investment fraud lawyers

Published on: January 8, 2013

Longwei Petroleum Under Investigation for Allegedly Misleading Investors with False Financials

Investment lawyers are currently investigating claims on behalf of investors in Longwei Petroleum Investment Holding Ltd. As a wholesale petroleum products distributor, Longwei Petroleum deals in storage, transportation, and sales of finished petroleum products in the People’s Republic of China.

Longwei Petroleum Under Investigation for Allegedly Misleading Investors with False Financials

In the latter part of December, Longwei Petroleum reported its sales revenue for October and November 2012. The company reported an increase in sales volume of 26.1% and an increase in product revenue of 35%, year-over year. However, in January, a report by GEOInvesting.com had a disastrous effect on the company’s share price because of the report’s allegations that the company had mislead investors with false financials. The report alleged Longwei Petroleum had exaggerated its November 2012 sales for its Gujiao and Taiyuan facilities. Allegations in the report also stated that the company failed to disclose a Tourism business investment amounting to $32 million. Allegedly, this investment was made by Shanxi Zhonghe Energy Conversion Co. Ltd., a Longwei Petroleum subsidiary.

On January 3, 2013, following the report, Longwei Petroleum’s shares plummeted 72%, or $1.68 per share, to only $0.62 per share during intraday trading. Securities arbitration lawyers say many investors suffered losses as a result of such a significant decline in per share value.

Published on: January 2, 2013

Investor Sues Citigroup for $400 Million Lost in CSO Fund

by InvestorLawyers

An investor recently commenced legal action attempting to recover $400 million lost in Citigroup Alternative Investments LLC’s Corporate Special Opportunities Fund. The investor, David Beach, is suing Citigroup, accusing the bank of misleading investors about debt trading in ProSiebenSat. 1 Media AG, (PSM). ProSiebenSat. 1 is a German firm and one of Europe’s biggest broadcasters.

Investor Sues Citigroup for $400 million Lost in CSO Fund

According to the complaint, which was filed in Manhattan federal court, John Picket, the CSO’s founder, leveraged the assets of the fund in order to purchase debt in the German firm’s offering worth around 558 million Euros, or $730 million. Allegedly, following Pickett’s actions, the CSO fund suffered significant losses. Reportedly, in December 2007, Pickett resigned.

Beach’s investment fraud lawyers stated in the complaint that, “investors were not informed that his departure was the result of his breaches of the fund’s investment restrictions.” Citigroup spokeswoman Danielle Romero-Apsilos declined to comment in relation to the suit.

Published on: January 2, 2013

Wells Timberland REIT Share Price Cut 35%

by InvestorLawyers

On December 14, 2012, Wells Timberland REIT Inc’s board of directors issued a new estimated value of the real estate investment trust’s common stock. Wells Timberland REIT is now valued at only $6.56 per share. In 2006, when the REIT was launched, the public offering price of the shares was $10, so the new estimated per share value represents a 35% decline. In addition, because the product is illiquid in nature, securities arbitration lawyers say it could be difficult for investors to get $6.56 per share in the market.

Wells Timberland REIT Share Price Cut 35%

The Timberland REIT’s Securities and Exchange Commission 8-K filing stated that the fund has $11.70 per share in timber assets, $0.28 per share in other net assets, and $5.42 per share in preferred equity liabilities and debt. Reportedly a certified public accounting firm and a forest consulting firm’s appraisal information was used by the board of directors in determining the per share price, but the estimate itself was made by the board of directors.

Starting in January, Timberland REIT investors will supposedly be able to redeem their shares for $6.23, or 95% of the product’s estimated value. However, investment fraud lawyers say that no cash distributions have been made, redemptions are funded out of the REIT’s “distribution reinvestment plan” and, reportedly, no ordinary share redemptions have been made.

Published on: December 11, 2012

New York Attorney General Criticizes Mortgage-Backed Securities Activities of Credit Suisse and Wells Fargo

by InvestorLawyers

Securities arbitration lawyers continue to investigate claims on behalf of investors who suffered significant losses during the 2008 market crash. In many cases, large investment banks allegedly deceived investors as to the risks of complex investments, including mortgage-backed securities, causing devastating losses.

Have Credit Suisse and Wells Fargo Paid their Dues? Many Don’t Think So

Currently, Credit Suisse Securities and affiliates are being sued by the state of New York based on claims that the firm misled investors about the evaluation of residential mortgage-backed securities.

“We need real accountability for the illegal and deceptive conduct in the creation of the housing bubble in order to bring justice for New York’s homeowners and investors,” says Eric Schneiderman, the state’s attorney general.

