The company’s own general counsel told executives in September 2015 that Aequitas Management was running a Ponzi scheme. The executives kept raising money for another three months anyway.

Aequitas Management LLC sold itself as a feel-good investment: buy discounted medical debt, collect the payments, and everybody wins. Hospitals get cash. Patients get relief. Investors get steady, secure returns backed by real assets. It was the kind of pitch that sophisticated investors love because it sounds responsible and profitable at the same time.

The reality, documented in forensic accounting performed during the company’s receivership, was that a forensic accountant could not identify “meaningful amounts” of private investor funds used to buy receivables during the entire indictment period. The money went somewhere else entirely: to earlier investors and to corporate operating expenses. That is what a Ponzi scheme is. That is what Aequitas was.

Between June 2014 and February 2016, Aequitas raised $346 million (enough to fully fund the operations of roughly 1,700 average American public school teachers for their entire careers) from private investors across three products. The people who ran the company knew the whole time.

The Machine That Ate People’s Money

Aequitas started buying discounted medical debt in the mid-2000s: hospitals sell you the right to collect on unpaid patient bills at a discount, and you make money on the spread. In theory, this is a legitimate business. In practice, Aequitas expanded into student loan debt, and by 2014, its single largest asset was debt owed by students of Corinthian College, a for-profit education chain already notorious for predatory lending practices.

When Corinthian stopped paying in June 2014 and filed for bankruptcy, Aequitas lost roughly $4 million per month (roughly the annual salary of 60 median-wage workers) in cash payments overnight. The company never recovered. Instead of telling investors the truth, executives invented a crisis-management playbook: offer “blue-light specials” with short redemption periods and high interest rates to lure in new cash, then use that new cash to pay the people already owed money.

That is a Ponzi scheme. The executives knew it was a Ponzi scheme. Their own compliance team knew it was a Ponzi scheme. Multiple internal warnings were raised, documented, and ignored. And then they raised another $346 million (enough to pay the annual grocery bills of over 57,000 average American families) from private investors while none of this was disclosed.

The Numbers That Were Hidden in Plain Sight

The collateral picture was a fraud within the fraud. Aequitas marketed its Private Note product with tear sheets showing that investors’ money was backed by assets worth roughly twice what was owed. One quarterly document showed $772 million in collateral supporting $364 million in subordinated debt. Investors called this “a very good profile.” They were right. It would have been, if the numbers were real.

In reality, more than half that claimed collateral was not available to Private Note holders after banks with senior claims took their cut. One of Aequitas’s biggest listed assets, categorized as “corporate debt,” was actually an internal loan to its parent company, called the Holdings Note, which was used to fund the operating losses of other Aequitas affiliates. By the end of the indictment period, the Holdings Note had grown to $180 million (roughly the combined net worth of 2,300 average American households), and between $110 million and $170 million of it could not have been recovered in a liquidation.

Aequitas also claimed a third major asset category: equity investments. The value of those equity investments was based primarily on unrealized, non-cash gains in a company that serviced healthcare receivables. In plain English: they were counting money they had not made yet, in a company that had not paid them yet, as backing for investments that were supposedly secure and income-generating.

The Non-Financial Ledger: What the Numbers Cannot Count

The court documents measure this crime in dollars and months. They do not measure what it means to trust a person with your clients’ savings and be lied to your face. One Registered Investment Advisor described meeting with Aequitas’s top executives because he “would not deal with a company” unless he could sit across from “the ones who really know what’s going on.” He needed to look them in the eye. He needed to know his clients were safe. He invested. He was wrong to trust them, and that wrongness was engineered deliberately by the people on the other side of that table.

Consider Brett Trowbridge, who was on the verge of wiring $1.5 million (more than most Americans earn in 20 years of full-time work) to Aequitas in late 2015. He was nervous because of the SEC investigation. He asked for a meeting. CEO Robert Jesenik sat down with him in December 2015 and “talked about the big picture of the business; how well it was going.” Jesenik told Trowbridge the receivables business was “healthy and good” and that the SEC investigation would be resolved soon. Jesenik said none of this was true at the time. Trowbridge wired the money. Trowbridge testified that “he felt Jesenik lied to him.” That sentence, eight words long, contains a universe of damage.

Two Aequitas employees, Vanessa Dehaan and Jessica Cataudella, did the right thing. During compliance testing in the spring of 2015, they identified what looked like a Ponzi scheme and brought their concerns to Andrew MacRitchie, the Chief Compliance Officer. The Chief Compliance Officer, the person whose entire job is to prevent exactly this kind of harm, dismissed them. They then escalated to the company’s general counsel. Their reward for doing the right thing was to spend months fighting an internal war against executives who kept raising money anyway, watched the company collapse in March 2016, and then sat through a six-week federal criminal trial recounting every detail of what they had warned about and been ignored on.

