Securities Lawyer Blog | Victim of Fraud?

TAG | REIT loss Lawyer

Jan/13

24

Alison Janke, Port Richey, FL, Fined and Suspended by FINRA

Comments off · Posted by Securities Lawyer in FINRA

The following information is from FINRA’s website under “Disciplinary and Other FINRA Actions, January, 2013.”

Alison Marie Janke (CRD #4409155, Registered Representative, Port Richey, Florida)

was fined $11,600, which includes the disgorgement of financial benefit received of $6,600, and suspended from association with any FINRA member in any capacity for three months.

Without admitting or denying the findings, Alison Janke consented to the described sanctions and to the entry of findings that she had participated in a private securities transaction without providing prior written notice to her member firm.

Ms.Janke referred a customer who was seeking alternative investments to a registered representative at a different firm, where the customer invested $200,000 in a real estate investment trust (REIT) through the other registered representative. Alison Janke not only referred the customer to another representative, but also attended the meeting with the customer and the other representative, and assisted with the completion of the purchase transaction.

The findings stated that a limited liability company Janke owned received a $6,600 payment in connection with the sale of the REIT.

The suspension is in effect from December 3, 2012, through March 2, 2013.
(FINRA Case #2011030660801)
This ends the information from FINRA’s website.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you find yourself in this situation, or a similar situation with your broker or financial advisor, call for a free consultation with an attorney, 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

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Jan/13

9

LPL Sued over Nontraded REIT Sales by Massachusetts

Comments off · Posted by Securities Lawyer in FINRA

Massachusetts securities regulators sued LPL Financial, LLC, in December over sales practices of brokers regarding the REITs. Secretary of the Commonwealth, William Galvin, charged LPL Financial with a failure to supervise registered reps who sold the nontraded REITs in violation of both state limitations and the company’s rules. The Securities Division also charged LPL Financial with dishonest and unethical business practices writes Bruce Kelly in an article in InvestmentNews.com.

These charges stem from the sales of $28 million of nontraded REITs to almost 600 clients from 2006 to 2009. The Securities Division found that 569 had regulatory violations. These included sales made in violation of Massachusetts 10% concentration limits; sales made in violation of prospectus requirement; and sales made in violation of LPL compliance practices. LPL received gross commission of $1.8 million for those sales, according to the complaint.

The InvestmentNews.com article goes on to say that the largest amount of sales was for Inland American Real Estate Trust Inc., the largest nontraded REIT in the industry, with $11.2 billion in real estate assets. Massachusetts investors put at least $20.1 million in Inland American, which is currently the focus of a fact-finding investigation by the Securities and Exchange Commission. Massachusetts is seeking full restitution to clients in the state who were sold REITs allegedly in violation of state and prospectus requirements. It is also seeking an unspecified administrative fine against the firm.

LPL Financial is the largest independent broker-dealer, with more than 13,000 registered reps and advisers. Along with Ameriprise Financial Inc., it is one of the largest sellers of nontraded REITs, which are sold only through independent broker-dealers. The investments are marketed as a way to diversify an investor’s portfolio and generate income.

Nontraded REITs, which had over $10 billion in sales in 2012, have drawn attention from regulators and the market recently. Many notable REITs took hits in 2008 and 2009 during the broad downturn of the commercial real estate market. Some of the industry’s largest REITs have suffered a drop in valuations of 25% to 50%, and some REITs have also cut dividends to investors.

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member have experienced losses through LPL Financial, LLC, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit http://www.securitieslawyer.com.
Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Jan/13

9

Did You Invest in Wells Timberland REIT?

Comments off · Posted by Securities Lawyer in FINRA

Soreide Law Group is currently investigating the Wells Timberland REIT for the investors who suffered financial losses. FINRA, the Financial Industry Regulatory Authority, fined Wells Investment Securities $300,000 for improper sales materials when selling the Wells Timberland REIT, from May 2007 to September 2009. (Wells Investment Securities neither admitted nor denied the charges.)

