Tag Archives: Advisor Negligence

MVP REIT Loss Recovery

If you lost money in MVP REIT I, MVP REIT II or Parking REIT, please call 1-866-817-0201 to speak to a lawyer about potential loss recovery.  Most cases are handled on a contingency basis, where the attorney does not receive fees unless there is a recovery.

The Financial Industry Regulatory Authority (FINRA) is investigating whether MVP American Securities violated federal securities laws or the authority’s rules when it raised money from investors from 2012 to 2017.  This was disclosed in a corporate filing filing with the Securitites and Exchange Commission concerning Parking REIT, the subsequent entity of MVP REIT I and II.

Michael Shustek, through MVP American, raised approximately $180 million from sales of MVP I and II.  Though the exact nature of the investigation is still unknown, the most likely violation would be the sale of the investments with an undisclosed conflict of interest.The investigation does not only concern MVP American, but also Shustek.

investingstockphoto 1Other reports critical of Shustek and MVP state the two engaged in behavior that was abusive to investors.  This was done by having the REIT buy and sell the same six properties repeatedly, with little to know economic motivation to do so.  More details concerning this investigation can be found in the Las Vegas Review Journal.

These highly aggressive investment may also be unsuitable for investors seeking only moderate risk or retirement income.  The sale of such an unsuitable investment is a securities violation and may entitle an investor to recovery of losses.

This is not the first time Shustek has been in trouble with securities regulators.  In 1999, Nevada regulators investigated him for potential securities violations in running Del Mar Mortgage.  He has also been previously investigated by the SEC for his dealings with Vestin real estate for utilizing misleading information in sales presentations.

Jeffrey Pederson represents investors around the country in arbitrations in front of FINRA.  Please call for a free initial consultation.

Recovery of Woodbridge Loss

Landmark

Woodbridge investors believed real estate ensured the safety of their investments.

Investors of Woodbridge may have the ability to recover the losses they sustained.  Please call 1-866-817-0201 or 303-300-5022 for a free consultation with a private attorney concerning potential loss recovery.

Regulators have charged the Woodbridge Group of Companies with operating a Ponzi scam.  This creates liability on the part of those advisors selling Woodbridge.

There were glaring issues in these Woodbridge investments for an extended period of time.    These issues should have been discovered during reasonable due diligence by the brokers and agents selling the Woodbridge investments.  These investments should have been recognized as not being suitable for any investor.

The U.S. Securities and Exchange Commission (SEC) had been investigating Woodbridge since 2016.  Woodbridge, the Sherman Oaks, California-based Woodbridge, which calls itself a leading developer of high-end real estate, had been under the microscope of state regulators even longer.   The focus of these regulators was the possible fraudulent sale of securities.

On December 21, 2017,  the SEC charged the Woodbridge Group of Companies with operating a $1.2 billion Ponzi scheme that targeted thousands of investors nationwide.  “The only way Woodbridge was able to pay investors their dividends and interest payments was through the constant infusion of new investor money,” per Steven Peikin of the SEC.

Prior to the charge, in January 2017, the SEC served a subpoena on Woodbridge for relevant electronic communications.  Woodbridge failed to respond to this subpoena.  This left the SEC to seek court intervention to compel Woodbridge to produce potentially damaging documentation the SEC believes existed.  The SEC filed its allegation that Woodbridge is a Ponzi scheme within weeks of its access to Woodbridge’s documents.

Through court filings, the SEC states that Woodbridge “has raised more than $1 billion from several thousand investors nationwide” and it “may have been or may be, among other things, making false statements of material fact or failing to disclose material facts to investors and others, concerning, among other things, the use of investor funds, the safety of the investments, the profitability of the investments, the sales fees or other costs associated with the purchase of the investments.”

Shortly after the issuance of the order sought by the SEC Woodbridge declared bankruptcy.  This filing does not extinguish the rights of investors.  These investors have claims against the brokers and advisors selling the investments.

Woodbridge has additionally stated that it has also received inquiries from about 25 state securities regulators concerning the alleged offer and sale of unregistered securities by unregistered agents.

The Woodbridge Group of Companies missed payments on notes sold to investors the week of November 26, 2017, and December 5, 2017 filed chapter 11 bankruptcy.  The company blamed rising legal and compliance costs for its problems.

Woodbridge said it had settled three of the state inquiries and was in advanced talks with authorities in Arizona, Colorado, Idaho and Michigan when it filed for Chapter 11 protection.

The company’s CEO, Robert Shapiro, resigned on December 2  but will continue to be paid a monthly fee of $175,000 for work as a consultant to the firm.

On August 14, 2018, Jerry Raines of HD Vest Investments entered into a regulatory settlement whereby he agreed to a bar from the securities industry to resolve the investigation into his sale of Woodbridge notes.  Raines operated from Kilgore, Texas.  Likewise, Donna Lynn Barnard, agreed to a similar sanction.

David Ferwerda likewise entered into a regulatory settlement concerning his sale of Woodbridge.  Ferwerda did not contest the charge and FINRA simply stripped him of his license.  This, however, does not exonerate either Ferwerda or his former employer, Signator Investors, of civil liability for losses.

Frank Roland Dietrich entered into a regulatory settlement with FINRA concerning sales in excess of $10 million of Woodbridge.  Dietrich was previously a broker with Quest Capital and Wunderlich Securities.  The FINRA settlement included Dietrich agreeing to a lifetime ban from the securities industry.

Those at Woodbridge are not the only ones responsible for investor losses.  The Colorado Division of Securities is considering sanctions against investment advisor Ronald Caskey of Firestone, Colorado.  Caskey is the host of the Ron Caskey Radio Show.  James Campbell of Campbell Financial Group in Woodland Park, Colorado and Timothy McGuire of Highlands Ranch, Colorado are also the subject of regulatory investigations by the state regulator.  The Colorado Division of Securities has also begun investigating Jerry Kagarise of Security 1st Financial of Colorado Springs.  Another seller of Woodbridge in the Springs area is Carrier Financial.

These and other Colorado investment advisors have raised approximately $57 million from 450 Colorado investors.  Woodbridge continued to solicit investors through these advisors, in addition to radio and online ads, through October 2017, just prior to the bankruptcy filing.

While the regulatory actions will do little to compensate the damaged investors, these actions support private civil actions for recovery by investors.  We are investigating and in the process of bringing suit against Colorado investment advisors selling Woodbridge investments, and would like to share what we have learned with other investors in Colorado and nationwide.

Rueters is the source of some of the information contained herein.