A Cedar Rapids man has lost his appeal of a Linn County District Court ruling upholding a default civil judgment for alleged consumer fraud and ongoing criminal conduct.
The Iowa Attorney General’s Office in December 2012 won a civil judgment for more than $1 million against Alan Lucas, 43, and eight businesses he controlled in a fraud case.
Lucas claimed the attorney general’s office had no jurisdiction over his case because the limited partnership of companies he controlled were formed in Delaware.
District Judge Stephen B. Jackson Jr. entered a default judgment against Lucas, and Judge William Thomas entered a default judgments against the companies Lucas controlled. Judge Sean McPartland denied Lucas’s motion to dismiss the default judgments.
On Thursday, the Iowa Court of Appeals agreed that the attorney general’s office and district court had jurisdiction in the case and affirmed the default civil judgment against Lucas.
“We find no abuse of the district court’s discretion in its refusal to set aside the default judgments,” Judge David Danilson wrote for the court. ”Lucas and the entity defendants have failed to establish good cause to set aside the default judgments.”
Attempts by The Gazette to reach Lucas for comment on the appeals court ruling were unsuccessful.
Lucas was accused of engaging in a pattern of fraudulent conduct for the purpose of bilking investors out of more than $150,000 they believed they had invested with Noah Aulwes of Cedar Rapids. According to court documents, Aulwes, whom the state contended was an associate of Lucas’s, operated Covenant Asset Management, and general partner and investment manager of Covenant Investment Fund.
Aulwes was sentenced in December 2012 for misappropriating about $200,000 of investors’ funds for his personal benefit and making Ponzi-type payments to other investors, along with about $90,000 of clients’ funds that were invested in the Philippines.
In August 2012, Aulwes pleaded guilty to felony charges of securities fraud, first-degree theft and money laundering. He was sentenced in December 2012 to 10 years in prison and ordered to pay $363,000 in victim restitution.
According to records, Aulwes transferred control of the Covenant Investment Fund and its remaining assets of about $189,000 to Lucas in May 2010. Lucas also assumed a $60,000 debt owed by Aulwes to the fund, but investors were not informed of the loan.
Aulwes closed bank accounts for the companies and transferred investor funds totaling about $189,000 into accounts controlled by Lucas, according to court documents. Within days, Lucas drew a $9,000 check from the Covenant Investment Fund account to cover overdue rent he owed on behalf of his company, Asherlee Management.
Trish Mehaffey of The Gazette contributed to this story.