Judge rules two bilked $1.6 million out of investors in scam
CONCORD - A Lincoln, Mass., couple swindled investors in their New Hampshire company out of some $1.6 million, a federal judge has ruled.
In a ruling Monday, U.S. District Court Judge Steven McAuliffe reduced a jury's $2.9 million verdict to $1.6 million, but his ruling suggests the case might best have been handled by federal prosecutors.
"This case arises out of a business operation that had all the earmarks of an old-fashioned investment scam," McAuliffe wrote.
No criminal charges have been filed, however, against the couple who McAuliffe said perpetrated the scam, Christina and Deaver Brown of Lincoln, so far as The Telegraph was able to find.
McAuliffe's ruling arose out of the Chapter 7 bankruptcy case of Simply Media Inc. of Campton. The corporation filed for bankruptcy in 2006, purporting to have no assets whatsoever, according to court records.
In August, attorney Steven Notinger, the Nashua lawyer appointed as a trustee to oversee the bankruptcy case, filed a complaint against Christina (Rago) Brown and other nominal directors of the company, seeking a jury trial.
Notinger claimed that the company's directors failed to exert any control over the company, ceding all authority to Christina and Deaver Brown, "and sat idly by as the Browns benefited personally while Simply Media endured significant harm."
Notinger could not be reached Tuesday afternoon.
A jury in U.S. District Court heard the case in June and returned a $2.9 million judgment for the trustee, money that would ultimately be used to repay people who invested or loaned money to Simply Media.
McAuliffe also issued a scathing ruling Monday, suggesting that the Browns' corporation was little more than a scam.
"The scheme proved to be highly effective, yet it was quite simple," McAuliffe wrote. "First, the Browns formed Simply Media, Inc. Then, armed with apparently bogus profit and loss statements prepared by Deaver, a few sample products, and a compelling yarn of historical success woven by Deaver, the couple approached well-to-do friends and acquaintances and offered them the 'opportunity' to own a portion of the company."
The Browns persuaded investors to part with a total of about $1.6 million, McAuliffe wrote. "The Browns used that money to pay for all manner of personal expenses, including, for example, personal dry cleaning bills, individual memberships at an athletic club and payments on the mortgage loan on their home," he wrote.
"Not surprisingly, the capital was soon spent, and the supply of gullible investors dried up. Simply Media was put into bankruptcy," McAuliffe wrote.
Reached Tuesday by e-mail, Deaver Brown wrote that the company will appeal McAuliffe's order. Brown added that he was not a defendant in the case and that none of the directors of Simply Media took a salary from the company.
The Browns have been found responsible for similar conduct before, involving a former Massachusetts company, CD Titles Inc., court records show. CD Titles Inc. filed for Chapter 7 bankruptcy in Massachusetts in 1998, and the case was finally closed in 2005, court records show.
David Schmerin of Las Vegas, and his company, Wrightwood Laboratories, sued CD Titles in 1998, and won a judgment against the company in Suffolk County Superior Court in Massachusetts, but Schmerin said Tuesday that collecting has been another battle. "He'll shut down a company and start up another one," Schmerin said of Deaver Brown. "There is no stopping this man."