Brandon Anderson, the former Waynesville financial advisor made infamous after he was fined almost $500,000 by the Securities Exchange Commission, is now facing a $6.8 million judgment.
The judgment against Anderson, his wife and codefendant Morgan Paige Anderson and their company, TMS Group, LLC, was delivered in Haywood County Superior Court Monday afternoon by Judge Brad Letts after Anderson failed to show up for his hearing. The morning began when a couple of emails from Anderson were read aloud to the court.
Anderson’s first email, sent to an assistant clerk of court early Friday afternoon, said he and his wife/codefendant, Morgan Paige Anderson, received neither a notice of mediation nor the notice of the hearing until the prior week because of some issues with mail forwarding.
“We let (attorney for the plaintiffs) Pat (Smathers) know that we would be happy to hold a phone mediation and that we were not represented by council (sic) and do not intend to be represented by council (sic),” that email reads.
The clerk sent an email back to Anderson making it clear that Judge Letts wanted him to either appear before the court or send an attorney to represent his interests.
“If Mr. Smathers is looking for a judgment which I’m sure he is, he can go ahead and get one and we will appeal it,” his reply reads.
Letts moved forward with the hearing, allowing Smathers and the plaintiffs, John and Sandra Troiani, to present their case. First, John Troiani took the stand. According to his testimony, in the summer of 2016, Anderson approached him about opening an Italian restaurant at the site of his recently closed-down Apple Creek Café in downtown Waynesville.
Shortly after, they entered into a verbal agreement. The Troianis would put $15,000 into the business to help get it up and running, then they would use the profits to pay down a $24,000 debt Anderson had with Cisco and $26,000 he owed in taxes. The rest of the profits would go to Anderson. Then, after three years, he would sell the business to the couple for $1.
For about 10 weeks, things went according to plan, and John said the restaurant was doing well, although he found himself pouring more of his own money into the business to make ends meet. All the while, he noticed Anderson began taking money from the business’ joint checking account.
“I saw a withdrawal of $10,000, and I have no idea where it went,” he said, adding that there was also a $21,000 withdrawal.
Because Anderson didn’t spend any time in the restaurant, the Troianis typically contacted him over the phone. But once they began raising more and more questions, even that became impossible. Then, one day, out of the blue, they were fired.
“We walked in, and [Anderson] was sitting there with … (attorney) Sam Hyde,” John said. “Sam just looked at me and said ‘your services are no longer needed here.’”
Although they only had a verbal contract, the Troianis presented as evidence a Mountaineer article from Aug. 25, 2016, that said they were to “take over the restaurant space at 111 N. Main St. in Waynesville.”
Because the Andersons didn’t show up, they had no chance to argue against any of the evidence presented, and Letts ruled in the Troianis’ favor. The judgment was immense. In total, the compensatory damages awarded were $1,720,815.32.
The breakdown for that number is as follows: $28,815.32 for the Troianis’ investment in the business; $142,000 for lost wages over the three years they would have continued to work at the restaurant prior to ownership; $1.2 million for potential earnings over the eight years the couple planned to own the restaurant before retiring; and $350,000 the couple believed they could get from the sale of the business.
Per North Carolina law, punitive damages are capped at three times the compensatory damages, meaning Judge Letts had tremendous discretion. He chose the maximum amount, which came to $5,162,445. When combined, the total judgment was $6,883,261.
Hours after the judgment, Anderson spoke with The Mountaineer. He stood by what he’d said in his emails to the court and added he believes the judgment was absurd.
“It’s not going to hold water,” he said.
Anderson said he already has an attorney looking into his options and that he plans on appealing the judgment.
“They’re not going to get $7 million. They’re not going to get anything,” he said.
The day after the hearing, the Troianis said they expected Anderson to say something like that. The couple now lives in Maine, but John said the trip was well worth it. He added that they initially only wanted to sue for the money they’d invested in the business, but once they met with attorney Smathers, they began to factor in other potential losses.
“We gave him the opportunity to just pay us off, and we’d have walked away from it … but he was arrogant instead of just paying us,” John said.
John admitted that while the initial deal they struck with Anderson was risky and required a lot of hard work, he was excited at the prospect of running the restaurant.
“The deal was we would keep paying, and he would get all the profits after we got Cisco paid off and the 26k in back taxes,” he said. “Then we’d have to meet our obligation to pay rent and the normal bills. Then he would take the profit, I’m assuming so he could pay off the build-out. I had no problems with that. He gave us a chance to have our own business, which I was really appreciative of. I knew it would be tough, but I believed we were capable enough to do it.”
