 

communicated with Plaintiff Nowak and his son Nick Nowak about their investment, both over 

the telephone and in person. On information and belief, Oliver engaged in similar conduct with 

other Aequitas investors. 

29. In addition to his direct outreach to Plaintiffs, Oliver worked closely with the 

Plaintiffs’ investment advisors, communicating with the RIA representatives sometimes multiple 

times a day. Oliver frequently communicated with SCG and PAG representatives and provided 

them with inside information about Aequitas’s fundraising needs. In 2014, Plaintiff William 

Ramstein sought to buy Aequitas securities in amounts that exceeded SCG’s portfolio allocation 

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recommendations. Together, Oliver and SCG arranged for Aequitas to accept Ramstein’s 

investment directly from Ramstein, structuring the investment to appear as if SCG was not 

involved. Both SCG and PAG recommended that clients invest no more than 10% of their 

investment portfolio in Aequitas securities. On information and belief, Ramstein may have 

invested closer to 100% of his investment portfolio in Aequitas. 

30. Other than his direct interactions with investors and their advisors, Oliver was 

identified as Aequitas’s Executive Vice President in every PPM that the SAC alleges was false 

or misleading: June 9, 2010 ACF PPM, December 1, 2011 ACF PPM, November 30, 2012 ACF 

PPM, November 30, 2013 ACF PPM, September 9, 2015 ACF PPM, October 27, 2015 ACF 

PPM, July 11, 2011 AIOF PPM, March 1, 2012 AIOF PPM, December 31, 2012 AIOF PPM, 

February 15, 2012 AIOF-II PPM, October 1, 2014 AIOF-II PPM, October 31, 2014 AIOF-II 

PPM, February 2014 ACOF PPM, September 30, 2011 AIPF PPM, December 12, 2014 AIPF 

PPM, February 15, 2012 AIPF PPM, June 1, 2012 AIPF PPM, December 31, 2012 AIPF PPM, 

October 1, 2014 AEIF PPM, January 1, 2015 AEIF PPM, December 14, 2015 AEIF PPM, and 

the July 31, 2015 APCF PPM. Each of these PPMs touted Oliver’s “over 15 years [of] corporate 

banking” experience “where he utilized his expertise in financing middle-market companies in a 

wide variety of industries,” his consulting, structuring, and refinancing experience, and his 

degree in finance. 

31. On information and belief, Oliver, like Jesenik, had approval authority over the 

disclosures contained in these PPMs and over their distribution to investors. The SEC alleges 

that Oliver himself personally distributed certain PPMs to investors during meetings or over 

email to solicit additional investment in the Aequitas entities. Oliver also distributed 

subscription agreements and other marketing materials 

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32. The SEC alleges that, along with Jesenik, Oliver was also responsible for 

approving the content of the quarterly financial updates that the Aequitas entities shared with 

investors and potential investors. Plaintiffs’ SAC addresses these quarterly financial statements, 

which Plaintiffs contend were false or materially misleading. 

33. Oliver also allegedly played a significant role in monitoring what information was 

received by investors such as financial information and diligence information relating to the 

Aequitas entities. 

34. Oliver allegedly was also heavily involved at all relevant times in Aequitas’s 

business decisions and strategy. Oliver served on Aequitas’s Investment Committee, as 

disclosed in PPMs discussed in Plaintiffs’ SAC. According to the Receiver’s reports, Oliver was 

one of three individuals who were authorized to vote on investment decisions. The others were 

Jesenik and MacRitchie. On information and belief, by serving on the Investment Committee, 

Oliver played a critical role in deciding how Aequitas valued its assets and deployed capital 

received from the individuals who bought Aequitas securities. 

35. Oliver was also a voting member of the Board of ACM, an active participant in 

Aequitas’s Management Committee, and a voting member of Aequitas’s Audit Committee. The 

SEC alleges that Oliver attended frequent meetings addressing reviews of Aequitas’s financial 

statements, cash management, and similar issues. 