FINRA stated that the marketing materials for the Wells Timberland REIT contained 116 “improper, unwarranted or exaggerated statements.” FINRA further stated that various information concerning diversification, distributions and redemptions of the REIT was misleading.

“By approving and distributing marketing materials with ambiguous and equivocal statements, Wells misled investors into thinking Wells Timberland was a REIT at a time when it was not a REIT,” said Brad Bennett, FINRA executive vice president and chief of enforcement, in a statement.

If you or a loved one invested in the Wells Timberland REIT due to your stock broker or financial advisor’s recommendation call Securities Lawyer, Lars Soreide, of Soreide Law Group at: 888-760-6552, or visit www.securitieslawyer.com.

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Dec/12

7

Did You Invest in Behringer Harvard REIT I?

Comments off · Posted by Securities Lawyer in FINRA

Soreide Law Group, PLLC, is conducting an investigation into Behringer Harvard REIT I.

Earlier this year, Behringer Harvard REIT I lost two properties in Minnesota and St. Louis to foreclosure. At midyear, the company listed $3.98 billion in assets and $2.509 billion in liabilities.

There are now lawsuits stating that share values in the REIT have fallen from about $10 in the original offering to currently as little as $2.40 in the secondary market. Some of the claims in the lawsuit allege that the Behringer Harvard REIT’s officers misrepresented its financial results and prospects. Other claims in the suit state that officers charged excessive fees and “compensated themselves handsomely out of the proceeds they have raised from the offerings.”

If your stock broker or financial advisor sold you Behringer Harvard Strategic Opportunity Fund I, and you sustained a significant loss of your investment, call Securities Lawyer, Lars Soreide, at 888-760-6552 for a free consultation, or visit Soreide Law Group’s website at: http://securitieslawyer.com.

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Dec/12

4

Did You Invest in Any of These Companies?

Comments off · Posted by Securities Lawyer in FINRA

Securities Lawyer, Lars Soreide, of Soreide Law Group, is investigating the following investments. If your stock broker/financial advisor recommended the following investments you may be able to pursue a claim through a FINRA arbitration. Many of the brokerage firms that sold these investments carry errors and omissions insurance which may offer some level of redress for your investment losses if you qualify. Call (888) 760-6552 for a free consultation or visit http://www.SecuritiesLawyer.com for more information.

REEF Oil & Gas Income & Development Fund II - Stopped distributions July 2009

Core-Governor’s Pointe TIC - Reduced distributions April 2009, stopped distributions June 2010. Recently stopped paying mortgage.

GK Properties Fund III - Stopped distributions Dec 2009

Core-Northridge Promenade TIC- Facing foreclosure

Moody-Fairfield Inn, Meadowlands TIC – Facing foreclosure

TSG Series 2007-A Debenture - TSG President, Rob Hannah prohibited from selling securities in Illinois, based in part on his failure to disclose pending litigation in the PPM for the TSG Series 2007-A Debenture. Washington State Department of Financial Institutions found that TSG made material misrepresentations or omissions in selling investments.
TSG accepted a consent order so as to resolve this issue.

Small Business Co. -CEO Karen Person charged by SEC and FBI with mail and wire fraud. Faces 20 year prison term if convicted.

Desert Capital REIT-Desert Capital was forced into involuntary bankruptcy by its creditors.

Striker Petroleum Series B3 Debenture - Litigation Release No. 21325 / December 4, 2009Securities and Exchange Commission v. Striker Petroleum, LLC, et al., Civ. Action No. 3:09-CV-2304-D (United States District Court for the Northern District of Texas, Dallas Division).Court Appoints Receiver for Dallas Oil and Gas Company and Enters Injunctions Against the Company and its Principals for Conducting Fraudulent $57 Million Debenture Offering

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Nov/12

13

Did You Invest With Vincenzo (Vince) Covino?

Comments off · Posted by Securities Lawyer in FINRA

Soreide Law Group, PLLC, has launched an investigation into the suspended Idaho broker, Vincenzo (Vince) Covino. Covino was employed at Legacy Wealth Management Group in Boise, and Prospera Financial Services. Covino was with LPL Financial until 2009.

