Financial Counsel by Eccleston Law

FINRA Finds Merrill Lynch Liable for Libel and Wrongful Termination

In January 2011, Nicole Cannava filed a Statement of Claim with the Financial Industry Regulatory Authority (FINRA) seeking $68,117 in compensatory damages plus interest, attorneys' fees, costs, and expungement of her Central Registration Depository (CRD) as a result of alleged libel on her Form U5 and for wrongful termination. In the Matter of the FINRA Arbitration Between Nicole Alise Cannava, Claimant, v. Merrill Lynch Pierce Fenner & Smith Inc., Respondent. Merrill Lynch denied the allegations and asserted affirmative defenses.

In April 2012, the FINRA Arbitrator hearing the dispute found Merrill Lynch liable and ordered it to pay Cannava $68,117. In addition, the Arbitrator found defamation and recommended the expungement of the answers to Question 14J(1) on Cannava's Form U4 and Questions 7F(1) on her Form U5.

In the section "Termination Disclosure" in Form U4, Question 14J states: "Have you ever voluntarily resigned, been discharged or permitted to resign after allegations were made that accused you of: [V]iolating investment-related statutes, regulations, rules, or industry standards of conduct? [F]raud or the wrongful taking of property? [F]ailure to supervise in connection with investment-related statutes, regulations, rules or industry standards of conduct?"

In the section "Termination Disclosure" in Form U5, Question 7F it states: "Did the individual voluntarily resign from your firm, or was the individual discharged or permitted to resign from your firm, after allegations were made that accused the individual of: [V]iolating investment-related statutes, regulations, rules or industry standards of conduct? [F]raud or the wrongful taking of property? [F]ailure to supervise in connection with investment-related statutes, regulations, rules or industry standards of conduct?"

Specifically, the Arbitrator recommended that the answers to the above questions be changed from "Yes" to "No," and also the Disclosure Reporting Pages that accompany the questions be enitrely expunged. Lastly, the Arbitrator recommended that the "Reason for Termination of Discharge" in the Form U5 be replaced with "Voluntary."

FINRA Amends Enforcement Action Against David Lerner Associates Naming David Lerner Personally

FINRA has amended their enforcement action against David Lerner Associates to add David Lerner personally for allegedly misleading investors about the risks involved in investing in the Apple REITs (for which David Lerner Associates is the sole distributor) and also about the valuations of the REITs.  This is the second enforcement action filed by FINRA against the firm in the past year.

According to the recent complaint, FINRA is taking issue with David Lerner's response to FINRA's first enforcement action, which resulted in the firm sending out more than 50,000 letters to investors to counter the negative press the firm received in the wake of the first enforcement action. The letter also allegedly contains statements made to investors about a possible consolidation of the Apple REITs for listing on a national exchange to dispose of the illiquid shares that they held.  FINRA is arguing that the statements about a possible consolidation and listing of the non-traded REITs were made in order to induce new and existing customers to purchase shares in the Apple REITs.

To many investors, this development may come as a surprise. Many investors were not fully informed of the risks involved in purchasing an Apple REIT and believed that this investment was suitable for their investment objectives, age, and risk tolerance.

If you have invested in any of the Apple REITs upon the recommendation of David Lerner Associates, please contact one of our attorneys at 312-332-0000.  Our attorneys are representing investors who have suffered losses investing in the Apple REITs along with those who are seeking to rescind (get out of) their investment in these products.

FINRA Files Second Enforcement Action Against David Lerner Associates

FINRA has recently filed a second enforcement action against David Lerner Asosicates for allegedly misleading investors about the risks involved in investing in the Apple REITs (for which David Lerner Associates is the sole distributor) and also about the valuations of the REITs.  This is the second enforcement action filed by FINRA against the firm in the past year.

According to the recent complaint, FINRA is taking issue with David Lerner Associates' response to FINRA's first enforcement action, which resulted in the firm sending out more than 50,000 letters to investors to courter the negative press the firm received in the wake of the first enforcement action. The letter also allegedly contains statements made to investors about a possible consolidation of the Apple REITs for listing on a national exchange to dispose of the illiquid shares that they held.  FINRA is arguing that the statements about a possible consolidation and listing of the non-traded REITs were made in order to induce new and existing customers to purchase shares in the Apple REITs.