Published on: November 29, 2012

Mark Hotton Allegedly Defrauded Clients; Investors Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investing claims on behalf of the clients of Mark Hotton. A recent complaint filed by the Financial Industry Regulatory Authority alleges that Hotton stole or rerouted money from his clients — funds that amounted to at least $8.5 million. Hotton, a stockbroker and businessman, was earlier accused of having allegedly defrauded the production team of “Rebecca: The Musical” by fabricating investors. Hotton was later sued by the producers of the musical. In an earlier statement, Preet Bharara, Manhattan U.S. Attorney, alleged that Hotton had “faked lives, faked companies and even staged a fake death, pretending that one imaginary investor had suddenly died of malaria.”

Mark Hotton Allegedly Defrauded Clients; Investors Could Recover Losses

FINRA’s latest charges against Hotton are separate from the charges that he defrauded the producers of the musical. These charges state that since 2006, Hotton allegedly stole at least $5.9 million from clients and caused funds amounting to at least $2.6 million to be rerouted from the Oppenheimer Inc. brokerage accounts of his clients. These rerouted funds were wired to Hotton’s outside business activities, other entities and individuals affiliated with Hotton. Furthermore, securities arbitration lawyers say Hotton reportedly lied when filling out third-party wire request forms, forged letters of authorization signatures and created investments that were completely fictitious.

In 2009, Hotton left Oppenheimer and he was last registered, until May 2012, with Obsidian Financial Group. Hotton faces serious charges in both cases, including 20 years in prison for each count of wire fraud related to the musical and monetary sanctions and/or a bar from the securities industry related to the most recent charges. Clients of Hotton are encouraged to contact an investment fraud lawyer as soon as possible to explore their options for recovering their losses through all possible avenues, including securities arbitration.

Published on: November 28, 2012

FINRA Now Arbitrating Claims Against Investment Advisers

by InvestorLawyers

A recent announcement from the Financial Industry Regulatory Authority stated that arbitration is open to disputes between investors and registered investment advisers, or RIAs. According to securities fraud attorneys, this is good news for investors who have been the victims of RIA fraud but can’t afford costly court proceedings. It has been unclear for quite some time whether the arbitration system was available to complaints against investment advisers, who are overseen by the Securities and Exchange Commission. But now, this November 1, 2012 guidance posted on FINRA’s website indicates the regulatory authority is, in fact, accepting those cases, though they are subject to certain conditions.

Investment fraud lawyers say that clients of investment advisers usually resolve disputes in court or alternate forms of arbitration, but these processes can be time-consuming and expensive. RIA arbitration disputes are typically heard by JAMS Inc. or the American Arbitration Association, which can cost tens of thousands of dollars more than FINRA arbitration. Furthermore, FINRA arbitration is more cost-effective and less time-consuming than court proceedings.

Securities fraud attorneys have been asking FINRA to make their arbitration proceedings available to clients of investment advisers and, it seems, the regulatory authority is listening despite the fact that many investment advisers oppose the idea. The change was mentioned by Linda Fienberg, head of FINRA’s dispute resolution unit, at a conference held by PIABA, the Public Investors Arbitration Bar Association, in Texas.

Published on: November 22, 2012

FINRA Bars CEO; Victims of Unauthorized Trading Could Recover Losses

by InvestorLawyers

On November 8, 2012, the Financial Industry Regulatory Authority issued a news release stating that it has barred Mark Gillis, Chief Executive Officer for Hudson Valley Capital Management, and expelled the firm itself for defrauding its customers. The fraud occurred when funds and securities were used to cover losses incurred by manipulative day trading executed by Gillis. Securities fraud attorneys are following this and other unauthorized trading cases for potential arbitration claims to recover losses for investors.

FINRA Bars CEO: Victims of Unauthorized Trading Could Recover Losses

According to FINRA’s findings, in 2012, Hudson Valley, through Gillis, improperly day traded stock worth millions using the firm’s Average Price Account. Following the improper trades, Gillis manipulated the stocks’ share prices and withdrew his day trading proceeds using accounts under his control. Following significant losses caused by this fraudulent trading, Gillis made unauthorized trades in customer accounts in order to cover the losses. Thousands of shares in securities were purchased by Gillis and then allocated to customers at excessive markups from 177 percent to 280 percent. In addition, he paid for an unauthorized purchase of stock by converting customer funds. One customer suffered losses of around $400,000 because of Gillis’ fraudulent activity.

When two customers became aware of unauthorized trading in their accounts, they confronted Gillis, who attempted to hide his misconduct by lying to them. He later lied during sworn testimony to FINRA staff. Investment fraud lawyers stress to investors the importance of diligently monitoring their accounts and statements for fraudulent activity. If investors suspect unauthorized trading or any other type of securities fraud has occurred in their accounts, they should contact a securities fraud attorney immediately.