Vince Covino was fined and suspended by FINRA for borrowing hundreds of thousands of dollars from a client, a violation of his firm’s policies and the NASD (National Association Of Securities Dealers) rules as well.

Covino also has two FINRA complaints filed by more than 20 former clients who allege that Covino may have gotten them into unsuitable investments for their portfolios, putting their investments at risk, and resulting in losses.

Vince Covino has prior complaints relating to the sale of insurance and REITs (Real Estate Investment Trusts).

If you invested with Vincenzo (Vince) Covino, Prospera Financial Services, Legacy Wealth Management Group, VSR Financial Services, LPL Financial, or Beneficial Life Insurance, call and speak at no charge to a securities attorney who may potentially help you recover your losses. Call 888-760-6552, or visit http://www.securitieslawyer.com.

Soreide Law Group, PLLC, representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Apr/12

30

Did You Invest in Cornerstone Core Properties REIT?

Comments off · Posted by Securities Lawyer in FINRA

Soreide Law Group, PLLC, has been conducting investigations into several REITs.  Cornerstone Core Properties REIT was at one time valued around $8.00 per share.  If you were an investor at that price, you have now seen that value tumble to its current approximate value of $2.25.  This non-traded Real Estate Investment Trust has suffered a sharp decline in tenant occupancy.  It was 69% at the end of 2011 and 92% as 2008 came to an end. Additionally, this REIT was prevented from raising necessary capital for funding due to alleged regulatory issues.

The Financial Industry Regulatory Authority, also know as FINRA, has been closely monitoring the sale of non-traded REITs and how those products were marketed.  REITs have occasionally been marketed as safe investments by certain broker/dealears when in fact they are often illequid and extremely risky to the investor.

Securities lawyer, Lars K. Soreide, of Soreide Law Group is currently investigating any alleged improper marketing to the clients by their financial advisors or broker/dealers.  If you feel you have incurred losses through your purchase of Cornerstone Core Properties due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Apr/12

24

Nontraded REITs on the Slide

Comments off · Posted by Securities Lawyer in FINRA

Have you invested in these  non-traded real estate investment trusts and funds that have recently seen steep devaluations?Name         Offering price      Per share Current estimated value       % decline per share  Behringer Harvard Opportunity REIT I          $10.00      $4.12           -58.80%       Behringer Harvard REIT I                                     $10.00     $4.64           -53.60%       Behringer Harvard Short-Term Opportunity Fund $10.00     $0.40          -96%       Cornerstone Core Properties REIT                     $8.00        $2.25           -71.88%       Inland Western Retail Real Estate Trust Inc.   $10.00     $6.95           -30.50%       KBS Real Estate Investment Trust Inc.               $10.00      $5.16           -48.40%   Source: SEC filings Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member have sustained investment losses due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: www.securitieslawyer.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.      

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Apr/12

20

Cornerstone Core Properties Plunges 72%–Another Nontraded REIT

Comments off · Posted by Securities Lawyer in FINRA

Bruce Kelly writes in an InvestmentNews.com article, that another nontraded real estate investment trust has taken a sudden and precipitous decline in value — this time plunging nearly 72%.

The investors in the Cornerstone Core Properties REIT Inc. were told this month by the company that the shares, once valued at $8, are now worth $2.25. “The estimated per-share value has been adversely affected by the recent global economic downturn, negatively impacting our small business tenant base, which has resulted in approximately $43 million of previously announced impairment charges recorded in the second and third quarters of 2011,” according to the letter, which was signed by Terry Roussel, the REIT’s chairman and chief executive.

Kelly writes that a sharp decline in tenant occupancy has hammered the REIT: Tenant occupancy of the REIT’s retail properties was 69% at the end of last year, compared with 92% at the end of 2008. “A couple of years ago, the sponsor had some regulatory issues and had to shut down capital raising,” said Anthony Chereso, CEO of FactRight LLC, a due-diligence firm that covers managers of alternative investments. “It had some properties with tenant issues, and the portfolio had issues with covering debt and distributions. It was not constructed well.” FactRight last year recommended that broker-dealers pull the Cornerstone Core Properties REIT from their platforms, Mr. Chereso said.