To many investors, this development may come as a surprise. Many investors were not fully informed of the risks involved in purchasing an Apple REIT and believed that this investment was suitable for their investment objectives, age, and risk tolerance. 

If you have invested in any of the Apple REITs upon the recommendation of David Lerner Associates, please contact one of our attorneys at 312-332-0000.  Our attorneys are representing investors who have suffered losses investing in the Apple REITs along with those who are seeking to rescind (get out of) their investment in these products.

 

Robert Van Zandt and Van Zandt Ponzi Scheme Loss Recovery - FINRA Arbitration for Investors

Investors who have suffered losses investing with Robert Van Zandt, Kimmarie Van Zandt, and Van Zandt Agency may be able to recover their losses through FINRA arbitration. 

According to the New York Attorney General, Robert Van Zandt was allegedly running a Ponzi scheme through the Van Zandt Agency that defrauded more than 100 investors. Through the Van Zandt Agency, Robert H. Van Zandt is believed to have sold unregistered promissory notes that appeared to be a secured real estate investment.  Van Zandt allegedly lured investors into the Ponzi scheme by guaranteeing returns of up to 12% on these promissory notes.  Through a series of shell corporations such as Burke and Grace Avenue Corporation, Van Zandt allegedly operating this Ponzi scheme targeting residents of Bronx, New York.  Robert H. Van Sandt is believed to have targeted the investors who had their tax returns prepared at the Van Sandt Agency.

On September 6, 2011, while under investigation by the New York Attorney General’s office since April, along with his father Robert Henry Van Zandt and wife Kimmarie Gervasi Van Zandt, Robert Van Sandt was found dead in his home as a result of a gunshot wound to the head.

The New York Attorney General believes that the Ponzi scheme began when the real estate market collapsed around 2008, which left Robert Van Zandt unable to pay investors the returns they had promised.  As a result, Robert Van Zandt decided to raise money from investors, using the funds of the new investors to repay the old investors.  However, during the course of running the Ponzi scheme the Attorney General believes that the Robert Van Zandt may have misappropriated investors funds to pay personal expenses and gambling debts, including trips to Las Vegas.

Investors are believed to have lost most, if not all of their money in the Van Zandt Ponzi scheme.  However, such investors may be able to recover their losses through securities arbitration. 

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.

If you are an investor that has suffered losses investing with Robert Van Zandt, Kimmarie Gervasi Van Zandt, or with the Van Zandt agency, please contact one of our attorneys at 312-332-0000 for a FREE, NO OBLIGATION to discuss your recovery options.

UPDATE: SEC Files Civil Injunctive Action Against Arthur Lin, Marcin Malarz, and Jacek Sienkiewicz for Selling Unregisered Securities; Eccleston Law Continues Investigation of $6.3 Million Scheme in Illinois

Following the filing of an SEC civil action for injunctive relief, Eccleston Law is continuing its investigation of Marcin Malarz, Arthur Lin, and Jacek Sienkiewicz and their companies Malarz Equity Investments, LLC and Malarz Equity Investment, Inc. and Invision Investment, LLC in connection with an alleged $6.3 million Ponzi scheme that was conducted starting in 2008.

Investors who have suffered losses are encouraged to contact our attorneys to discuss their recovery options.

Malarz and Lin (who was at the time a registered representative at LPL Financial Corporation), allegedly solicited investors to invest in Malarz Equity Investments, LLC and Malarz Equity Investment, Inc., which were purportedly in the business of converting apartments to condominiums, and then selling condominium units to purchasers.   Malarz and Lin represented to investors that the proceeds of the offering were to fund their business.

Malarz and Lin sold promissory notes to investors promised to pay returns of between 12-15%.  Malarz personally guaranteed the principal and interest payments to investors.  Malarz and Lin also represented to investors that the offering was also to be capped at $3,000,000, that there was no pending litigation against the company, and that Malarz was to receive no compensation for his services. 

Contrary to these representations, Malarz and Lin failed to disclose that Malarz was in fact named as a defendant in multiple civil cases at the time the notes were sold.  Malarz and Lin also exceeded the $3,000,000, selling collectively $6.3 million in notes to investors. 