While the Troianis were bouncing money from account to account, credit card to credit card, to make the restaurant work without hurting their credit, they said Anderson was often living lavishly and traveling the country.
“He was always traveling,” John said. “Skiing in Jackson Hole, going to Vegas, going on two-week trips to see clients in Tennessee and Georgia and Washington.”
Smathers said Anderson has been difficult to work with on this case.
“I think he basically turned his nose up at the court system, and that’s not the way our society works,” he said. “I think it would be in his best interest to cooperate, but if he continues to behave how he has so far I don’t think he will.”
Now that the Troianis’ suit has finally reached a judgment, the next step is trying to get at least a portion of that money. While Anderson claimed he didn’t have much in the way of assets and doesn’t even own the house where he lives in east of Nashville, he does have a home for sale in Asheville for $1.3 million.
“We’ll pursue the assets of he and his wife, as well as anything for TMS (Group, LLC),” Smathers said.
The judgment is good for 10 years, can be renewed and draws 8 percent interest until it is paid.
While Anderson has recently received judgment against him of over $550,000 and $210,000 and he still has pending lawsuits and liens to address, it appears he has been able to shuffle funds around to avoid payment.
A defamation lawsuit he filed against his ex-wife was illuminating in this regard.
“The bank statements reviewed by the court, including the plaintiff’s personal accounts and Anderson Financial accounts, reflect that the plaintiff moves money between his various accounts in large increments of $50,000 and $100,000,” a document from that suit reads.
“In 2016 alone and to date, the plaintiff deposited $220,000 into his (current) wife’s account,” it later reads.
However, because Morgan owns 50 percent of TMS Group, LLC, she was named in the Troiani suit, as well, meaning he can’t use her accounts to shield any wealth.
That suit also offered a glimpse into the volume of business Anderson was doing as an investment advisor in Waynesville, noting that he had $101,800,000 under his management, from which he was earning 1 percent every year, and that he also “sells annuities from which he earns significant commissions.”
Ultimately, Anderson lost that lawsuit and ended up owning his ex-wife more money.
Anderson’s bankruptcy filing from 2016 also offered a host of information. The examiner’s report from that bankruptcy also noted that Anderson was transferring funds to his wife’s account.
“The statements made above as to the debtor’s transfer of over $180,000 to his wife’s account are restated here,” that report reads. “The examiner believes the transfer of funds to an account solely owned by his wife with the intent to avoid legitimate costs to be a clear fraudulent act.”
The IRS also formally objected to the bankruptcy filing in a document sent to the court by a U.S. Attorney. According to that document, he owed $550,312 in “taxes and certain other debts” to the government. By statute, if someone owes more than $394,725 to the government, they can’t be granted Chapter 13 bankruptcy.
He then tried to file for Chapter 11 bankruptcy, but the examiner again advised against granting it.
“The examiner does not believe the debtor to have the requisite honesty upon which to establish fair and trustworthy implementation of a successfully (sic) Chapter 11 plan,” that report reads.
“Causation of his current financial distress can be linked to his domestic problems, the unprofitable restaurant investment, and perhaps his entanglement with the SEC investigation,” it later reads. “According to claims filed in this case thus far, he owes the IRS in excess of $550,000, the North Carolina Department of Revenue $86,000, and his ex-spouse $206,000. It is also true that his substantial cash receipts in the recent past were spent on an extravagant lifestyle at the same time these debts were incurred.”
Ultimately, the examiner had “serious doubts as to the debtor’s honesty.”
“It is beyond argument that the timing of his original Chapter 13 petition was undertaken to avoid collection activity in state court in regards to his domestic matters,” the report reads.
It was recommended that either the Chapter 11 filing be dismissed or converted to a Chapter 7 filing. However, it was granted, and on Dec. 22, 2017, it was dismissed when he failed to make the required payments.
All that considered, it’s hard to say how much of the judgment the Troianis will actually receive, but for now, they are thrilled simply to see him having to pay for what they said were dishonest and selfish business practices.
“He has no regard for other people,” John said. “He only cares about himself and his lifestyle.”
“If feels good to hold him accountable,” Sandra said. “All the people in town he messed over … you just can’t treat people like that. I don’t care who you are. It’s just a matter of respect.”