Articles Tagged with REIT fraud lawyer

shutterstock_38114566-300x199The securities lawyers of Gana Weinstein LLP continue to investigate and represent investors who lost money in The Parking REIT (formerly known as the MVP REIT II) a non-traded real estate investment trust (Non-Traded REIT).  The Parking REIT claims to own parking lots and that an investment in the REIT provides benefits including, low operating and maintenance costs, potential for long-term capital appreciation, redevelopment opportunities, a fragmented Industry, and heavy demand.

Several years ago the board of The Parking REIT announced that it would be suspending the company’s distributions.  The Board claimed that the move would preserve capital in order to maintain sufficient liquidity to continue to operate the business and maintain compliance with debt covenants.

In a letter dated April 13, 2020, The Parking REIT provided more bad news for investors.  The company stated that “The company faces significant legal expenses related to pending lawsuits, an SEC investigation, and legal and consulting fees in connection with our exploration of potential strategic alternatives to provide liquidity to stockholders.”   Further, in order for the directors and officiers to protect themselves from increasing threates of liability the REIT paid “directors & officers liability insurance premiums added approximately $2.0 million to our general and administrative expenses in 2019.”  In addition, the REIT announced that “increasing expenses and general economic conditions are expected to prohibit The Parking REIT management and board of directors from considering a reinstatement of common stock and preferred stock distributions for the foreseeable future.”

Finally, the REIT claimed that no liquidity event may occur stating “there can be no assurance that the company will cause a liquidity event to occur in the near future or at all.”

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shutterstock_190371500-300x200Advisor Bryan Benson (Benson), formerly employed by Wells Fargo Clearing Services, LLC (Wells Fargo) has been subject to at least one customer complaint and one regulatory action during the course of his career.  According to a BrokerCheck report the customer complaint concerns alternative investments such as direct participation products (DPPs) like business development companies (BDCs), non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and private placements.  The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.

In April 2020 FINRA barred Benson after he consented to sanctions and findings that he refused to provide information and documents that were requested by FINRA in connection with an investigation into an investment-related customer complaint.  It is unclear the nature of the FINRA complaint that led to Benson’s bar from the industry

In April 2017 a customer complained that Benson violated the securities laws by alleging that Benson engaged in sales practice violations related to unsuitable investments concerning DPPs and limited partnership interests. The claim settled for $415,000.

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shutterstock_132704474-300x200The securities lawyers of Gana Weinstein LLP are investigating recommendations by brokerage firms for their clients to invest in Carey Watermark Investors 2 aka Watermark Lodging Trust – a non-traded real estate investment trust (non-traded REIT).  Carey Watermark Investors 2 originally sold shares for $10.00.  The fund claims to have an estimated net asset value per share of $11.41.  However, secondary market trading sources cite a far smaller value at only $5.50 a share – implying that the trading markets anticipate that Carey Watermark Investors 2 has substantially dropped in value.

As a background, Watermark Lodging Trust claims to be a premier lodging REIT with a portfolio of high-quality lodging assets led by an internal management team with a distinctive record of stockholder value creation. WLT claims to have been formed to take advantage of current and future opportunities in the lodging industry and seeks to provide investors with attractive, risk-adjusted returns and long-term growth in value.

Thereafter, on April 13, 2020, Carey Watermark Investors 2 and Carey Watermark Investors 1 merged in an all-stock transaction to create Watermark Lodging Trust.  In addition, since March 2020 the REIT has suspended distributions due to the reduced travel demand and related financial impact resulting from COVID-19.

In May 2020 the company filed a notice with the SEC stating that “approximately $277 million of indebtedness is scheduled to mature after the date of this Form 8-K through December 31, 2020. This indebtedness is nonrecourse mortgage indebtedness and the Company has extension options with respect to a portion of such indebtedness. If the Company’s lenders do not provide covenant relief or if the Company is unable to repay, refinance or extend any such indebtedness, the lenders may declare events of default and seek to foreclose on the underlying hotels. We may also seek to give properties back to the lenders. We have begun active efforts to raise capital through a variety of strategies, including, without limitation, sales of assets, potentially at discounted prices; incurrences of debt; joint venture arrangements; and/or issuances of equity securities in transactions which may be dilutive to our stockholders.”

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shutterstock_156562427-300x200The securities lawyers of Gana Weinstein LLP are investigating recommendations by brokerage firms for their clients to invest in Strategic Student & Senior Housing Trust (SSSHT) – a non-traded real estate investment trust (non-traded REIT).  Strategic Student & Senior Housing Trust has stopped distributing a dividend leaving investors with no returns for the time being.  As is too common in the brokerage industry, firms fail to understand the flawed non-traded REIT business model and only recommend these products for their 7% commissions – not because they benefit investors.