And to do the detriment on the investors, Malarz converted some the money raised in the offering for his own personal use.  For example, Malarz used funds to pay for a trip to Poland, a Las Vegas excursion where he spent $3,221.84 at Caesar’s Palace and $1,332.67 for an evening out at “Pure” nightclub.  Malarz also spent over $2,700 per month to pay for his personal BMW and made payments to Aurthur’s wife in excess of $381,000.

Malarz and Lin did not disclose that the funds would be used to pay back previous investors promissory notes.  At least one investor never received any principal or interest payments, even though Malarz personally guaranteed that payments would be made.  

As for Malarz and Sienkiewicz, the pair allegedly solicited investors to invest in Invision, LLC, which was also which were purportedly in the business of converting apartments to condominiums, and then selling condominium units to purchasers. 

The promissory notes sold by Malarz and Sienkiewicz promised to pay returns of 50% on principal, with Malarz and Sienkiewicz personally guaranteeing the principal and interest payments to investors.  Malarz and Sienkiewicz also represented to investors that there was no pending litigation against the company.

These representations were false.   Malarz and Sienkiewicz failed to disclose to investors that Malarz was named as a defendant in multiple civil cases at the time the notes were sold. 

Malarz and Sienkiewicz did not disclose that the funds would be used to pay back previous investors promissory notes.  At least one investor never received any principal or interest payments, even though Malarz and Sienkiewicz personally guaranteed that payments would be made.  

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.

If you are an investor that has suffered substantial losses investing in with any of the , your losses may be recoverable through securities arbitration.  Please contact Jim Eccleston at the Eccleston Law Offices at 312-332-0000 to discuss your recovery options.  

Eccleston Law Investigates Robert Van Zandt and the Van Zandt Agency Following Ponzi Scheme Allegations

The attorneys at Eccleston Law have launched an investigation of Robert Van Zandt, Kimmarie Van Zandt, and Van Zandt Agency following recent allegations that the Robert H. Van Zandt, through the Blondell Avenue-based Van Zandt Agency, was running a Ponzi scheme that defrauded more than 100 investors.

Through the Van Zandt Agency, Robert H. Van Zandt is believed to have sold unregistered promissory notes that appeared to be a secured real estate investment.  Van Zandt allegedly lured investors into the Ponzi scheme by guaranteeing returns of up to 12% on these promissory notes.  Through a series of shell corporations such as Burke and Grace Avenue Corporation, Van Zandt allegedly operating this Ponzi scheme targeting residents of Bronx, New York.  Robert H. Van Sandt is believed to have targeted the investors who had their tax returns prepared at the Van Sandt Agency.

Investors are believed to have lost most, if not all of their money in the Van Zandt Ponzi scheme.  However, such investors may be able to recover their losses through securities arbitration. 

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.

If you are an investor that has suffered losses investing with Robert Van Zandt, Kimmarie Gervasi Van Zandt, or with the Van Zandt agency, please contact one of our attorneys at 312-332-0000 for a FREE, NO OBLIGATION to discuss your recovery options.

Robert Van Zandt and Van Zandt Agency Investor Recovery Options

The attorneys at Eccleston Law have launched an investigation of Robert Van Zandt, Kimmarie Van Zandt, and Van Zandt Agency following recent allegations that the Robert H. Van Zandt, through the Blondell Avenue-based Van Zandt Agency, was running a Ponzi scheme that defrauded more than 100 investors.

Through the Van Zandt Agency, Robert H. Van Zandt is believed to have sold unregistered promissory notes that appeared to be a secured real estate investment.  Van Zandt allegedly lured investors into the Ponzi scheme by guaranteeing returns of up to 12% on these promissory notes.  Through a series of shell corporations such as Burke and Grace Avenue Corporation, Van Zandt allegedly operating this Ponzi scheme targeting residents of Bronx, New York.  Robert H. Van Sandt is believed to have targeted the investors who had their tax returns prepared at the Van Sandt Agency.

On September 6, 2011, while under investigation by the New York Attorney General’s office since April, along with his father Robert Henry Van Zandt and wife Kimmarie Gervasi Van Zandt, Robert Van Sandt was found dead in his home as a result of a gunshot wound to the head.

The New York Attorney General believes that the Ponzi scheme began when the real estate market collapsed around 2008, which left Robert Van Zandt unable to pay investors the returns they had promised.  As a result, Robert Van Zandt decided to raise money from investors, using the funds of the new investors to repay the old investors.  However, during the course of running the Ponzi scheme the Attorney General believes that the Robert Van Zandt may have misappropriated investors funds to pay personal expenses and gambling debts, including trips to Las Vegas.

