The attorneys at Eccleston Law have expanded their investigation of Nevada-based Desert Capital REIT and CM Securities following its forced involuntary Chapter 11 bankruptcy this week. For many investors, (some for the first time) the news this week indicates that their investment with Desert Capital REIT may be at a complete loss and are now beginning to review their legal options.
Desert Capital REIT is a non-traded real estate investment trust; that relied on short term mortgage loans secured by real estate to generate income for shareholders. Todd Parriot, CEO of Desert Capital also operated CM Capital and CM Securities. Both firms are broker-dealers that actively marketed the REIT beginning in 2004. “Hard money” lenders like Desert Capital REIT are among the riskiest real estate ventures. The loans that Desert Capital made are secured by raw land, developments, and construction projects that naturally come with a versatile appraised value especially during recent years. At its peak, Desert Capital REIT boasted a return of 13.4%. These high returns may have tempted brokers to market the REIT as a safe income producing investment without disclosing the investments inherent risk. Moreover, some brokers may have abandoned their duty to recommend suitable investments when recommending the purchase of shares in Desert Capital.
Unfortunately, many investors in Desert Capital REIT unexpectedly suffered losses when the real estate market collapsed and Desert Capital REIT began to lose market value. Beginning in 2007 Desert Capital lost $21.8 million, in 2009 $11 million, and in the third quarter of 2010 alone, $26 million. Desert Capital has since been forced into chapter 11 bankruptcy, further devaluing the already deflated shares investors hold in this REIT.
Furthermore, FINRA has recently announced that it was paying close attention on the sale of REITs, more specifically, the way in which the investments were marketed towards potential investors. Many times REITs are wrongly portrayed to be safe income producing investments.
If you are an investor that has suffered losses investing in Desert Capital REIT, your losses may be recoverable through securities arbitration. For a free, no obligation consultation please contact one of our attorneys at 312-332-0000 to discuss your recovery options.
Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.
FinancialCounsel.com, hosted by James J. Eccleston, is a companion website to this blog, along with EcclestonLaw.com. It contains complementary material of general interest to investors and financial services professionals. Investors will find material on securities arbitration to recover investment losses; industry and financial markets intelligence; and strategies for estate planning. Professionals have access to material on broker/adviser registration, regulation, compliance and disciplinary proceedings; industry and financial markets intelligence; strategies for estate planning; and broker/adviser employment litigation and injunctions, including defamation and non-competition/solicitation issues. 
