SEC accuses patent-troll lawyer and former BigLaw attorney of deceiving businesses in loan scheme
The Securities and Exchange Commission has accused two Texas lawyers of luring small business owners to deposit money with a loan company by falsely promising the money would be safely invested and leveraged to obtain loans for the businesses.
In reality, the SEC alleges, lawyers Jay Mac Rust and Christopher Brennan used the money for risky investments and to pay the loan company operator and themselves, report the Am Law Daily (sub. req.) and Texas Lawyer (sub. req.). Some of the money also went to pay earlier depositors who demanded the return of their money, according to the SEC complaint (PDF) and press release.
Rust was previously in the news as an officer of MPHJ Technology Investment. The so-called “patent troll” company sent demand letters to small businesses claiming they had infringed MPHJ’s patents by scanning and emailing documents. MPHJ reached a settlement with the Federal Trade Commission in November 2014 in which it agreed to stop making misrepresentations in the letters, including claims it would initiate a lawsuit if no licensing fees were paid.
Brennan was a solo practitioner in Colorado at the time of the alleged misconduct. He previously worked at Fulbright & Jaworski and Bracewell, according to the Am Law Daily. The article says he currently works at Martin, Disiere, Jefferson & Wisdom, but his name is no longer on the firm’s website.
Rust and Brennan were acting as escrow agents for the purported loan company, Atlantic Rim Funding. They collected $13.8 million from 29 small business owners from December 2010 to March 2012, and caused more than $6 million in losses, the SEC complaint alleges.
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