Investors are believed to have lost most, if not all of their money in the Van Zandt Ponzi scheme.  However, such investors may be able to recover their losses through securities arbitration. 

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.

If you are an investor that has suffered losses investing with Robert Van Zandt, Kimmarie Gervasi Van Zandt, or with the Van Zandt agency, please contact one of our attorneys at 312-332-0000 for a FREE, NO OBLIGATION to discuss your recovery options.

Praetorian Global Fund Loss Recovery Attorneys

The attorneys at Eccleston Law are actively seeking to represent investors who have suffered losses in the pre-IPO fraud allegedly involving the Praetorian Global Fund and Florida resident John A. Mattera. 

The SEC recently filed a lawsuit alleging that various individuals and entities carried out the scam using a newly-minted hedge fund named The Praetorian Global Fund. They are believed to have falsely claimed that the fund and affiliated Praetorian entities owned shares worth tens of millions of dollars in privately-held companies that were expected to soon hold an initial public offering (IPO) including Facebook, Groupon, and others.Taking advantage of investor interest in pre-IPO shares that are virtually impossible for company outsiders to obtain, John A. Mattera and others allegedly solicited funds and gave investors a false sense of comfort that their money was protected by telling them that an escrow service was receiving their funds.

In reality, according to the SEC’s complaint, John A. Mattera and his cohorts never owned the promised pre-IPO shares in these companies. The SEC sought an emergency court order to freeze the assets of John A. Mattera, John R. Arnold, Joseph Almazon of Hicksville, N.Y., David E. Howard II of New York City, Bradford Van Siclen of Montclair, N.J., and eight different entities. The SEC’s complaints charge Mattera, Van Siclen, the Praetorian Fund, Praetorian G Power I LLC, Praetorian G Power II LLC, Praetorian G IV, Praetorian G Power V LLC, and Praetorian G Power VI LLC, Arnold, Spartan Capital Partners and First American Service Transmittals Inc. with various violations of Federal securities laws.

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.

If you are an investor that has suffered losses investing with John A. Mattera, The Praetorian Global Fund, John R. Arnold, Joseph Almazon, David E. Howard II,  Bradford Van Siclen, the Praetorian Fund, Praetorian G Power I LLC, Praetorian G Power II LLC, Praetorian G IV, Praetorian G Power V LLC, and Praetorian G Power VI LLC, Spartan Capital Partners or First American Service Transmittals, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

Solomon Keegan Group/WTS Proprietary Trading Group Loss Recovery Attorneys

The attorneys at Eccleston law have launched an investigation of the Los Angeles-based Solomon Keegan Group and WTS Proprietary Trading Group following reports of investor trading losses.

According to its website, the Solomon Keegan Group "operates a premier equity trading firm consulting clients on profitable methods to trade their personal investment capital. The firm offers opportunities for select clients to trade capital in addition to their own capital to generate greater returns.  Our proven system and methodology was developed over more than10 years by licensed  professional traders."

 

The WTS Proprietary Trading Group's website states that "traders trade the firm's capital on several stock markets. We train new recruits our proprietary intraday trading methodology, with no financial risk. Our leading edge, direct access electronic trading platform provides traders with live market data, volume price discounts, rapid order execution, and software stability, giving our traders the necessary advantages to succeed."

 

Upon information and belief, both traders and investors may have suffered losses investing and/or trading with either the Solomon Keegan Group and/or the WTS Proprietary Trading Group.  If you are a trader or investor who has suffered such losses, your losses may be recoverable through securities arbitration or litigation.

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.

If you are an investor that has suffered losses investing with Solomon Keegan Group or WTS Proprietary Trading Group, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

 

Eccleston Law Investigates Eric T. Burns Following Emergency Suspension by Kansas Securities Commissioner

The attorneys at Eccleston Law have launched an investigation of former Morgan Stanley Smith Barney and Dimensions Financial Group representative Eric T. Burns following his failure to provide information about allegations of misappropriation of client funds by Eric Burns while he was employed with Dimensions Financial and/or Morgan Stanley Smith Barney. 