One RIA testified that the firm’s tear sheets were “pretty much the bible” of the industry for explaining investments to clients. Most of her investors based their decisions on those tear sheets. Aequitas updated its tear sheets quarterly and used them as the primary communication channel to RIAs about fund performance. The executives controlled every word on those documents. When Cataudella and the general counsel pushed to revise the materials to accurately reflect where the money was actually going, the defendants dragged their feet. Investors did not receive revised materials until late 2015 and early 2016, after the scheme had already consumed hundreds of millions of dollars. One RIA stated that if he had known investor money was going to repay prior investors, he would not have invested “a penny” of his clients’ money. He did not use those words as a figure of speech. He meant every client, every account, every dollar he was responsible for.

Legal Receipts: Their Own Words Destroyed Them

Societal Impact: Who Really Paid the Price

Sophisticated Victims Are Still Victims

The defense team spent weeks at trial arguing that Aequitas’s investors were too smart and too wealthy to be defrauded. They were “accredited investors,” meaning they met the SEC’s minimum wealth and sophistication thresholds. Some were Registered Investment Advisors with legal fiduciary duties to their clients. The argument was essentially: these people should have known better, so it is partly their fault.

The Ninth Circuit rejected this argument decisively. The court held that contractual disclaimers do not protect fraudsters from criminal liability, and that “the wire fraud statute protects the naive as well as the worldly-wise.” The court confirmed that whether a representation has a tendency to influence a decision-maker is a separate question from whether the decision-maker was “justified” in relying on it. Justifiable reliance matters in civil cases; in criminal fraud, what matters is that the defendants lied.

The economic harm flows downstream. RIA Jeff Sica had 70 individual clients with a combined $32 million (enough to fund a small-town public library system for decades) invested in Private Note alone. Those 70 clients were not hedge fund managers. They were individual people who trusted an advisor who trusted a company that was lying to him. Another investor, Bob Zamarripa, put in $12 million (more than 300 years of average minimum wage earnings). The defendants told him “a hundred percent” of his money would go to secure healthcare receivables. The source material documents that at least two RIAs were subsequently sued by their own clients for due diligence failures. The fraud did not stop at the RIA; it radiated outward to every end client behind them.

The “Sophisticated Investor” Shield Was a Weapon

The defendants structured their entire fraud around the regulatory distinction between public and private securities markets. By requiring all investors to be “accredited” under SEC Regulation D, Aequitas operated in a space with fewer disclosure requirements and less regulatory oversight than public markets. They then used that reduced oversight as cover, deploying lengthy Private Placement Memoranda filled with, as the government’s closing argument put it, “50 pages of legalese, footnotes, warnings, buzzers, and bells that lawyers write.”

The PPM served as a liability shield, not a genuine disclosure tool. Aequitas’s own head of marketing testified that the PPM “was not even placed in the shared marketing folder.” The general counsel described it as a “CYA” document. The marketing materials, the tear sheets, the in-person pitches by executives, those were the real sales tools. The PPM existed to give the company a paper defense if things went wrong. The defense tried to use it as exactly that at trial, and the jury rejected it.

This is not a quirk of this one company. The structure is replicable. Find a lightly regulated market, create a product that sounds responsible and generates real returns in the early years, require investors to be wealthy enough that the courts will question whether they should have known better, bury the real disclosures in documents that no one reads, and run a Ponzi scheme in the gap between what you say and what those documents technically say. The Aequitas case is a blueprint for what already existing wealth-protection structures enable when bad actors find them.

The “Cost of a Life” Metric

What Now: Who to Watch and What to Demand

Three executives were convicted. Three others, Brian Oliver, Olaf Janke, and Scott Gillis, entered guilty pleas before trial and testified for the government. Every person at the top of Aequitas who knew the truth has now been held accountable in a federal court. The Ninth Circuit affirmed every conviction in September 2025. That is accountability, and it matters.

The executives convicted and sentenced in this case are:

• Robert J. Jesenik, CEO and founder: 168 months (14 years) imprisonment, wire fraud and conspiracy convictions.
• Andrew N. MacRitchie, Chief Compliance Officer: 70 months imprisonment, wire fraud and conspiracy convictions.
• Brian K. Rice, Executive Vice President: 37 months imprisonment, wire fraud and conspiracy convictions.

The DOJ has a press release here about the executives of Aequitas being sentenced to federal prison: https://www.justice.gov/usao-or/pr/former-aequitas-ceo-and-company-executives-sentenced-federal-prison-roles-300-million

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