Soreide Law Group has filed a FINRA arbitration on behalf of their client (Claimant) against:
EMERSON EQUITY LLC, and their registered representative, JOSHUA DAVID CHAPIN (JOSHUA D CHAPIN) (Respondents).
The Claimant is retired and living in Florida. On or about November of 2021, the Claimant sold an apartment building and was interested in spending less time managing property while deferring his tax on the exit. The lawsuit states that the Claimant was referred by a friend to EMERSON EQUITY broker, JOSHUA D CHAPIN. CHAPIN has been registered both as a broker and as an investment advisor with EMERSON EQUITY LLC of Irvine, California, since November of 2015.
A Delaware Statutory Trust (DST) can purchase fractional ownership in properties that are 1031 qualified without having to own the whole property. The lawsuit alleges that JOSHUA D CHAPIN made this process seemingly easy and claimed it to be safter than owning and controlling a whole property. However, allegedly the Claimant was not made aware of the acquisition cost, asset management, disposition fees, broker commission which can bring the total cost can be between 15-18% of the property value. Also, given the fractional ownership the Claimant maintained, liquidity was a huge challenge to exit the investment as no secondary market exists.
The lawsuit alleges that on or about March of 2022, JOSHUA D CHAPIN recommended the Claimant invest 100% of the money into four DSTs--$500,000 was invested into Inspired Healthcare Capital of Naperville DST (now in bankruptcy), $349,280 into Versity Vintage (suspended all distributions), $500,000 into Capital Square (suspended distributions) and $500,000 into Keystone Triple Net which is the only currently performing DST. Less than three years later, three out of four of the DST investments ceased to pay any distributions and are totally illiquid.
The lawsuit claims that the Claimant was looking for low risk tax-advantaged investment strategy to generate income to sustain him through retirement and was planning on living off the income of the DSTs in retirement. Now it is possible the Claimant may not be able to fully support himself. There is no market for fractional interest in DSTs and the Claimant has no control over what happens to any of the three failed properties.
The lawsuit alleges EMERSON EQUITY and their representative, JOSHUA D CHAPIN’s actions have caused damage to the Claimant of $1,000,000, alleging negligence, breach of fiduciary duty, and negligent supervision. No answer has been filed by the Respondents, and it’s anticipated the responders will deny all wrongdoing.
According to FINRA’s BrokerCheck, available to the public on FINRA’s website, JOSHUA D CHAPIN has been in the securities industry for 15 years and has been listed with 5 firms. CHAPIN has 4 disclosures on his FINRA CRD report. All four disclosures are pending “CUSTOMER DISPUTES.”
To discuss this article or any other securities issues, contact Soreide Law Group and speak to an experienced securities lawyer at no cost: 888-760-6552.
Soreide Law Group represents our clients nationwide before FINRA on a contingency fee basis.