The Kansas Securities Commissioner issued an emergency order of summary license suspension of Eric Burns for willfully and without cause failing to comply with a request for information issued by the Kansas Securities commission. 

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.

If you are an investor that has suffered losses investing with Eric T. Burns while he was employed with Dimensions Financial Group or Morgan Stanley Smith Barney, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

FACAAP Recovery Options for Former Merrill Lynch Brokers

Eccleston Law is pleased to announce that its attorneys are continuing investigation to offer representation to former Merrill Lynch (Bank of America) financial advisors with unpaid Financial Advisor Capital Accumulation ("FACAAP"), Wealthbuilder, Growth Award, and Long Term Incentive Compensation ("LTICP") deferred compensation.

Prior to 2009, the FACAAP provided for awards to eligible employees in Merrill Lynch’s Global Wealth Management division generally based upon their prior year’s performance. Payment for an award was contingent upon continued employment for a period of time and subject to forfeiture during that period. Awards granted in 2003 and thereafter are generally payable eight years from the date of grant in a fixed number of shares of Bank of America common stock. For outstanding awards granted prior to 2003, payment is generally made ten years from the date of grant in a fixed number of shares of Bank of America common stock unless the fair market value of such shares is less than a specified minimum value, in which case the minimum value is paid in cash. FACAAP is no longer an active plan and no awards were granted in 2009. At December 31, 2009, there were 26 million shares awarded under FACAAP outstanding, of which 6 million shares were granted prior to 2003. The weighted-average fair value of awards granted under FACAAP during 2008 and 2007 was $45.04 and $83.30 per award, respectively.

When Bank of America acquired Merrill Lynch in September 2008, it negotiated certain deal terms affecting deferred compensation for the financial advisors.  Namely, as part of the acquisition documents, a "change in control" clause was triggered that affected the way certain deferred compensation plans vested.  The affected plans include the FACAAP, Wealthbuilder, Growth Award, and Long Term Incentive Compensation ("LTICP") plans.  As structured, if a broker with the firm leaves for "good reason" as defined by the plan documents, Merrill Lynch is required to pay must immediately vest and pay the departing awards.

If you are a broker who left Merrill Lynch after August of 2008 to join another brokerage, you may be able to recover your unpaid FACAAP, Growth Award, Wealthbuilder, or Long Term Incentive Compensation ("LTICP") deferred compensation.

Eccleston Law represents financial advisers nationwide in regulatory, compliance, disciplinary and employment matters in arbitration, litigation, and before regulatory bodies such as the SEC, FINRA and state securities regulators.  If you are a former Merrill Lynch broker with an unpaid FACAAP, Growth Award, Wealthbuilder, or Long Term Incentive Compensation ("LTICP") deferred compensation, contact one of our attorneys at 312-332-0000 to discuss your case.

MF Global Investor Loss Recovery Options

The attorneys at Eccleston Law have expanded their investigation of MF Global following allegations that there may be as much as $700 million in customer funds missing from MF Global accounts.  This revelation was uncovered after a deal with Interactive Brokers collapsed.  Interactive Brokers later disclosed to the SEC and the CFTC that the funds were missing.  Investors or traders may be able to recover their losses through securities arbitration or litigation.

Leading up to MF Global's collapse and Chapter 11 bankruptcy filing, MF Global was searching for an acquiring firm following multiple downgrades by various credit rating agencies.  These downgrades caused the share price to plummet more than 80%, which caused the NYSE to suspend trading and move to delist the company.  MF Global Holdings, Ltd. and its finance subsidiary, MF Global FInance USA, Inc., also filed for Chapter 11 Bankruptcy. The FBI is also expected to investigate whether MF Global's activities were violated criminal laws.

According to its website, "MF Global is a leading broker-dealer with a deep involvement in financial markets around the world. We work closely with clients to create customized trading and hedging solutions in the world’s markets for commodities, listed futures and options, equities, fixed income securities and foreign exchange.MF Global is a member of more than 70 financial exchanges around the world, and we are a leader by trading volume on a number of these exchanges."

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.

