REIT fraud

Lee Kramer Has Complaint Over Alternative Investment Sales Practices

May 6, 2020 | by Staff Attorney

Advisor Lee Kramer (Kramer), currently employed by FSC Securities Corporation (FSC Securities), has been subject to at least two customer complaints, seven regulatory actions, and two employment terminations for cause during the course of his career. According to a BrokerCheck report one of the customer complaints concern 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. Kramer discloses that he operates a number of outside businesses, some of which are investment related, including Kramer Financial, LLC and Kramer Wealth Managers. 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 October 2019 a customer complained that Kramer violated the securities laws by alleging that Kramer engaged in sales practice violations related to recommending alternative investments such as BDCs and an annuity. The claim alleges $93,000 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

ARC New York City REIT Investment Loss Options

January 2, 2018 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating investor losses in American Realty Capital New York City REIT (ARC New York REIT) a non-traded real estate investment trust (Non-Traded REIT). According to the firm’s website, seeks to provide its investors with a combination of current income and capital appreciation through strategic investments in high-quality commercial real estate located within the five boroughs of New York City, particularly Manhattan. The funds’ three primary objectives are stated as to preserve and protect capital, pay monthly stable cash distributions; and increase the value of assets in order to generate capital appreciation.

However, according to secondary market sources for non-traded REITs, shares of ARC New York REIT are currently listed for $11.02 per share a far drop from the sale price of $25 per share when the REIT issued shares to investors.

Our firm often handles cases involving direct participation products (DPPs), private placements, Non-Traded REITs, and other alternative investments. These products are almost always unsuitable for middle class investors. In addition, the brokers who sell them are paid additional commission in order to hype inferior quality investments providing perverse incentives for brokers to sell high risk and low reward investments.

American Realty Capital Hospitality Investors Suffer Losses

September 25, 2017 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating investor losses in American Realty Capital Hospitality Trust Inc. (Hospitality Trust), a non-traded real estate investment trust (Non-Traded REIT). The company then changed its name to Hospitality Investors Trust Inc.

Hospitality Trust acquires select-service lodging properties and brand national hotel. Hospitality Trust initial offering was January 2014 and raised $911 million. Hospitality Trust suspended dividend distributions in January 2017 and is not currently offering a redemption plan to shareholders trapping investors in the product.

According to a secondary market providers which allow investors to bid and sell illiquid products such as Non-Traded REITs, Hospitality Trust sells for just $10.50 per share – a significant loss on the original purchase price of $25.00.