These REIT’s regulatory issues had to do with marketing at the sponsor level, Mr. Chereso said. The sponsor broker-dealer is Pacific Cornerstone Capital Inc. “Their only option is to liquidate,” he said. “There’s not a whole lot that can be done to revive it.”

Kelly writes the Cornerstone REIT raised only $172.7 million between 2006 and 2009, making it a relatively small player in a marketplace in which the largest players have raised and deployed billions of dollars. Still, other nontraded REITs or real estate funds sold by REIT sponsors recently have seen dramatic declines in value, eating away at investors’ portfolios and making life difficult for the brokers who sold the products.

By the end of December, investors in the Behringer Harvard Short-Term Opportunity Fund I LP, which had about $130 million in total assets, saw its valuation drop to 40 cents a share, down drastically from $6.48 a share Dec. 31, 2010, and the Behringer Harvard Opportunity REIT I Inc. saw its estimated value decline to $4.12 a share at the end of last year, from $7.66 a year earlier.

The Cornerstone Core Properties REIT changed its chief financial officer at the end of last year, replacing Sharon Kaiser with Stephen Robie, according to filings with the Securities and Exchange Commission.

In conclusion of the InvestmentNews.com article, Kelly writes that the REIT has been focused on paying down debt, selling three properties in the fourth quarter of 2011 with $24.8 million in sales value. The proceeds were used to pay down $13.5 million of debt and to build cash reserves, according to an SEC filing.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member have sustained investment losses due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Apr/12

2

KBS REIT I Share Price Down; Dividends to Investors Cut to ZERO

Comments off · Posted by Securities Lawyer in FINRA

In a March 30, 2012, article from InvestmentNews.com, Bruce Kelly writes that another major nontraded real estate investment trust has seen a sharp drop in its value — but is also stopping paying distributions to investors.

The KBS Real Estate Investment Trust Inc., or KBS REIT I, told investors Monday it was cutting the value of the REIT to $5.16 per share, from $7.32, a drop of 29%. The REIT’s offering price was $10 per share. A number of REITs have seen valuations decline this year as the commercial real estate market continues to struggle and debt weighs on REITs’ balance sheets.

“The new pricing of KBS REIT I reflects the current status of the portfolio, and the discontinuation of distributions was made with the goal of managing the REIT’s debt obligations and cash flows, and attempting to maximize the total return to investors over time,” said Keith Hall, executive vice president of KBS REIT I.

Kelly writes that the REIT is substantial, having raised $1.7 billion in equity in its initial offering, according to an investor presentation the company filed with the Securities and Exchange Commission on Monday. It has $3.4 billion in property assets, and holds loans and other debt of $2.3 billion.

KBS announced that distributions to investors will be cut to zero. The REIT “will discontinue paying monthly distributions to shareholders in an effort to maximize the total amount of capital returned to shareholders over time,” according to the filing. Since July 2009, annual distributions had been 53 cents per share, according to the filing.

KBS said cash flow will be used to meet four objectives: paying down debt, strategically reinvesting capital, attempting to improve the overall return of the company and managing the REIT’s reduced cash flow.

The InvestmentNews.com article said that when asked to clarify what the last objective meant, Mr. Hall noted that it was simply one of the stated company objectives. The KBS REIT has been hit by the broad decline in the commercial real estate market since 2008. Occupancy of the REIT’s real estate holdings declined last year to 85%, from 92% in 2010, according to the filing. Added to that, rents are in decline. “REIT I’s existing rents are rolling downward into this moderately improving rental market that still remains well below peak levels,” according to the filing.

Kelly adds that eighty-one percent of the REIT’s portfolio is in office space, with 10% in bank branches and 9% in industrial real estate. KBS REIT I “has not been immune” to the broad real estate market’s difficulties,” Mr. Hall said. “While some markets have recently made slight recoveries, many markets are still challenged with decreasing occupancy and/or new lease rates at substantially lower levels from the 2007-08 peaks.”

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member have sustained investment losses due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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