36. The SEC alleges that, in exchange for his services, Oliver received a salary of 

$350,000 with a bonus target of 100% of his salary. 

37. The Forensic Report alleges that Oliver was aware of Aequitas’s significant debt 

obligations, including debt that Aequitas entities owed to outside investors. In an October 2015 

email quoted in the Forensic Report, Oliver stated: “Unfortunately, we have a history of building 

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what we think are ‘conservative’ plans, making business/spending/investing decisions based on 

those plans, not achieving those plans, and as a result creating a wider and wider gap between 

cash revenue and cash expenses. . . . Since converting to an asset management firm, we’ve 

virtually never been profitable, and have now accumulated nearly $100MM of aggregate losses 

over our history.” The Forensic Report suggests that despite his awareness of certain financial 

challenges facing Aequitas, Oliver continued to raise funds from investors, both by soliciting 

investors directly and by working with RIAs. 

38. Like Jesenik, the SEC has sued Oliver in the SEC Action, and its complaint 

alleges that Oliver perpetrated a scheme to defraud investors and misuse their assets. It further 

alleges that since 2014, Oliver, together with Jesenik, has defrauded investors into thinking that 

they were investing in a portfolio of trade receivables in the healthcare, education, transportation, 

or consumer credit sectors. In reality, Jesenik, Oliver, and—after he joined Aequitas in early 

2015, Gillis—allegedly used the majority of investor funds to repay prior investors and to pay 

the operating expenses of the Aequitas enterprise, which exceeded the fees Aequitas’s affiliated 

entities told investors they would charge for managing investments. The SEC further alleges that 

Oliver is personally liable for violating the antifraud provisions of the Securities Act, the 

Exchange Act, and the Advisers Act in connection with the offer and sale of Aequitas securities, 

and for the conduct described in this paragraph. 

N. Scott Gillis 

39. Gillis joined Aequitas in January 2015 as the Executive Vice President Chief 

Operating Officer (“COO”) for ACF, ACM, and AIM. In the role of COO, Gillis reported 

directly to Jesenik and was responsible for “planning, implementing, managing and controlling 

all financial-related activities of the company.” Following the departure of Aequitas’s former 

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CFO, Olaf Janke (“Janke”), Gillis also served as Aequitas’s acting CFO. Gillis was also named 

an Executive Vice President of Aequitas. Gillis was a 10% owner of Aequitas Management. He 

received a salary of $400,000 with a bonus target of 100%. 

40. In 2015, Gillis was responsible for the financial information prepared and 

distributed through Aequitas’s quarterly updates. These quarterly updates included Aequitas’s 

total assets and a breakdown of asset allocations. 

41. The SEC alleges that Jesenik, Oliver, and Gillis were aware in 2015 that 

Aequitas’s financial position was deteriorating. The SEC further alleges that on a daily basis, 

Jesenik and Gillis received internal cash models and projections, which demonstrated significant 

liquidity issues. Jesenik and Gillis allegedly discussed ACF’s cash needs on a near-daily basis. 

Nonetheless, Aequitas continued selling securities throughout 2015 and into early 2016. 

42. The SEC alleges that, as Aequitas’s CFO, Gillis was (or should have been) aware 

that Aequitas Holdings lacked the ability to repay its intercompany loan to ACF (the “Holdings 

Note”)—an issue kept closely between the Aequitas insiders. According to allegations in the 

SEC’s Complaint, Aequitas internal records showed an increasing gap between the amount of the 

Holdings Note and its available collateral. The SEC asserts that by June 2015, the balance of 

this loan was $147.4 million and the collateral was $65.3 million. The SEC further alleges that 

Gillis held meetings in 2015 to address the shortfall in collateral, and was involved in Aequitas’s 

Office of the Chief Investment Officer meetings where the Holdings Note was discussed. According 

to the SEC’s allegations, Gillis was also aware that in April 2015, the Holdings Note well exceeded 

its allowable line of credit ($80 million) under the Promissory Note agreement between ACF and 

Aequitas Holdings, and that Aequitas backdated an amendment to that Promissory Note to 

January 2014.

