investment fraud lawyers

Published on: September 19, 2012

Louis V. Schooler, Western Financial Planning Accused of Investment Scam by SEC

Investment fraud lawyers are currently investigating potential claims on behalf of the investors of Western Financial Planning Corp., based in San Diego. Reportedly, Western Financial Planning has been accused by the Securities and Exchange Commission of running a real estate investment scam. The alleged scam raised around $50 million from hundreds of investors around the nation.

Louis V. Schooler and Western Financial Planning Accused of Investment Scam by SEC

Early this month, a temporary asset freeze against the financial planning firm and Louis V. Schooler, the firm’s owner, was obtained by the SEC. Securities arbitration lawyers say the SEC’s allegations state that Schooler and Western Financial sold units in partnerships, organized by Western, for the purchase of vacant land located in Nevada. Reportedly, the land would then be held to be sold at a later date for a profit.

According to the SEC’s claims, Western neglected to tell investors that they (the investors) would be paying outrageous mark-ups on the land. Investment fraud lawyers say that in some cases, mark-ups amounted to over five times the fair market value of the land. Furthermore, allegations state that Schooler failed to tell investors that the initial land purchase was financed by mortgages, which later encumbered the property.

Published on: September 17, 2012

What Went Wrong with Dividend Capital REIT: What Many Investors Didn’t Know

by InvestorLawyers

Securities fraud attorneys have been investigating claims on behalf of investors who suffered Dividend Capital Trust investment losses, but what exactly went wrong?

What Went Wrong with Dividend Capital REIT: What Many Investors Didn't Know

According to investment fraud lawyers, while most REITs experience value changes every day because they are traded on stock exchanges, “non-traded,” “private,” or “unlisted” REITs were not traded on exchanges with regulations. Furthermore, these investors of non-traded REITs paid additional layers of fees because the investments were mostly sold by brokers. Generally, investors were promised stable prices and healthy income generation from these investments, but the decline in the commercial real estate market and management problems have resulted in a significant decline in the value of many non-traded REITs.

Many brokers unsuitably recommended non-traded REITs; after all, they were extremely profitable to them thanks to the hefty fees associated with the investment. Many brokers told investors that the REITs values would remain the same while providing income, but many non-traded REITs have temporarily — or indefinitely — suspended payments to investors. That said, securities fraud attorneys note that most public REITs that have been responsibly managed are providing reliable income to their investors.

Published on: September 14, 2012

Cole Credit Property Trust II May be Following in the Footsteps of Other Non-traded REITs

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who were improperly sold various non-traded REIT investments and suffered significant losses as a result. Reportedly, Cole Credit Property Trust II is currently in the process of executing its “exit event.” In this event, a non-traded Real Estate Investment Trust either performs an initial public offering or sells its assets.

Cole Credit Property Trust II May be Following in the Footsteps of other Non-Traded REITs

In recent events, other non-traded REITs have gone through this process and securities fraud attorneys say that, in most cases, the event does not go well for investors. As a result of the exit event, many REITs have experienced a significant decline in the offering — often amounting to 30 percent or more of the investment’s value.

As the seventh-largest non-traded REIT in the industry, Cole Credit Property Trust II has invested assets amounting to nearly $3.4 billion. Reportedly, Morgan Stanley and UBS Investment Bank have been hired by Cole Credit Property Trust II to explore their options for the exit event. Investment fraud lawyers encourage Cole Credit Property Trust II investors to closely monitor the REIT’s valuation as, despite an estimated valuation of $9.35 per share, the trend in previous non-traded REITs indicates that the market may not be so kind to the per share valuation.

Published on: September 10, 2012

Dividend Capital REIT and Seven Other Non-traded REITs Suffer Significant Losses

by InvestorLawyers

Securities arbitration lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of their investment in eight of the biggest non-traded REITs, including Dividend Capital Total Realty Trust Inc. According to a recent analysis, over the last seven years, eight of the biggest REITs have lost 37 percent of their equity value, or around $11.3 billion.

Dividend Capital REIT and Seven Other Non-Traded REITs Suffer Significant Losses

In July, Dividend Capital Total Realty Trust Inc. revised its per share value to $6.69, down from its March value of $8.45 per share. The Dividend Capital REIT raised $1.8 billion at a $10 per share price. Dividend Capital REIT president, Guy Arnold, failed to return calls seeking comment on the REIT’s performance. For more information about the Dividend Capital REIT, see the previous blog post, “Dividend Capital REIT Restructuring Could be a Sign of Trouble.”