Strategic Student & Senior Housing Trust has been particularly hard hit in the recent recession due to the nature of its investments properties.  Strategic Student and Senior Housing Trust is a public, non-traded REIT focused exclusively on assets in the student housing and senior housing areas. The fund is premised on investing in two areas “with strong demographic drivers from college students and baby boomers” according to its website.

The fund states that SSSHT intends to take advantage of the growing demand for recession-resistant asset classes and desirable demographic trends.  The REIT states that it believes that SSSHT can provide stability, diversification, income, and potential growth over the long-term.

However, in an April 2020 prospectus update, Strategic Student & Senior Housing Trust stated that it incurred a net loss of approximately $19.6 million for the fiscal year ended December 31, 2019. Further, the REITs accumulated losses are approximately $41.8 million as of December 31, 2019.  Moreover, due to the current recession the REIT suspended its primary offering while still early in its acquisition stage.  Strategic Student & Senior Housing Trust warned that its operations may not be profitable in 2020.

Further Strategic Student & Senior Housing Trust investors are now trapped in the REIT when in March 2020, when the REIT’s board of directors determined to suspend the share redemption program with respect to common stockholders effective as of May 3, 2020.  The REIT stated that until it can establish a net asset value per share it was not currently possible to determine accurately redeem or sell shares.

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shutterstock_189006551-207x300Advisor Scot Fairchild (Fairchild), currently employed by Lucia Securities, LLC (Lucia Securities) has been subject to at least two customer complaints during the course of his career.  According to a BrokerCheck report one of the customer complaint concerns alternative investments such as direct participation products (DPPs) like business development companies (BDCs), non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and private placements.  The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.

In December 2019 a customer complained that Fairchild violated the securities laws by alleging that Fairchild engaged in sales practice violations related to breach of fiduciary duty, misrepresentations and omissions, negligence and unsuitable investments in high risk, illiquid investments purchased between 2013 and 2014 and in violation of Nevada Securities Laws. The claim alleges $214,335 and is currently pending.

In January 2019 a customer complained that Fairchild violated the securities laws by alleging that Fairchild engaged in sales practice violations related to breach of fiduciary duty, negligence, breach of contract, and unsuitable investment recommendations related to Real Estate Investment Trusts purchased between on or around 2013 and 2014.  The claim alleges $500,000 and settled for $175,000.

DDPs include products such as non-traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments.  These alternative investments virtually never profit investors and are almost always unsuitable for investors because of their high fee and cost structure.  Brokers selling these products are paid additional commission in order to hype these inferior quality investments providing a perverse incentives to create an artificial market for the investments.

Several studies have confirmed that Non-traded REITs underperform publicly traded REITs with some showing that Non-Traded REITs cannot even beat safe benchmarks, like U.S. treasury bonds.  Brokers selling these products must disclose to the investor that non-traded REITs provide lower investment returns than treasuries while being high risk and illiquid – but almost never do.  Because investors are not compensated with additional return in exchange for higher risk and illiquidity, these kinds of alternative investment products are rarely, if ever, appropriate for investors.  Continue Reading

shutterstock_186555158-300x200Advisor Gene Esplin (Esplin), formerly employed by Kalos Capital, Inc. (Kalos) and Triad Advisors, Inc. (Triad Advisors) has been subject to at least one customer complaint during the course of his career.  According to a BrokerCheck report one of the customer complaint concerns alternative investments such as direct participation products (DPPs) like business development companies (BDCs), non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and private placements.  The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.

In December 2019 a customer complained that Esplin violated the securities laws by alleging that Esplin engaged in sales practice violations related to allegations that alternative investments purchased at Triad during the Representative’s association with respondent Triad and thereafter during the Representative’s association with respondent Kalos Capital were unsuitable.  The claim alleges $1,000,000 and is currently pending.

DDPs include products such as non-traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments.  These alternative investments virtually never profit investors and are almost always unsuitable for investors because of their high fee and cost structure.  Brokers selling these products are paid additional commission in order to hype these inferior quality investments providing a perverse incentives to create an artificial market for the investments.

Several studies have confirmed that Non-traded REITs underperform publicly traded REITs with some showing that Non-Traded REITs cannot even beat safe benchmarks, like U.S. treasury bonds.  Brokers selling these products must disclose to the investor that non-traded REITs provide lower investment returns than treasuries while being high risk and illiquid – but almost never do.  Because investors are not compensated with additional return in exchange for higher risk and illiquidity, these kinds of alternative investment products are rarely, if ever, appropriate for investors.  Continue Reading

shutterstock_186471755-300x200Advisor Marco Azizi (Azizi), currently employed by Centaurus Financial, Inc. (Centaurus) has been subject to at least four customer complaints during the course of his career.  According to a BrokerCheck report the customer complaints concern alternative investments such as direct participation products (DPPs) like non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs.  The attorneys at Gana Weinstein LLP have represented dozens of investors who suffered losses caused by these types of high risk, low reward products.

