CHARLESTON - The wife of a prominent Charleston investor has sued her husband's company in an apparent move to save her house.
Patricia Fuqua filed a lawsuit Dec. 1 in Kanawha Circuit Court against husband Knox Fuqua's AAM Investments, as well as BB&T, over an unpaid $50,000 loan.
Knox Fuqua is being sued in federal court by the Securities and Exchange Commission over allegations that he misappropriated $1.5 million of his clients' funds.
Patricia Fuqua's lawsuit says AAM Investments has refused to repay BB&T the money it was lent Aug. 10, 2005, because of a dispute. Fuqua adds that the AAM Investments agent who secured the loan did not have the authority to do so.
"BB&T threatened to institute foreclosure proceedings on Plaintiff's home in Kanawha County due to the willful default of AAM Investments," the complaint says. "As a consequence of Defendant AAM Investments' wrongful refusal to pay the loan principal and interest, Plaintiff will suffer irreparable harm by a foreclosure sale of her home."
So Fuqua is seeking $140,000 from her husband's business and for BB&T to not foreclose. Her husband, meanwhile, recently denied the SEC's allegations.
Fuqua created Kanawha Investment & Trust Co. and Appalachian Asset Management and manages the AAM Equity Fund. The SEC filed suit against him in August.
The complaint says Fuqua used two investment vehicles to facilitate his scheme, the Fixed Income Fund and AAM Investments.
"Fuqua funneled his clients' money through these investment vehicles and into banks accounts that he alone controlled, recording these transfers as purported loans," the complaint says. "Fuqua then used the client funds transferred into these bank accounts to repay other clients wanting to redeem their investments, to pay business expenses and to siphon over $200,000 to pay a multitude of personal expenses."
The SEC says Fuqua misappropriated $300,000 from Monica Hatfield, $600,000 from Retina Consultants, owned by Hatfield's husband Mark, and another $600,000 from Community Health Systems. The organization claims he ignored those clients' requests and put the funds in his own vehicles.
Fuqua used funds from AAM Investments to buy resort rental property on Kiawah, S.C., the complaint says. It adds that he and his family used the property for seven months a year and used rental income that should have gone back to AAM's shareholders to pay his family's personal resort expenses.
Inside the house was a placard that said, "Welcome to the Fuquas."
The SEC seeks judgment against Fuqua finding that he violated securities laws, ordering him to disgorge all ill-gotten gains and pay civil penalties.
David Williams is representing the SEC. Other federal lawsuits filed by the U.S. Department of Labor and a Virginia brokerage firm are pending against Fuqua
Judge John Copenhaver has been assigned the case.
Robert Goldberg is Patricia Fuqua's attorney, while Judge Jennifer Bailey Walker has been assigned the case.
Kanawha Circuit Court case number 06-C-2572