BRS was a software development company based in Houston, Texas that focused on technology that could analyze video content by imitating learning and memory processes of the human brain. BRS was founded in 2005 by Davis and he served as BRS’ Chairman of the Board until September 2015 and CEO until August 2014. In or around 2013 BRS’ revenues plummeted and its net operating losses increased substantially. By 2014 BRS’ total sales were only $765,000 and the firm suffered a net loss of $37.7 million.
According to the complaint, in late 2013 Steele recommended BRS to the couple notwithstanding BRS’ failing business model and its CEO’s unsuccessful past. Steele pitched Claimants on an investment in BRS as an opportunity to earn income between 8% and 12%. Claimants alleged that the primary source of most of the Claimants investment in BRS came from their accounts managed by Steele through her advisory firm – Steele Financial Inc. The complaint alleges that Steele was so confident in BRS that she initially recommended the Claimants borrow money from a bank to invest in BRS.
In early 2016, the interest payments to investors stopped. On March 1, 2016, BRS sent a letter to its note holders that it intended on paying all interest payments due to date on April 1, 2016. During March 2016, BRS rebranded itself as Giant Gray as part of its restructuring efforts. However, Claimants never received the promised payments.
Thereafter, on December 14, 2017 The Securities and Exchange Commission (SEC) charged Davis with fraudulently raising approximately $28 million from investors and then diverting more than $7.8 million of those proceeds his personal benefit. According to the SEC’s complaint, BRS and Davis secretly diverted millions of dollars for Davis’s personal use by using fake invoices in the names of shell companies Davis controlled.
The Claimants’ complaint alleges that CAMAS failed to supervise Steele’s sales of BRS as required under the industry’s rules. CAMAS was required to supervise the sale of BRS for suitability and record the transactions on the firm’s books and records. Claimants alleged that CAMAS knew or should have known that Steele engaged in BRS sales because the firm was obligated to supervise securities transactions and activities conducted by Steele through Steele Financial Inc. or in any capacity. Claimants allege that had CAMAS reviewed Steele’s files, communications, and client fund transfers the firm would have discovered evidence of her involvement in BRS recommendation of BRS investments to numerous clients.
The investment lawyers at Gana Weinstein LLP represent investors who have suffered investment losses due to allegations of wrongdoing. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.