Court Rules Against Dayton-Based Investment Firm In Fraud Case

An agreed preliminary and permanent injunction was approved yesterday between the Division of Securities and Wayne T. Essex and his companies (Essex and Associates, Inc. in Dayton, Essex HR & Associates, Inc. in Beavercreek, and HR Reconciliation, LLC in Dayton.) The injunction prohibits Essex and his companies from:

– selling or offering to sell securities in violation of the Ohio Securities Act
– selling or offering to sell securities without prior approval of the court
– engaging in any deceptive, fraudulent or manipulative act.

Montgomery County Common Pleas Court Judge Mary Wiseman signed the injunction. In December 2011, Judge Wiseman issued a temporary restraining order against Essex and his companies. The judge also appointed as receiver James Swaim of the Dayton law firm of Flanagan, Lieberman, Hoffman & Swaim. The receiver is working to recover Essex’s business assets for distribution as approved by the court.

The Division of Securities initiated the action based on allegations that Essex sold promissory notes in the Dayton Small Business Capital Fund, which he told investors would be invested in Dayton-area small businesses. Twenty investors purchased approximately $1.1 million in the fraudulent investment from July 6, 2010 – November 23, 2011. Essex never made loans to or investments in small businesses with the money, the State charged.

The Division’s investigation found that Essex sold securities without a license, sold unregistered securities and engaged in securities fraud. The Division also found that Essex commingled investor funds with his business and were used to support his personal lifestyle, including out-of-state travel.

Essex did not tell investors that he was not licensed to sell securities and that the securities were not properly registered. Essex told investors that their funds were guaranteed and that they would receive annual returns of five, seven or 10 percent – with higher rates to those who invested larger dollar amounts.

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