yLoft, LLC v. Bechtler, Parker & Watts, P.S.C. was filed in the Circuit Court for Jefferson County, Kentucky on January 18, 2022, asserting claims for negligent misrepresentation, fraudulent misrepresentation, violation of state securities laws, and unjust enrichment against an accounting firm alleged to have facilitated the sale of unregistered securities.
Plaintiffs are individuals and institutional investors that invested in promissory notes sold by non-parties ACS Payment Solutions, LTD Co. d/b/a ACS Payment Solutions, LLC and ACS Payment Solutions II Incorporated (collectively, “ACS”). Defendant Bechtler, Parker & Watts, P.S.C. (“BPW”) is an accounting firm owned by Defendant Christopher J. Bechtler (“Bechtler”) that performed accounting services for ACS and Plaintiffs. Defendants are alleged to have engaged in a scheme with ACS to solicit and defraud outside investors, including Plaintiffs.
Plaintiffs allege that ACS was a short-term lending company that offered high interest loans to the hearing impaired via a web portal. To finance its operations, ACS initially obtained high-interest loans from non-traditional institutional lenders that charged in excess of 20% of the amount borrowed. Plaintiff alleges that Defendants served as accountants for ACS from its inception and, by virtue of this role, Defendants were apprised of ACS’ precarious financial condition. Nevertheless, to keep ACS’ operations afloat, Defendants assisted Plaintiffs in devising a scheme to replace the high-interest loans with investments in ACS through the sale of notes purporting to bear interest at a rate of 12 to 18 percent. Plaintiffs claim that they were clients of Defendants that were solicited by the accounting firm to purchase ACS’ notes using false representations and falsified offering materials. They claim that Defendants were then paid for those solicitations in commissions.
In classic Ponzi fashion, ACS then used the sale proceeds to make interest payments to current and former investors, to defend and initiate litigation arising from transactions with institutional borrowers, and to fund ACS’ owner, Jeffrey Jenkins’ (“Jenkins”), lavish lifestyle. Plaintiffs further claim that, as ACS’ accountants, Defendants were aware that the Company was approaching insolvency and that Jenkins was pilfering funds belonging to the Company’s creditors, yet took no actions to alert or inform Plaintiffs of Jenkins’ misuse of company funds. Ultimately, ACS was unable to continue to make interest payments on the notes and, on December 14, 2020, it filed for Chapter 7 bankruptcy, claiming it had zero remaining assets.
The complaint asserts various claims for negligent misrepresentation, fraudulent misrepresentation, violation of Kentucky’s Blue Sky Laws, and unjust enrichment, seeking compensatory and punitive damages and attorneys’ fees for Defendants’ role in facilitating the fraudulent scheme.