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43. In July 2015, Gillis was closely involved in ACF’s actions to comply with the 

Investment Company Act of 1940 (“1940 Act”). The 1940 Act requires certain entities to 

register as an “investment company” unless they qualify for an exemption from registration. 

One exemption applies when 55% or more of a company’s assets are so-called “good assets”—

i.e., notes and accounts receivable that represent the value of merchandise, insurance, or services. 

Gillis understood in the spring of 2015 that ACF did not have sufficient “good assets” and was 

relying on a one-year safe harbor for “transient investment companies.” Gillis also understood 

that an institutional lender to one of the Aequitas entities, Wells Fargo, required ACF to bring 

itself back within the 55% standard by June 30, 2015, and to obtain a written opinion from counsel to 

that effect. To achieve this goal, Gillis implemented transactions that adjusted ACF’s asset 

composition. On information and belief, Gillis also instructed an employee simply to write down 

the value of certain “bad assets,” thereby improving ACF’s ratios in Aequitas’s books. Gillis 

issued these instructions without informing Aequitas’s outside counsel, Wells Fargo, or others, 

and the valuation change was completed. After Aequitas provided a written 1940 Act opinion to 

Wells Fargo, Gillis approved a second change, which returned the ACF valuations to their 

original levels and increased the company’s overall valuation. These changes did not become 

known until early February 2016. On information and belief, Gillis was responsible for other 

transactions and bookkeeping adjustments to comply with the 1940 Act, which were also not 

disclosed to outside counsel, Wells Fargo, or others. 

44. Gillis was identified in the September 9, 2015 ACF PPM, October 27, 2015 ACF 

PPM, and the July 31, 2015 APCF PPM as Aequitas’s Chief Operating Officer and in the AEIF 

December 14, 2015 AEIF PPM as Aequitas’s Executive Vice President, Chief Operating Officer. 

Each of these PPMs touted Gillis as a CPA and CFP, and boasted of his experience as former 

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CFO of AIG Retirement Services, Director of “dozens of AIG subsidiaries,” and his successes in 

pushing SunAmerica Life Companies’ “market-leading growth, 30% annually for 15 years,” as 

its former Vice President and Controller before its merger with AIG. 

45. Like Jesenik and Oliver, the SEC has sued Gillis in the SEC Action, and its 

complaint alleges that Gillis perpetrated a scheme to defraud investors and misuse their assets. It 

further alleges that since 2014, Jesenik, together with Oliver, has defrauded investors into 

thinking that they were investing in a portfolio of trade receivables in the healthcare, education, 

transportation, or consumer credit sectors. In reality, Jesenik, Oliver, and—after he joined 

Aequitas in early 2015, Gillis—allegedly used the majority of investor funds to repay prior 

investors and to pay the operating expenses of the Aequitas enterprise, which exceeded the fees 

Aequitas’s affiliated entities told investors they would charge for managing investments. The 

SEC further alleges that Gillis is personally liable for violating the antifraud provisions of the 

Securities Act, the Exchange Act, and the Advisers Act in connection with the offer and sale of 

Aequitas securities, and for the conduct described in this paragraph. 

Additional Aequitas Executives 

46. On information and belief, Jesenik, Oliver, and Gillis were not the only 

executives who were involved in the sale of Aequitas securities. As described in the Forensic 

Report, other executives, insiders, and advisors played important roles in overseeing the 

challenged securities offerings, soliciting sales, and directing Aequitas’s use of funds raised by 

outside investors. As with Jesenik, Oliver, and Gillis, a stay and injunction entered in the SEC 

Action prevents Sidley from asserting claims against these individuals at this time. Counsel for 

the Receiver has informed Sidley that he is of the opinion that the injunction extends to every 

Aequitas executive and prevents Sidley from asserting claims against the executives until further 

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order of the Court overseeing the SEC Action. Sidley reserves the right to seek leave of Court to 

assert claims against additional third parties—including additional officers or directors of 

Aequitas—once the stay and injunction are lifted. 

