The investment fraud attorneys with Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Christopher Scalese (Scalese) currently not associated with any broker-dealer alleging unsuitable investments, misrepresentations and omissions of material information among other claims. According to brokercheck records Scalese has been subject to nine customer complaints. Many of the complaints involve direct participation products (DPPs) such as non-traded real estate investment trusts (REITs), equipment leasing funds – such as LEAF or ICON, and other alternative investments.
In January 2017 a customer filed a complaint alleging unsuitable investments, misrepresentation, and other causes of action in connection with the sale of various REITS and an equipment leasing fund. The customer claimed damages of $1,326,000. The claim is currently pending.
Our firm has represented many clients in illiquid alternative investments products. All of these investments come with high costs and have historically underperformed even safe benchmarks, like U.S. treasury bonds. For example, products like oil and gas partnerships, REITs, and other alternative investments are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed at all. However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them and have created a large market for a failed product. Further, investor often fail to understand that they have lost money in these illiquid investments until many years after investing. In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.