Another non-traded REIT, CNL Lifestyle Properties Inc., experienced a share price drop to $7.31. The CNL Lifestyle Properties REIT raised $2.7 billion at a $10 per share price, according to investment fraud lawyers.

Published on: September 6, 2012

CNL Lifestyle Properties REIT Investors Could Recover Losses

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors who have suffered significant losses as a result of their investment in CNL Lifestyle Properties Inc. Reportedly, a recent announcement from CNL Lifestyle Properties stated that its per share value estimate has dropped from its original share price of $10 to $7.31. This decline represents a drop of 27 percent, which could mean significant losses for many investors. Furthermore, the REIT is reportedly cutting investor dividends, or distribution.

CNL Lifestyle Properties REIT Investors Could Recover Losses

Financial Industry Regulatory Authority rules have established that brokers and firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance.

The CNL Lifestyle Properties REIT is, according to investment fraud lawyers, another in a long line of non-traded REITs currently under investigation. REITs typically carry a high commission which motivates brokers to make the recommendation to investors despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Non-traded REITs, such as the CNL Lifestyle Properties REIT, carry a relatively high dividend or high interest, making them attractive to investors. However, these investments are inherently risky and illiquid, which limits access of funds to investors. This becomes a major problem for investors, especially retired individuals, who may need to access their funds when the need arises. For more information on REITs, see the previous blog post “FINRA Investor Alert: Public Non-Traded REITs.”

Published on: September 5, 2012

Behringer Harvard Strategic Opportunity Fund I Investors Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of their investment in Behringer Harvard Strategic Opportunity Fund I. Reportedly, this investment is in serious trouble, with its assets being far outweighed by its liabilities. Behringer Harvard Strategic Opportunity Fund I was initially offered in 2005 and, since then, has raised $65 million. Six properties were involved in the fund’s investing, including a hotel in Los Angeles and an office building in Amsterdam. It has been reported that, around the middle of August, Behringer Harvard informed brokers of the fund’s problems.

Behringer Harvard Strategic Opportunity Fund I Investors Could Recover Losses

Allegedly, many brokers recommended Behringer Harvard Strategic Opportunity Fund I to their clients, misrepresenting the investment as low risk and safe. Furthermore, investment fraud lawyers say some brokers unsuitably placed an overconcentration of client assets in the product.

Chief executive of the funds of which Behringer Harvard’s opportunity platform consist, Michael O’Hanlon, stated that Behringer Harvard Strategic Opportunity Fund I’s “liabilities are greater than its assets.” O’Hanlon also stated that a “swing issue” is in effect over the Los Angeles hotel and the fund is currently negotiating with banks on the issue.

Published on: August 31, 2012

Victims of Lewis J. Hunter’s Fraud Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of individuals who invested with Lewis J. Hunter, a former broker in Michigan. A cease-and-desist and administrative proceedings order was recently instituted by the Securities and Exchange Commission against Hunter, who allegedly misappropriated money from his brokerage customers and, in turn, used the funds to pay personal expenses. The amount of money allegedly misappropriated is estimated to be around $300,000.

Victims of Lewis J. Hunter’s Fraud Could Recover Losses

The SEC’s Division of Enforcement’s allegations of misappropriation of funds state that Hunter promised guaranteed returns in both domestic and foreign bank investments while registered with HD Vest Investment Securities Inc. Further, the SEC’s claims allege that Hunter paid personal and business expenses with the funds and made false and misleading representations to conceal his actions from his clients. Reportedly, these misrepresentations included fabricating bank documents.

Based on the SEC’s allegations, securities arbitration lawyers believe that Hunter was a registered representative for HD Vest Investment Securities Inc. from November 15, 2006 through October 19, 2011. HD Vest Investment Securities is headquartered in Texas and is a registered broker-dealer. While registered there, Hunter reportedly became a partner in National Business Concepts LLC, purportedly in bookkeeping, accounting, business consulting, management and tax preparation.