Aequitas Advisory Board 

47. As reflected in the Forensic Report, Aequitas engaged the services of an Advisory 

Board, which was comprised of “experienced business men and women,” who advised Aequitas 

on various issues. Aequitas identified the Advisory Board in documents it used to sell securities 

to investors, including many of the PPMs that the SAC alleges to have been false or 

misleading. Each of these PPMs touted the Advisory Board as providing “insight and guidance 

on market opportunities and product developments.” In addition, the Forensic Report suggests 

that certain Advisory Board members worked as “finders” by referring individuals to Aequitas as 

prospective investors. It also describes the Advisors as “insiders of Aequitas.” As with the 

Aequitas executives, a stay and injunction entered in the SEC Action prevents Sidley from 

asserting claims against members of the Advisory Board at this time. Counsel for the Receiver 

has informed Sidley that he is of the opinion that the injunction extends to member of the 

Advisory Board and prevents Sidley from asserting claims against those individuals until further 

order of the Court overseeing the SEC Action. Sidley reserves the right to seek leave of Court to 

assert claims against additional third parties—including individual Advisors—once the stay and 

injunction are lifted.

Registered Investment Advisors 

SCG, PAG, and RP Capital 

48. RP Capital was a defendant in an action brought by a putative class of Aequitas 

investors, which was recently resolved through a settlement. See Brown, et al. v. Price, et al., 

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No. 3:17-cv-00869-HZ (D. Or.). The Brown Plaintiffs alleged that RP Capital facilitated sales of 

Aequitas securities without disclosing material facts about the Aequitas entities. The Brown 

Plaintiffs made similar allegations against SCG and PAG, alleging that both entities sold 

Aequitas securities without disclosing their extensive connections to the Aequitas entities or 

potential conflicts of interest stemming from those connections.

5

 

49. SCG and PAG were RIAs who recommended Aequitas securities to their clients, 

and therefore had duties to perform adequate due diligence before recommending an investment, 

to recommend investments suitable to their clients’ risk tolerances, and to act at all times in good 

faith and in their clients’ best interests. 

50. The Brown Plaintiffs alleged that SCG and PAG held themselves out to their 

clients as independent RIAs acting in accord with these duties. Representatives of SCG and 

PAG presented themselves as having the financial expertise necessary to evaluate the riskiness of 

the Aequitas securities, and as having performed the due diligence necessary to recommend their 

clients to purchase the securities. Allegedly, representatives of SCG and PAG claimed to 

recommend investments that were suitable to their clients’ financial needs and risk tolerances. 

Representatives of SCG and PAG also allegedly claimed to act in their clients’ best interests and 

to disclose conflicts of interest. 

51. On information and belief, the recommendations that SCG and PAG personnel 

provided to their clients were the decisive factor in their clients’ (including five of seven named 

Plaintiffs in this action) decisions to purchase Aequitas securities. 

 

5

 The Brown Plaintiffs did not name SCG or PAG as defendants because, at the time that case 

was filed, both entities were owned by Aequitas and subject to the litigation stay. 

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52. The Brown Plaintiffs alleged that representatives of SCG and PAG introduced 

their clients to Aequitas and its securities offerings, characterized the Aequitas securities as “safe 

and secure” investments, facilitated communications and meetings between their clients and 

Aequitas personnel, and assisted their clients to complete documents to consummate the sales. 