If you are an investor that has suffered losses investing with MF Global, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

Eccleston Law Investigates Charles Copeland and Copeland Wealth Management Following SEC Fraud Charges

The Securities and Exchange Commission recently filed a complaint in United States District Court in Riverside, California against Copeland Wealth Management, Copeland Realty,  and Charles P. Copeland for fraud and breach of fiduciary duty. The SEC alleged that as an investment adviser registered with the SEC, Copeland Wealth Management managed approximately $125 million in assets under management. The assets under management are primarily mutual funds and real estate funds. Copeland Realty, an unregistered investment adviser, allegedly acted as the general partner for 21 limited partnerships primarily invested in real estate. Charles Copeland, who is a certified public accountant, is the founder, co-owner and officer of both Copeland Wealth Management and Copeland Realty.

The SEC alleged that from 2003 through May 31, 2011, Charles Copeland, Copeland Wealth Management, and Copeland Realty raised over $62 million from over 100 investors, including many of Charles Copeland’s accounting clients, by selling interests in limited partnerships operated by Copeland Wealth Management and Copeland Realty. According to the SEC’s complaint, throughout the offer and sale of the limited partnerships, Charles Copeland, Copeland Wealth Management, and Copeland Realty made material misrepresentations and omissions regarding: (1) the use of investor funds, (2) conflicts of interest, (3) guaranteed returns, (4) the unauthorized trading of put options, and (5) the payment of undisclosed real estate commissions and other related compensation.

As of May 31, 2011, Copeland Wealth Management had approximately $144 million in assets under management comprised of $123 million invested primarily in mutual funds and $21 million invested primarily in real estate and real estate related loans through partnerships managed by Copeland Realty. Copeland Wealth Management is believed to have approximately 770 advisory accounts. Copeland Realty is believed to have acted as the general partner for 21 partnerships with 191 limited partners that have invested in real estate and real estate related loans. 

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.

If you are an investor that has suffered losses investing with Copeland Wealth Management, Copeland Copeland Realty, and/or Charles Copeland, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

Eccleston Law Actively Seeks Investors Suffering Losses with Steven Dolott of Delott & Associates

The attorneys at Eccleston Law are actively seeking investors who suffered losses investing with Long Grove, Illinois financial advisor Steven Delott of Delott & Associates, Inc.  According to the Illinois Securities Department, Steven Howard Delott was a registered representative of NFP Securities, which he disclosed Delott & Associates as an outside business activity.

According to the Illinois Securities Department, FINRA was investigated Steven Delott's Workshops and Annuity Training Classes that he conducted while a representative with NFP Securities, which resulted in a FINRA enforcement action against Delott for allegedly violating FINRA rules.  On February 17, 2010, Steve Delott entered into an AWC with FINRA which details the numerous alleged violations of NASD rules. 

Specifically, the AWC describes Delott as conducting seminars directed at senior citizens that focused almost exclusively on inducing seniors to purchase high commission equity indexed annuities ("EIAs"), as well as sales of single premium life insurance policies.  Delott also allegedly promoted reverse mortgage strategies to obtain more money from seniors to place in the annuities.  Steven Delott is also believed to have conducted annuity training classes to instruct attendees in the use of high-pressure and allegedly improepr sales techniques.  The marketing materials used during these seminars was not approved by NFP securites. 

Steven Delott was subsequently prohibited from associating with any FINRA member firm and assessed a deferred fine of $35,000.  On August 10, 2011, Steven Delott was also prohibited from offering or selling any securities in the State of Illinois.

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.

If you are an investor that has suffered losses investing with Steven Delott or Delott & Associates , please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

 

UPDATE: Eccleston Law Continues Investigation of Brett S. Kleese and BSK Enterprises, LLC following SEC Administrative Proceedings

The attorneys at Eccleston Law are continuing their investigation of Mesa, Arizona resident Brett S. Kleese, BSK Enterprises, LLC, and Rosand Enterprises, Inc. following SEC administrative proceedings and a 2009 Arizona Corporation Commission cease and desist order.

From about October 2007 through May 2008, Brett Kleese allegedly offered and sold at least 57 investors approximately $3 million of unregistered promissory notes issued by BSK.  Based on investor reports, perhaps up to $12 million in promissory notes were sold to investors. 

The promissory notes contained promises by BSK to repay the investors principal plus interest.  Kleese told investors that BSK would lend their funds to Rosand Enterprises, which Rosand would use as collateral to pay for the construction of low-cost, prefabricated housing in Chicago.  Kleese also told investors that their funds would be deposited into an Illinois law firm’s trust account, and that none of the money would be withdrawal because it was to be used by Rosand as collateral for the line of credit and that the account was covered by a bond.