Published on: November 16, 2012

FINRA Decision: David Lerner Associates to Pay $12 Million in Restitution to Customers for Unsuitable Sales of Apple REIT Ten

by InvestorLawyers

According to a news release on October 22, 2012, the Financial Industry Regulatory Authority has sanctioned David Lerner Associates Inc. and ordered the company to pay approximately $12 million to customers. The affected customers purchased Apple REIT Ten shares, which is a non-traded Real Estate Investment Trust sold by David Lerner Associates. Some customers who will be receiving restitution were also charged excessive markups. Investment fraud lawyers are still investigating potential claims on behalf of investors who purchased Apple REITs from David Lerner Associates.

FINRA Decision: David Lerner Associates to Pay $12 Million in Restitution to Customers for Unsuitable Sales of Apple REIT Ten

David Lerner Associates is the sole distributor of Apple REITs, including the $2 billion Apple REIT Ten. According to the press release, David Lerner Associates “solicited thousands of customers, targeting unsophisticated investors and the elderly, selling the illiquid REIT without performing adequate due diligence to determine whether it was suitable for investors.” According to securities arbitration lawyers, selling non-traded REITs to customers for whom the investment is unsuitable is one of the biggest problems with non-traded REITs. Furthermore, misleading marketing materials were used in order to sell the REIT. These materials presented performance results but did not disclose that the REIT’s income was insufficient for supporting owners’ distributions.

In addition to the $12 million in restitution, David Lerner Associates was fined over $2.3 million for supervisory violations and charging unfair prices on collateralized mortgage obligations (CMOs) and municipal bonds. These unfair prices occurred over a 30-month period. According to investment fraud lawyers, victims of CMO and municipal bond fraud can also recover their losses through FINRA arbitration.

Published on: November 15, 2012

Recovery of Whitestone REIT Losses

by InvestorLawyers

Investors of Whitestone REIT are attempting to recover their REIT losses through Financial Industry Regulatory Authority securities arbitration. First offered in 2004 as a public, non-traded REIT under the name Hartman Commercial Properties REIT, shares of the investment were offered at a per share price valuation of $10. Until a statement in 2009, which informed investors that the value of Whitestone REIT had declined to a per share price of only $5.15, investors were unaware of any problems with the REIT.

Recovery of Whitestone REIT Losses

On May 1, 2009, Jack L. Mahaffey, Independent Trustee, Chairman of Compensation Committee and Chairman of Special Committee for Whitestone REIT, issued a letter to shareholders. This statement revealed the $5.15 valuation was considered by Western Reserve Partners, a real estate investment banking firm which was engaged to review Whitestone’s internal management analysis, to be “on the high side of the range of reasonableness for current valuation.”

The letter to shareholders also addressed the question of why investors’ dividends had been reduced despite the fact that they were led to expect a dividend of 7 percent. In addressing this question, Mahaffey stated that “Whitestone had established a pattern of making cash distributions in excess of its FFO and available cash flow, a practice generally avoided by listed REITs.”

Published on: November 8, 2012

Recovery of CNL Lifestyle Properties REIT I Losses

by InvestorLawyers

Since the August announcement that CNL Lifestyle Properties REIT I’s value significantly dropped, investors of this product have been seeking avenues for recovering their REIT losses. In many cases, the answer may be Financial Industry Regulatory Authority securities arbitration. The $7.31 adjusted price per share, which is down from the original $10 per share price, represents a decline of over 25 percent of the investment’s value. The REIT had raised around $3.2 billion at the time the public offering was closed, so the decline in value represents investor losses of more than $870 million.

Recovery of CNL Lifestyle Properties REIT I Losses

According to a letter to CNL Lifestyle Properties shareholders, James Seneff, the CHL Lifestyle Properties Chairman, and Stephen Mauldin, CEO, indicated that the loss in value was primarily a result of their “discontinued mezzanine program” and a $2.3 million reduction of income in their “golf and lodging portfolios.” This reduction in income is reportedly a result of a lower operating net income and lease modifications. However, a press release filed with the Securities and Exchange Commission indicates that the value decline was also a result of a $1.9 million increase in asset management fees and general administrative expenses, a $0.5 million increase in bad debt expenses, a $2.6 million increase in depreciation expenses and a $1 million increase in loan costs amortizations and interest expenses. Reportedly, these increases are due to the increase in the number of properties.

Because CNL Lifestyle Properties is managed and advised by CNL Lifestyle Advisor, its own affiliate, management fees, advisory fees and other administrative expenses are paid to another CNL entity. In fact, an annual report stated that in 2011, $74.1 million was paid to CNL Lifestyle Advisor in asset management fees, acquisition fees and other expenses. Meanwhile, net income losses were reported for three years in a row.