Some investment advisors have touted alternative investments as safe, stable, high return products. The truth is, these products are often laden with risks that are not disclosed and discussed with clients. In addition, alternative investments are simply unsuitable for many investors needs. The sale of these products often generates commissions of between 7-10% of the investment amount. Thus, there are unscrupulous advisors who have used misleading sales pitches designed to lure investors into putting their hard earned money into these extremely risky and unsuitable investment.
Some alternative investments are sold as private placements in limited partnership vehicles. These limited partnerships are formed to acquire, operate, and sell assets for the benefit of the partners. Investors in limited partnerships are entitled to receive distributions of operating cash flow as well as distributions from the sale or financing of assets as outlined in the partnership’s limited partnership agreement. Unlike stocks and bonds, limited partnerships are not listed on an exchange and are therefore illiquid and reliable pricing information is typically very difficult to obtain.
There is a line of limited partnerships held under LEAF Asset Management, LLC—a limited liability company that acts as general partner for a handful of limited partnership equipment leasing fund investment programs. LEAF Asset Management, LLC is a wholly-owned subsidiary of Resource America, Inc., a company that specializes in developing investment funds for outside investors and providing asset management services either by contract or by acting as the manager or general partner of its own sponsored investment funds.
The limited partnerships under the LEAF name include LEAF Equipment Leasing Income Fund I through IV. For the most part, these limited partnerships invest in portfolios of new and used computers, industrial equipment, medical equipment, office equipment, restaurant equipment, building systems, communication equipment, and garment care equipment that they lease to third parties. Investors have been enticed by the high rate of return that the LEAF limited partnerships initially offer. For example, LEAF III and LEAF IV both offered an initial distribution of 8.5%. However, this rate steadily went down to two and three percent, respectively. Both limited partnerships are now in wind down, and thus investors are unlikely to get back most, if not all, of their principal. Over the last couple of years, FINRA has begun to take notice of the potentially fraudulent activity surrounding limited partnerships.
The attorneys at Gana Weinstein LLP are experienced in handling cases involving investments in LEAF and other limited partnerships. Our consultations are free of charge and the firm is only compensated if you recover.