Wednesday, May 4, 2011
The SEC charged six former leading executives affiliated with Brooke Corporation, a Kansas-based financial corporation, with hiding critical information from investors and conducting a financial fraud. The SEC alleges that senior executives at Brooke Corporation and two subsidiaries – whose line of business was insurance agency franchising and providing loans to franchisees – misrepresented their deteriorating financial condition in filings to investors and other public statements in 2007 and 2008. Meanwhile, behind the scenes they engaged in various undisclosed schemes to meet almost weekly liquidity crises, and falsified reports and made accounting maneuvers to conceal the rapid deterioration of the loan portfolio.
Five of the six executives have agreed to settle the SEC’s charges against them. The Brooke companies are no longer in business.