In September 2019 a customer complained that Azizi violated the securities laws by alleging that Azizi from 2012 through 2014, the customers allege that the Azizi facilitated unsuitable, high-risk and illiquid investments.  The claim is currently pending.

In October 2018 a customer complained that Azizi violated the securities laws by alleging that Azizi recommended unsuitable investments and several other allegations associated therewith.  The claim is currently pending.

DDPs include products such as non-traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments.  These alternative investments virtually never profit investors and are almost always unsuitable for investors because of their high fee and cost structure.  Brokers selling these products are paid additional commission in order to hype these inferior quality investments providing a perverse incentives to create an artificial market for the investments.

Several studies have confirmed that Non-traded REITs underperform publicly traded REITs with some showing that Non-Traded REITs cannot even beat safe benchmarks, like U.S. treasury bonds.  Brokers selling these products must disclose to the investor that non-traded REITs provide lower investment returns than treasuries while being high risk and illiquid – but almost never do.  Because investors are not compensated with additional return in exchange for higher risk and illiquidity, these kinds of alternative investment products are rarely, if ever, appropriate for investors.  Continue Reading

shutterstock_129923876-300x239Advisor Kenneth Guerra (Guerra), currently employed by Independent Financial Group, LLC (Independent Financial) has been subject to at least two customer complaints, one financial disclosure, and one regulatory violation during the course of his career.  According to a BrokerCheck report the customer complaints concern alternative investments such as direct participation products (DPPs) like non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs.  The attorneys at Gana Weinstein LLP have represented dozens of investors who suffered losses caused by these types of high risk, low reward products.

In September 2019 a customer complained that Guerra violated the securities laws by alleging that Guerra engaged in sales practice violations related investments in high-risk alternative investments, resulting in a loss of some of their retirement assets. The claim alleges $100,000 in damages and settled for $25,000.

In March 2013 a customer complained that Guerra violated the securities laws by alleging that Guerra engaged in sales practice violations related to non-traded REITs purchased in 2007 through 2008 that were misrepresented and unsuitable. The claim alleges $80,000 in damages and settled for $60,000.

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shutterstock_115971289-269x300Advisor Genevieve Mar (Mar), currently employed by Berthel, Fisher & Company Financial Services, Inc. (Berthel Fisher) has been subject to at least four customer complaints and one termination for cause during the course of her career.  According to a BrokerCheck report the customer complaints concerns alternative investments such as direct participation products (DPPs) like non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs.  The attorneys at Gana Weinstein LLP have represented dozens of investors who suffered losses caused by these types of high risk, low reward products.

In May 2019 a customer complained that Mar violated the securities laws by alleging that Mar engaged in sales practice violations related to investments purchased between 2010 through 2015 that were unsuitable and misrepresented to them by the representative. The customers also allege that the firm failed to supervise the actions of the representative.  The claim alleges $1,500,000 in damages and is currently pending.

In July 2018 a customer complained that Mar violated the securities laws by alleging that Mar engaged in sales practice violations related to investments purchased between 2014 through 2016 were unsuitable, are not preforming as expected, and that the high risk level associated with the investments was not explained to them at the time of purchase. They also allege the firm failed to supervise the actions of the representative.  The claim alleges $250,000 in damages and is currently pending.

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shutterstock_112866430-300x199Advisor Yvonne Silguero (Silguero), currently employed by LPL Financial LLC (LPL Financial) has been subject to at least two customer complaints during the course of her career.  According to a BrokerCheck report the customer complaints concerns alternative investments such as direct participation products (DPPs) like non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs.  The attorneys at Gana Weinstein LLP have represented dozens of investors who suffered losses caused by these types of high risk, low reward products.

In August 2019 a customer complained that Silguero violated the securities laws by alleging that Silguero engaged in sales practice violations related to negligence, misrepresentations, breach of fiduciary duty from July 2014 through October 2018 concerning alternative investments. The claim alleges $500,000 in damages and is currently pending.

In April 2017 a customer complained that Silguero violated the securities laws by alleging that Silguero engaged in sales practice violations related to violations of the Texas State Securities Statutes, negligent misrepresentations, unsuitable investment recommendations and violations of the FINRA Rules.  The claim alleged $3,759,713 in damages and went to hearing.  The arbitration panel found LPL Financial liable and awarded $864,839 in damages, $340,000 in attorneys’ fees, and $350,000 in additional damages.

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