Articles Posted in Real Estate Litigation

shutterstock_182371613-300x200The securities attorneys at Gana Weinstein LLP are currently investigating Berthel, Fisher & Company Financial Services, Inc. (Berthel, Fisher & Company) broker Scott Barcomb (Barcomb). According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA), Barcomb has been subject to four customer disputes concerning unsuitable variable annuity recommendations and failure to conduct due diligence on private placement investments.  In addition, Barcomb has been subject to one criminal action.

In August 2010, a customer alleged that Barcomb failed to disclose taxes involved in disbursements from a 1035 contract. The case settled for $20,000 in damages.

In June 2010, a customer alleged that Barcomb and his member firm did not properly conduct due diligence on the tenant-in-common (TIC) property that they had recommended to their customers and invested their customers in. This dispute was settled for $200,000.

In November 2006, a customer alleged that Barcomb had unsuitably advised her to sell a variable annuity to fund the purchase of another variable annuity. The dispute settled at $10,000. Continue Reading

shutterstock_89758564-300x200The securities attorneys at Gana Weinstein LLP have been investigating H. Beck, Inc. (H Beck) broker Soonhee Cho (Cho). According to BrokerCheck records, Cho has been subject to a customer dispute and a permitted resignation from employment.

In November 2017, a customer alleged that from June 2013 to November 2017, Cho recommended non-traded Real Estate Investment Trusts (REITs) which were unsuitably risky to the customer and that he also failed to disclose the illiquidity of the investment to the customer. The customer has requested $193,000 in damages.

In addition, Cho has been subject to permitted resignation from member firms. In September 1999, Cho was permitted to resign from Waddell & Reed, Inc. for failing to comply with the firm’s correspondence procedures. Continue Reading

shutterstock_27786601According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Fera Shivaee (Shivaee) has been the subject of at least two customer complaints. Customers have filed complaints against Shivaee alleging a number of securities law violations including that the broker made unsuitable investments, misrepresentations and false statements in connection with recommendations to invest in private placements such as tenants-in-common (TICs) interests.

Shivaee has been a registered representative with Centaurus Financial, Inc. (Centaurus) since 1997.  According to FINRA records three TICs complained of include NNN River Exchange, NNN Plantations, and CORE Minneapolis.

TIC investments have come under fire by many investors. Indeed, due to the failure of the TIC investment strategy as a whole across the securities industry, TIC investments have virtually disappeared as offered investments.   According to InvestmentNews “At the height of the TIC market in 2006, 71 sponsors raised $3.65 billion in equity from TICs and DSTs…TICs now are all but extinct because of the fallout from the credit crisis.” In fact, TICs recommendations have been a major contributor to bankrupting brokerage firms. For example, 43 of the 92 broker-dealers that sold TICs sponsored by DBSI Inc., a company whose executives were later charged with running a Ponzi scheme, a staggering 47% of firms that sold DBSI are no longer in business.

Sales of TICs multiplied during the early 2000s from approximately $150 million in 2001 to approximately $2 billion by 2004. TICs are private placements that have no secondary trading market and are therefore illiquid investments. These products were promoted to investors as appropriate section 1031 exchanges allowing the investor to deferral taxes on appreciated real property. In a typical TIC, the investor receives a fractional interest in the property along with other stakeholders and the profits are generated mostly through the efforts of the sponsor and the management company that manages and leases the property. The sponsor typically structures the TIC investment with up-front fees and expenses charged to the TIC and negotiates the sale price and loan for the acquired property.

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shutterstock_73854277According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Robert Blake (Blake) has been the subject of at least six customer complaints, one criminal activity, and three regulatory actions. Customers have filed complaints against Blake alleging a number of securities law violations including that the broker made unsuitable investments, misrepresentations and false statements in connection with recommendations to invest in several different types of investments including private placements such as tenants-in-common (TICs) interests, variable annuities, and equity-indexed annuities.

Blake first became registered with a FINRA firm in 1974. From 2001 until November 2011, Blake was registered with Presidential Brokerage, Inc. Thereafter, Blake has been registered with Cambridge Investment Research, Inc. in the firm’s Greenwood Village, Colorado office. Blake operates out of business entity called Speer Wealth Management.

Both TICs and investment annuities have caused significant investment losses. The failure of the TIC investment strategy as a whole across the securities industry, TIC investments have virtually disappeared as offered investments.   According to InvestmentNews “At the height of the TIC market in 2006, 71 sponsors raised $3.65 billion in equity from TICs and DSTs…TICs now are all but extinct because of the fallout from the credit crisis.” In fact, TICs recommendations have been a major contributor to bankrupting brokerage firms. For example, 43 of the 92 broker-dealers that sold TICs sponsored by DBSI Inc., a company whose executives were later charged with running a Ponzi scheme, a staggering 47% of firms that sold DBSI are no longer in business.

TIC investments entail significant risks. A TIC investor runs the risk of holding the property for a significant amount of time and that subsequent sales of the property may occur at a discount to the value of the real property interest. FINRA has also warned that the fees and expenses associated with TICs, including sponsor costs, can outweigh the any potential tax benefits associated with a Section 1031 Exchange. That is, the TIC product itself may be a defective product because its costs outweigh any potential investment value or tax benefit offered to the customer.

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On December 5, 2013, the board of managers of 90 William Street condominium filed a construction defect case against SDS Procida and its managers and sister agencies (Defendants). SDS Procidia was the sponsor of the building. The complaint alleges that the building was marketed to potential and current owners as a luxury condominium project and was to provide innovative modern urban residences offering creative lifestyle and a social atmosphere.

The 113 unit condominium alleges that the building was built with inferior materials and contains pervasive construction defects, including serious health and safety issues in fire protection, roofing, windows, electrical, plumbing, insulation, elevator and domestic water systems of the building.

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