53. The Brown Plaintiffs alleged that representatives of SCG and PAG solicited and 

sold Aequitas securities not because those were good investment choices for their clients, but 

because of the conflicted relationship between SCG, PAG, and Aequitas. For instance, SCG was 

allegedly conflicted because its clients’ purchases of Aequitas securities were executed through 

RP Capital. RP Capital, which was affiliated with SCG through common ownership, allegedly 

entered into formal referral agreements with Aequitas entities. Under those agreements, RP 

Capital allegedly received referral fees for introducing Aequitas securities to investors. In this 

way, RP Capital allegedly gained revenue through SCG’s sales of Aequitas securities, which RP 

Capital shared with SCG representatives who advised several named Plaintiffs. On information 

and belief, this revenue amounted to approximately 2% of the value of each securities purchase. 

54. The Brown Plaintiffs alleged that SCG sold its assets to PAG, a new entity created 

via an agreement between Aspen Grove, Bean Holdings LLC (which did business as Private 

Advisory Group), and Doug Maurer. Pursuant to the PAG formation agreement, Aspen Grove—

which was majority-owned by an Aequitas affiliate—allegedly acquired a 68% ownership 

interest in PAG. According to the Brown Plaintiffs, SCG’s investment adviser representatives 

moved to PAG, and PAG accepted all of SCG’s approximately $110 million of Aequitas 

investments. 

55. The Brown Plaintiffs alleged that PAG was conflicted in advising its clients to 

purchase Aequitas securities, at a minimum, because it was majority-owned by Aequitas, 

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through Aspen Grove. But even further, PAG allegedly was directly controlled by Aequitas 

personnel. As the Brown Plaintiffs alleged, PAG’s July 2015 Form ADV lists the following 

direct control persons: Jesenik, Oliver, MacRitchie, Janke, and President of Aequitas Consumer 

Services Craig Froude. The Brown Plaintiffs further alleged that documents filed with the SEC 

reveal that ACM is also a direct control person of PAG. According to the Brown Plaintiffs, those 

relationships explain why PAG’s SEC Form ADV filed with the SEC on July 14, 2015 includes 

a long list of Aequitas affiliates as the indirect controllers of PAG, including Aequitas Holdings 

and Aequitas Wealth Management. SEC filings did not disclose the close relationship between 

PAG and Aequitas until July 2015. 

56. The conflicts alleged in the Brown Plaintiffs’ complaint allegedly resulted in 

SCG, then PAG, engaging in aggressive sales practices to sell Aequitas securities. Among other 

things, SCG and PAG representatives allegedly downplayed the risk associated with the 

investments—risks which were often clearly disclosed in Aequitas’s PPMs. SCG and PAG 

representatives allegedly described Aequitas investments as “safe and secure” and touted the 

high interest rates offered by the Aequitas entities. On information and belief, when investors 

pressed SCG and PAG for information about Aequitas, representatives of these entities would 

accept Aequitas’s explanations at face value rather than performing any independent 

investigation or diligence. At times, representatives would simply refer inquiring clients directly 

to Aequitas personnel, who would convince those individuals to invest new funds in Aequitas 

securities or refrain from redeeming existing investments. According to the Brown Plaintiffs, 

representatives of SCG and PAG continued advising their clients to purchase Aequitas securities 

despite receiving information reflecting financial challenges that faced the Aequitas entities. On 

information and belief, because of their relationship with Aequitas, SCG and PAG were often 

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able to offer their clients “special” pricing (in the form of higher interest rates) on securities 

offerings. On information and belief, such pricing breaks facilitated purchases by investors who 

would not have bought Aequitas securities without the “special” rates. 

57. All these practices occurred with respect to all five SCG/PAG clients who are 

named Plaintiffs in this action. With respect to Plaintiff Lawrence P. Ciuffitelli, representatives 

of SCG facilitated and attended a meeting with Ciuffitelli and Aequitas personnel as early as 

January 2011. Around the time of that meeting, the SCG representatives described Aequitas 

executives as “brilliant financiers” and described Aequitas as a “good, safe, stable investment.” 