Contrary to these representations, the funds sent to Rosand were withdrawn from the trust account which was not covered by a bond.  Kleese admitted that he did not adequately disclose these facts to investors.

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.

If you are an investor that has suffered losses investing with Brett S. Kleese, BSK Enterprises or Rosand Enterprises, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

UPDATE: Eccleston Law Continues Investigation of Select Asset Management, Brian A. Bjork, and Affiliated Parties Following SEC Fraud Charges and Receiver Appointment

Following the appointment of Steven A. Harr as Receiver in the $52 million Houston, Texas-based fraud, the attorneys at Eccleston Law have expanded their investigation of Houston-based investment adviser Select Asset Management LLC, its principal Brian A. Bjork, Select Asset Fund I, LLC, Select Asset Prime Index Fund, LLC, and others following SEC offering fraud charges. Investors are encouraged to contact our attorneys to discuss their recovery options.

On August 1, 2011, the SEC announced that it obtained a temporary restraining order, asset freeze, appointment of a receiver and other emergency relief against Houston investment adviser Select Asset Management LLC (“Select Asset”), its principal Brian A. Bjork, Select Asset Fund I, LLC, Select Asset Prime Index Fund, LLC, the J. David Group of Companies, Inc. ("J. David Group"), J. David Financial Group LP ("J. David Financial"); Select Capital Management, LLC and the Estate of Joel David Salinas ("Salinas Estate") on charges of offering fraud.

Specifically, the complaint alleges that from 2004 through the present, Brian Bjork offered securities in two fraudulent securities schemes, raising a total of $52 million. The SEC also alleges that in the first scheme, Brian Bjork, alongside business associate Joel David Salinas, offered investors corporate and other bonds through J. David Group of Companies, and J. David Financial Group, and raised approximately $39 million from more than 100 investors. According to the SEC complaint, Bjork and Salinas promised investors safe, fixed income from highly-rated corporate and other bonds, but in reality they never acquired the bonds as promised.

The SEC complaint alleges that in the second scheme, Brian Bjork—through Select Asset and its subsidiary defendant Select Capital Management —offered securities issued by two private funds and raised approximately $13 million from at least 52 investors since August 2007. According to the SEC complaint, the two funds, which were controlled by Brian Bjork, Select Asset and Select Capital, commingled investor money, failed to provide promised financial statements, and transferred money to fund-affiliated entities in related-party transactions undisclosed to investors.

The SEC complaint further alleges that in making the affiliated loans, certain defendants failed to conduct required due diligence and loan-approval procedures that had been promised to investors in the private placement offering memoranda.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by 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.

If you have suffered losses investing with Select Asset Management, Brian A. Bjork, Select Asset Fund I, Select Asset Prime Index Fund, the J. David Group of Companies, J. David Financial Group, or Select Capital Management, you may be entitled to seek recovery through securities arbitration.

Please contact one of the attorneys at the Eccleston Law Offices at (312) 332-0000 for a free, no obligation consultation to discuss your recovery options.

Eccleston Law Actively Seeking Current or Former David Lerner Associates or Apple REIT Employees

The attorneys at law are interested in speaking with current or former employees of David Lerner Associates or any of the Apple REITs, holding companies or related entities, who purchased shares in a retirement plan such as a 401(k) plan. Please contact one of our attorneys at 312-332-0000 for important information about the implications of having Apple REIT shares in your retirement plan.

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.

Florida Principal Barredby FINRA for Multiple Sales Practice Violations

Manuel Jose Leon Jr., a Registered Principal with Investors Capital Corp. has been found to have committed several violations by FINRA relating to the recommendation and sale of private securities through a company he formed to look like an independent branch of a broker-dealer. FINRA found that Leon did not properly notify his member firm that he was engaged in the sale of a private placement. He also did not have reasonable grounds to believe that the recommended private investment in the company was suitable and even recommended the investment to a retired couple of limited means. Leon recommended and allowed the couple to invest most of their investable assets, which amounted to $167,000.00 solely in the private placement investment resulting in over concentration in their portfolio. Prior to the dissolution of the investment, the company made interest and principal payments totaling some $26,000.00 to the couple, leaving them with a $141,000.00 loss. As a result of Leon failing to respond completely to FINRA requests for information and documents he has been barred from the industry.

