Attorneys Drop Off Dyer, Brennan Case, Leaving Them To Represent Themselves In Federal Court On Investor Scam Case

  • Monday, February 20, 2017

Attorneys for two Chattanooga men who were charged by the Securities and Exchange Commission with defrauding a large number of investors have dropped off their case, saying they have only been paid a limited amount and the pair say they have no more funds.

Magistrate Judge Susan Lee approved the requests by attorney Jerry Summers of Chattanooga and attorney Frank Lightmas of Atlanta to go off the case brought by the Securities and Exchange Commission against Doug Dyer, James Brennan and their wives.

Dyer and Brennan, as well as Alison Dyer have filed motions saying they will represent themselves in the Federal Court case.

Carole Johnston Brennan is also charged.

Judge Travis McDonough earlier ruled that Dyer and Brennan could obtain loans from friends and family to pay attorneys and for living expenses.

However, he said details of the loans must be spelled out in affidavits that he and the SEC must approve.

The loans would be without any collateral and must be from someone who has not received gifts from them and was not an investor.

Attorneys for Dyer and Brennan earlier said the pair had all their assets frozen, leaving them with no funds.

Attorney Lightmas earlier said, "These people have a right to eat. They have a right to pay bills."

He charged that the SEC "wants to publicly embarrass the defendants. This is about pounding people."

Judge McDonough said, "The SEC does have an interest in protecting victims. It's not just about embarrassing people."

The SEC announced in late July of last year that it had won a court-ordered asset freeze to halt "an ongoing fraud by two former Chattanooga brokers with disciplinary histories who allegedly raised more than $5 million from investors without using the money as promised."

The SEC said Dyer and Brennan sold purported shares in eight similarly named companies to more than 240 investors nationwide since 2008 without ever registering the stock as they promised.  Instead, according to the SEC’s complaint, Brennan and Dyer transferred investor funds into their personal accounts or those belonging to their wives. Attorneys now say there were 258 investors.

The action says over a five-year period that Carole Johnston Brennan received $30,000 of the funds and Alison Ford Dyer received $286,000.

SEC attorney Robert Schroeder said following publicity about the case that his office "was inundated" with people with complaints about the pair. He said some went back to 2003.

He said some complainants alleged that the pair sought individuals to send $7,500 and a video and they "could help them become stars."

Attorney Lightmas acknowledged there are not enough assets to cover the millions investors are owed.

He said the SEC had been sent "tons" of financial data, but the SEC said it has not been told who sent what amount of money to Dyer and Brennan and where the money went.

Attorney Schroeder said it appeared that money went into bank accounts, then was quickly dispersed out of the accounts.

Attorney Lightmas said he had represented the defendants in the SEC case and in an investigation conducted by the state of Tennessee. He said he had "also consulted with co-counsel in connection with issues that have arisen in connection with the pending criminal investigation being conducted by the office of the United States Attorney for the Eastern District of Tennessee arising out of this same Scenic City matter."

He said, "A small partial payment was made by defendants for work performed in the Tennessee Action, but Lightmas and the Firm have not been paid any amount for the hundreds of hours of other work performed by them for Defendants in the Tennessee Action, or for any work performed by them for Defendants and Relief Defendants in this case or for Defendants in the Criminal Case. Throughout the time that Lightmas and the Firm have performed this work, Defendants have represented that payments would be forthcoming for past fees already incurred and billed, but none have been made.

"Moreover, Defendants have told Lightmas and the Firm that they have no available financial resources to pay for past fees already incurred and billed in connection with the Tennessee Action,  this case or the Criminal Case and have further told Lightmas and the Firm that they have no available financial resources to pay for further legal representation in this case.

"This Court is well aware of the unsuccessful efforts by Defendants and Relief Defendants to obtain approval for the payment of some amounts for attorney’s fees from assets that they have but which are covered by the freeze order previously entered by this Court. If Lightmas and the Firm are required to continue to represent Defendants and Relief Defendants in this case, the amount due will increase substantially with no prospect that Lightmas and the Firm will ever be paid."

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