Ciuffitelli made his first investment in an ACF Note shortly thereafter. Representatives of SCG 

stayed in close contact with Ciuffitelli in the years following his initial investment, advising him 

to make additional investments and renew maturing investments. Representatives of SCG also 

encouraged Ciuffitelli to make investments at “special terms”—i.e., short-term, particularly highyielding investments that Aequitas used to cover cash shortages. Ciuffitelli continued as a PAG 

client after PAG acquired SCG’s assets. Representatives of PAG continued to encourage 

Ciuffitelli to make larger and different investments with the Aequitas entities, for example to 

invest in ACOF and Motolease Financial. On information and belief, SCG and PAG 

representatives were the decisive factor in Ciuffitelli’s decisions to purchase all the securities 

upon which he bases his claims in this action. 

58. With respect to Plaintiff Gregory and Angela Julien Revocable Trust U/A 

7/2/2012, SCG representatives assisted Julien (as trustee) with diligence he performed prior to 

making the trust’s first investment in an ACF Note in November 2010, including by helping 

Julien interpret information provided by Aequitas and attending calls with Aequitas personnel. 

When Julien redeemed his initial investment, representatives of SCG communicated with 

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Aequitas personnel, including Oliver, about how SCG “might be able to round up another $1M 

[short term private note] from Greg Julien, who just cashed out his $1M note.” Julien, on SCG’s 

recommendation, made the $1 million investment. Over time, SCG representatives advised 

Julien to make larger and different investments, for example to invest in AIOF. Julien and his 

trust continued as PAG clients after PAG acquired SCG’s assets. On information and belief, 

SCG and PAG representatives were the decisive factor in Julien’s decisions to purchase all the 

securities upon which he (as trustee) bases his claims in this action. 

59. Representatives of SCG contacted Plaintiff William Ramstein, several months 

before he made his first investment in an ACF Note in August 2011. Representatives of SCG 

requested information from Aequitas personnel on Ramsteins’ behalf and provided their analysis 

of that information to Ramstein. For example, in or around April 2012, SCG representatives told 

Ramstein that “Aequitas is in better financial condition than ever and making strong quarterly 

gains.” Representatives of SCG also arranged for Ramstein to attend “client appreciation” 

dinners, where Aequitas was described as “a well run equity firm.” In early 2014, SCG 

facilitated Ramstein making a “direct” investment with Aequitas that increased his “exposure to 

Aequitas in excess of 50% of his new worth.” Although Ramstein had reservations about this 

investment, SCG personnel “prepare[d] the paperwork” for the sale and “facilitate[d] the 

investment.” Ramstein continued as a PAG client after PAG acquired SCG’s assets. On 

information and belief, SCG and PAG representatives were the decisive factor in Ramstein’s 

decisions to purchase all the securities upon which he bases his claims in this action. 

60. As for Plaintiffs R.F. MacDonald Co. (“RFMC”) and the MacDonald Family 

Trust, representatives of SCG met with Jim MacDonald (“MacDonald”) in person weeks before 

RFMC’s initial ACF Note purchase in March 2011. Representatives of SCG continued to 

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encourage MacDonald to make larger and different investments with the Aequitas entities on 

behalf of both RMFC and the MacDonald Family Trust. RFMC, for example, expanded its 

investments by purchasing securities issued by AIPF in 2012 and AIOF in March 2013. The 

MacDonald Family Trust purchased a security issued by AIOF in 2012, and MotoLease 

Financial in 2015. RFMC and the MacDonald Family trust both continued as PAG clients after 

PAG acquired SCG’s assets. On information and belief, SCG and PAG representatives were the 

decisive factor in the decisions by RFMC and the MacDonald Family Trust to purchase all the 

securities upon which they base their claims in this action. 

61. The Brown Plaintiffs alleged that SCG and PAG’s sales tactics worked: when 

PAG acquired SCG’s assets in 2014, SCG’s clients allegedly owned approximately $110 million 

in Aequitas securities, or about 25% of the entire SCG assets under management. By the time 

Aequitas collapsed, PAG allegedly had put approximately 330 of its 600 clients in Aequitas 

securities, selling an additional $128 million in Aequitas notes and funds. 