Published on: August 27, 2012

Retail Properties of America, Formerly Inland Western, Faces More Problems

by InvestorLawyers

For quite some time now, securities fraud attorneys have been investigating claims on behalf of investors who suffered significant losses as a result of their investments in Retail Properties of America REIT, formerly known as Inland Western. Reportedly, the chief executive of Inland Real Estate Group of Cos. Inc., Daniel Goodwin, recently expressed criticism about the Retail Properties of America Inc.’s IPO timing. A new lawsuit states that in January 2011, the REIT told investors before the offering that they could expect a value of $17.25 per share. However, at the time of the offering, the REIT’s shares, adjusted for the stock split, were actually only valued at $3.20 a share. This also was significantly lower than the $10 price which the majority of investors paid per share.

Retail Properties of America, Formerly Inland Western, Faces More Problems

According to Goodwin, Inland Real Estate Group of Cos. Inc. has no control over Retail Properties of America. Furthermore, when asked if Inland would join in the lawsuit filed in the U.S. District Court for the Northern District of Illinois — which is seeking class action status — Goodwin said, “We have discussed various potential actions but haven’t reached a conclusion. Our interests are clearly aligned with the shareholders.”

Investment fraud lawyers say Retail Properties of America is the third-largest shopping center REIT in the nation. In April 2012, Retail Properties of America was converted to a publicly traded New York Stock Exchange company from a non-traded REIT.

Published on: August 24, 2012

Charles Schwab, Fidelity Investors Who Opted Out of Class Actions Could Recover Losses Through Securities Arbitration

by InvestorLawyers

Following settlements with the Financial Industry Regulatory Authority (FINRA), stock fraud lawyers say Charles Schwab and Fidelity investors could recover losses through securities arbitration. Fidelity reportedly has agreed to pay a $375,000 fine in a settlement with FINRA over allegations that the firm committed sales violations from December 2006 through December 2008 involving the Fidelity Ultra Short Bond Fund.

According to FINRA’s allegations, Fidelity Investments Institutional Services Co. Inc. and Fidelity Brokerage Services LLC, two Fidelity broker-dealers, failed to provide adequate supervisory procedures and produced misleading advertising and sales materials for the fund. Apparently when the subprime crisis unfolded, the fund began losing value in June 2007, but the sales materials for Fidelity continued to purport fixed-income securities of “high credit quality” being held by the fund. The fund’s net asset value fell to $8.25 per share by April 2008, from $10 per share before June 2007, according to investment fraud lawyers.

In a separate ruling in May, a settlement was approved by a federal court in a class action filed against Fidelity units in 2008. In that settlement, Fidelity paid $7.5 million to investors of the bond fund. The Charles Schwab Corp. settled a similar case last year in which they paid almost $119 million over its YieldPlus bond fund. A separate class action claim saw Schwab pay another $235 million to investors in 2010. However, stock fraud lawyers believe that not all investors were compensated.

Published on: August 22, 2012

Dividend Capital REIT Restructuring Could be a Sign of Trouble

by InvestorLawyers

Since the writing of the previous blog post “Dividend Capital Total Realty Trust Non-traded REIT Investors Could Recover Losses,” investment fraud lawyers have received communication from investors related to their concerns about the value of their shares. Reportedly, the quarterly dividend rate of these shares is 5.23 percent and the new price of each share is $6.69. The investment’s prospectus for Dividend Capital shares and its recent Securities and Exchange Commission filing indicate new terms for repurchase plans and a major restructuring of the investment. In addition, Dividend Capital Total Realty Trust appears to be going by a new name, Dividend Capital Diversified Property Fund.

Dividend Capital REIT Restructuring Could be a Sign of Trouble

This new offering is purportedly a means for the company to offer liquidity, securities fraud attorneys say. Generally, non-traded REIT shares are illiquid but, when the REIT is liquidated, are sold to another REIT, or goes public, the shares are sold. The SEC filing states that the offering is intended to replenish the capital of their fund shares. As a result, they will not have to list a termination date, should one of the aforementioned events occur. This new plan is scheduled to go into effect on October 1, 2012 and purportedly allows investors to liquidate shares at any time. The price of the shares at liquidation is determined by the company’s Net Asset Value’s daily calculation. However, restrictions on this plan include the following:

While Class A, W or I shares may be redeemed at any time, a “Quarterly Cap” has been instituted by Dividend Capital, which will limit redemptions equal to 5 percent of the total Net Asset Value of all shares set upon completion of the prior calendar quarter.