The remnants of downtown Fayetteville’s Mountain Inn are finally coming down. The historic hotel was partially demolished more than a decade ago in anticipation of building its replacement, the Renaissance Tower. The grand project was among several would-be developments associated with John Nock.
John Nock gained prominence for his association with high-profile, would-be real estate developments in Fayetteville, such as the 2006 plan for Renaissance Tower. But the multimillion-dollar high-rise replacement for the Mountain Inn suffered delays and never materialized.
In the years following the 2008 financial meltdown, Nock turned his attention from promoting local million-dollar deals to drawing million-dollar investments on the international scene through The Brittingham Group LLC, which he founded in 2010.
His alleged criminal activities through the venture led to a 12-count indictment on March 2 and his arrest on March 23. A federal grand jury in Fayetteville charged Nock with wire fraud, conspiracy to commit wire fraud, money laundering and conspiracy to commit money laundering.
The indictment places Nock at the heart of a scheme with three other men that defrauded investors of more than $16 million with promises of quick, extraordinary profits.
“I don’t know if I’m really permitted to say anything,” Nock, 54, told Arkansas Business in a brief phone call. “But I will say that I’m innocent, and that it will all be resolved.”
The case, originally scheduled to begin May 2, awaits a new trial date. According to the docket, Nock couldn’t afford an attorney and received a court-appointed lawyer.
But the indictment isn’t the first court action that has leveled fraud allegations at Nock and Brian Brittsan of San Marcos, California, a 65-year-old director at The Brittingham Group.
A Michigan judgment, filed of record in September 2019 in Arkansas as part of an effort to recoup money from Nock, provides a glimpse into the criminal case unsealed in Fayetteville’s U.S. District Court.
Upfront Fees
The nearly $3.1 million judgment against Nock, Brittsan and Brittingham Group was the outcome of a long-running federal lawsuit in Grand Rapids brought by three U.S. investment groups in 2016.
Tierra Verde Escape LLC, TOW Development LLC and AMI Investment Holdings LLC accused Nock and Brittsan of fraud and exposed details of their curious business dealings. Though the details differed, each group paid Brittingham an upfront fee of $50,000 to invest $500,000 in an enigmatic “structured finance transaction,” over which Nock and Brittsan would have control, with the funds to be held by Hongkong and Shanghai Banking Corp. Ltd.
Nock and Brittsan represented that this would be a relatively low-risk transaction and that they expected a return of 100% or more within 20 days of investment. But none of the three groups received any money from their investments.
U.S. District Judge Gordon Quist sent the lawsuit to arbitration after Nock and Brittsan successfully argued the dispute should be resolved in that manner under the terms of the memorandum of understanding signed by the parties.
Ultimately, David Brodsky, a New York arbitrator, found that Nock and Brittsan, in their dealings with the three groups, breached their fiduciary duty, committed fraud, unlawfully converted funds and received unjust benefit through fraud. In 2018, he awarded the groups a total of more than $3.1 million.
The total included $550,000 in compensatory damages plus interest to each group, an amount reflecting each company’s $50,000 upfront fee and $500,000 investment, all paid to Brittingham.
“Following the receipt of each of the $500,000 transfers, Brittsan and Nock engaged in a series of transactions that are hidden from sight of [the investors] and utterly without adequate explanation by either of them during their extensive direct and cross-examinations,” Brodsky wrote.
“Suffice it to say, neither could explain how the money flowed from entity to entity, despite their fiduciary obligation to safeguard the proceeds. Eventually, it appears as if a significant portion of the invested funds were transferred to a South African bank where the evidence trail runs cold.”
Brodsky, citing Nock and Brittsan’s “deliberate, reckless, malicious and wanton behavior,” also awarded punitive damages of $500,000 to each of the investment groups.
“[Their] reliance on alleged confidentiality provisions in various unidentified agreements and, allegedly, imposed by various unnamed banking organizations in various unnamed countries, is also completely incredible and further reflects their callous and wanton state of mind,” Brodsky wrote.
Brodsky also found that the agreement that specified the use of a Hong Kong arbitration institution to be nonexistent, and he declared the memorandum of understanding void because it was obtained through fraud.
In December 2018, the Michigan judge confirmed the arbitration award and ordered Nock and Brittsan to pay the damages plus interest as well as nearly $93,000 in arbitration costs.
Fraud Findings
Brodsky offered a scathing assessment of Nock and Brittsan during the arbitration hearing held May 29-June 1, 2018, in New York.
He found Nock to be “evasive and lacking in credible details regarding his experience with foreign banks, so-called structured finance transactions, monetizing of financial instruments or investing cash; specifically, his testimony regarding how each of the investments by claimants was supposed to be handled, what representations he made to each of the claimants and what happened to each of the investments once the proceeds were effectively in his control was completely incredible; similarly, his demeanor during the hearing was unpersuasive and led further to my finding that he was unbelievable. …
“I completely reject his testimony.”
Brodsky’s assessment of Brittsan was equally damning: “Brittsan’s consistent evasions and lack of recollection of any details of almost any important conversation he is alleged to have had with claimants’ individual representatives made him a completely unreliable witness, and I discount his testimony and specifically his denial regarding the making of any false or misleading statements to claimants’ individual representatives.
“In particular, the conduct that I find he engaged in is the antithesis of his self-serving statement that he and John Nock conducted themselves as ‘good strong Christian men’ based on a code of ‘honesty and integrity.’”
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