62. In the SAC, Plaintiffs contend that Sidley should be liable for participating or 

materially aiding in the sales of Aequitas securities. While Sidley disputes any such claims of 

participation or material aid as to itself, to the extent Plaintiffs prevail on these (or similar) 

claims, then SCG, RP Capital, and PAG also participated or materially aided in the sales of 

Aequitas securities for the reasons alleged herein. 

FIRST CLAIM FOR RELIEF – CONTRIBUTION (ORS 59.115(3)) 

(Against All Third-Party Defendants) 

63. Sidley realleges and incorporates by reference Paragraphs 1-62 above. 

64. While Sidley has denied Plaintiffs’ claims against it, if and only if Plaintiffs’ 

claims, as asserted in the SAC, are proven and Sidley is found liable to Plaintiffs for Oregon 

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Securities Law violations, Third-Party Defendants are each jointly and severally liable for those 

violations pursuant to ORS 59.115. 

65. If, and only if, Plaintiffs prove that their alleged damages are attributable to 

Sidley’s alleged participation or material aid in the sales of Aequitas securities, then, as 

described herein, the Third-Party Defendants directly participated and materially aided in the 

sale of Aequitas securities to a far greater extent than Sidley is alleged to have done. Further, 

any damages sustained by Plaintiffs are wholly or partially attributable to conduct by the ThirdParty Defendants, upon whom Plaintiffs relied in buying the relevant securities. 

66. Pursuant to ORS 59.115(3), if and only if Sidley is found liable to Plaintiffs for 

Oregon Securities Law violations, which liability Sidley denies, Sidley is entitled to contribution 

from Third-Party Defendants. 

RESERVATION OF CLAIMS AGAINST OTHER THIRD PARTIES 

67. Sidley reserves the right to assert any and all claims against additional third 

parties. Discovery necessary to reveal the liability of additional parties is currently unavailable 

because of a stay imposed in the SEC Action. Moreover, as detailed elsewhere in this ThirdParty Complaint, the stay order includes an injunction, which prevents Sidley (or any other 

party) from initiating litigation against any of the Aequitas entities or their officers, directors, 

employees, or agents. Counsel for the Receiver has informed Sidley that he is of the opinion that 

the injunction extends to a wide range of individuals affiliated with the Aequitas entities 

including, among others, Aequitas executives and members of the Advisory Board. Sidley 

reserves the right to seek leave of Court to assert claims against additional third parties once the 

stay and injunction are lifted. 

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RIGHT TO ATTORNEY’S FEES 

68. If Sidley prevails in its claims against one or more Third-Party Defendants, the 

Court should award Sidley reasonable attorney’s fees pursuant to ORS 59.115(10).

PRAYER FOR RELIEF 

WHEREFORE, in the event Sidley is found liable to Plaintiffs with respect to any 

matters alleged in the SAC, Sidley requests that the Court: 

1. Enter a judgment in favor of Sidley and against each of the foregoing Third-Party 

Defendants for contribution; 

2. Enter a judgment apportioning the liability of Sidley, if any, and each Third-Party 

Defendant on the basis of comparative fault; 

3. Award Sidley its attorney’s fees and costs incurred in this action; 

4. Award Sidley such other and further relief that the Court deems just and proper. 

DATED this 10th day of December, 2018. 

MARKOWITZ HERBOLD PC

By: s/ Jeffrey M. Edelson

David B. Markowitz, OSB #742046 

DavidMarkowitz@MarkowitzHerbold.com 

Jeffrey M. Edelson, OSB #880407 

JeffEdelson@MarkowitzHerbold.com 

(503) 295-3085 

Brad D. Brian 

Brad.Brian@mto.com 

Bruce A. Abbott 

Bruce.Abbott@mto.com 

MUNGER, TOLLES & OLSON LLP 

(admitted pro hac vice) 

Attorneys for Defendant and Third-Party 

Plaintiff Sidley Austin LLP

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