The U.S. Securities and Exchange Commission (SEC) achieved a major legal victory when a federal jury found a Virginia-based brokerage subsidiary and its CEO liable for $70 million in connection with a prolonged investment fraud scheme. The SEC originally filed suit in 2011 against AIC Inc., Community Bankers Securities LLC, and CEO Nicholas D. Skaltsounis, alleging they operated a Ponzi scheme by selling millions of dollars in promissory notes and stock under false pretenses.
The investments were marketed with falsified and misleading information that concealed the firm’s financial instability. Essential facts concerning the safety of investments, expected returns, and the use of proceeds were intentionally omitted or distorted, deceiving investors and putting their capital at substantial risk.
According to the SEC, the companies were never profitable and used funds from new investors to pay returns to earlier investors—a classic Ponzi scheme hallmark. This fraudulent activity harmed at least 74 investors across 14 states, many of whom suffered significant financial losses.
After nearly three weeks of trial in a Tennessee federal court, U.S. District Judge Thomas Varlan ordered:
AIC Inc. to pay $35.6 million in disgorgement, pre-judgment interest, and civil penalties
Community Bankers Securities LLC to pay $31.2 million
CEO Nicholas D. Skaltsounis personally liable for $2.6 million
This judgment underscores that courts take securities fraud seriously and will hold both companies and individuals accountable for breaching investor trust and violating federal laws.
Recognizing Investment Fraud and Protecting Your Assets
Investment fraud often targets individuals by promising high or guaranteed returns with minimal or no risk. To protect yourself, watch out for the following warning signs:
Unusually consistent or above-market returns: Real investments typically fluctuate with market conditions.
Vague or complex explanations: If it’s hard to understand how your money is invested, proceed cautiously.
Pressure tactics: Urgency or secrecy requests are common in fraud schemes.
Difficulty withdrawing funds: Legitimate investments allow reasonable access to your money.
Lack of licensing: Verify that brokers and firms are properly registered with regulatory agencies.
If you suspect that you may have been defrauded, it’s critical to consult a securities fraud attorney promptly. Acting quickly can protect your rights and increase your chances of recovering lost funds.
Scope of the Fraud and Investor Impact
The fraud extended beyond misleading financial information. According to the SEC, the firms operated under a sustained pattern of deception designed to conceal AIC’s financial instability. At the time the securities were offered, AIC was never profitable—a material fact omitted from communications with investors.
After nearly three weeks of trial in a Tennessee federal court, U.S. District Judge Thomas Varlan issued a decisive ruling:
AIC Inc. must pay $35.6 million, including disgorgement, prejudgment interest, and civil penalties.
Community Bankers Securities LLC was ordered to pay $31.2 million.
Nicholas D. Skaltsounis, the individual behind the fraud, was personally fined $2.6 million.
The outcome serves as a cautionary tale for anyone investing in privately marketed securities and underscores the need for legal counsel when fraud is suspected.
Looking for help? Speak with a securities fraud lawyer at The Frankowski Firm.
Why This SEC Case Matters for Investors
The SEC’s enforcement action against AIC and its affiliates reinforces the importance of transparency, disclosure, and investor protection. It sends a clear message to financial professionals: deceptive practices and violations of trust will not be tolerated.
For investors, this case is a sobering reminder that even licensed firms can engage in misconduct. Victims are often left navigating a complex legal system on their own, uncertain of how—or if—they can recover investment losses.
Take the first step. Here’s how to recover investment losses with the help of experienced counsel.
Have You Been Affected by Investment Fraud?
If you or a loved one has suffered losses as a result of investment fraud, Ponzi schemes, or broker misconduct, you may have a strong legal claim for recovery. The Frankowski Firm represents investors nationwide and can guide you through the process of seeking restitution.
Call Richard Frankowski at 888-741-7503 for a free consultation with an experienced investment fraud lawyer.
Frequently Asked Questions (FAQs)
What is investment fraud?
Investment fraud involves deceptive practices where investors are misled, resulting in financial losses. This includes Ponzi schemes, false statements about a security, and unauthorized trading.
How do I know if I was a victim?
Red flags include inconsistent reporting, guaranteed returns, pressure to reinvest, or being unable to withdraw your funds. A review by a securities attorney can confirm fraud.
Can I recover my investment losses?
Yes. Recovery is possible through FINRA arbitration, SEC restitution programs, or civil litigation. It depends on the facts of your case.
What does it cost to speak to a lawyer?
We offer free consultations, and most cases are handled on a contingency fee basis, meaning you owe nothing unless we recover funds on your behalf.
Key Takeaways
The SEC won a $70M judgment against AIC Inc., Community Bankers Securities, and CEO Nicholas Skaltsounis.
The firms misrepresented the safety and return potential of their investments, which were never profitable.
The scheme defrauded at least 74 investors in 14 states.
Victims may have legal options to recover their losses through arbitration or litigation.
Speaking with an experienced attorney is the first step toward recovery.
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Don’t wait to act. If you believe you’ve been defrauded, contact The Frankowski Firm today for a confidential consultation.
888-741-7503