If you have suffered losses investing any Manuel Jose Leon Jr. or Investors Capital Corporation, please contact Eccleston Law Offices to discuss your recovery options at (312) 332-0000.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by 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.

Eccleston Law Launches Investigation of Select Asset Management, Brian A. Bjork, and Affiliated Parties Following SEC Fraud Charges

The attorneys at Eccleston Law have launched an investigation of Houston-based investment adviser Select Asset Management LLC, its principal Brian A. Bjork, Select Asset Fund I, LLC, Select Asset Prime Index Fund, LLC, and others following SEC offering fraud charges.  Investors are encouraged to contact our attorneys to discuss their recovery options.

On August 1, 2011, the SEC announced that it obtained a temporary restraining order, asset freeze, appointment of a receiver and other emergency relief against Houston investment adviser Select Asset Management LLC (“Select Asset”), its principal Brian A. Bjork, Select Asset Fund I, LLC, Select Asset Prime Index Fund, LLC, the J. David Group of Companies, Inc. ("J. David Group"), J. David Financial Group LP ("J. David Financial"); Select Capital Management, LLC and the Estate of Joel David Salinas ("Salinas Estate") on charges of offering fraud.

Specifically, the complaint alleges that from 2004 through the present, Brian Bjork offered securities in two fraudulent securities schemes, raising a total of $52 million. The SEC also alleges that in the first scheme, Brian Bjork, alongside business associate Joel David Salinas, offered investors corporate and other bonds through J. David Group of Companies, and J. David Financial Group, and raised approximately $39 million from more than 100 investors. According to the SEC complaint, Bjork and Salinas promised investors safe, fixed income from highly-rated corporate and other bonds, but in reality they never acquired the bonds as promised.

The SEC complaint alleges that in the second scheme, Brian Bjork—through Select Asset and its subsidiary defendant Select Capital Management —offered securities issued by two private funds and raised approximately $13 million from at least 52 investors since August 2007. According to the SEC complaint, the two funds, which were controlled by Brian Bjork, Select Asset and Select Capital, commingled investor money, failed to provide promised financial statements, and transferred money to fund-affiliated entities in related-party transactions undisclosed to investors.

The SEC complaint further alleges that in making the affiliated loans, certaindefendants failed to conduct required due diligence and loan-approval procedures that had been promised to investors in the private placement offering memoranda.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by 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.

If you have suffered losses investing with Select Asset Management, Brian A. Bjork, Select Asset Fund I, Select Asset Prime Index Fund, the J. David Group of Companies, J. David Financial Group, or Select Capital Management, you may be entitled to seek recovery through securities arbitration.

Please contact one of the attorneys at the Eccleston Law Offices at (312) 332-0000 for a free, no obligation consultation to discuss your recovery options.

SEC Sues Sam Otto Folin and Benchmark Asset Managers Over $8.7 Million in Misappropriated Client Funds

On July 12, 2011 the SEC charged Sam Otto Folin, Benchmark Asset Managers and its parent company, Harvest Managers with misappropriating approximately $8.7 million from advisory clients, friends and family through material misrepresentations and omissions.

From 2002 through 2010, Folin, Benchmark and Harvest offered and sold securities in Harvest, Benchmark, and Safe Haven Portfolios, a pooled investment vehicle, promising investors that their funds would be invested in public and private companies with “socially responsible” goals. Instead, the complaint alleges that Folin, diverted a portion of the invested funds to pay previous investors as well as sustain Benchmark’s and Harvest’s expenses which included paying Folin’s salary.

Allegedly Benchmark and Harvest issued various “notes” to advisory client, friends and family promising guaranteed above-market interest rates.  Folin assured investors that such notes were conservative and safe. According to the complaint, Folin failed to disclose the true uses of those funds and continually misrepresented the value of the notes on quarterly statements.

In addition, the complaint alleges that in 2004 Folin formed Safe Haven. Allegedly Folin caused Benchmark’s advisory clients to invest in Safe Haven and that Folin also acted as investment advisers to Safe Haven. From 2006 through 2009, allegedly Folin caused Safe Haven to pay $1.7 million to Benchmark and Harvest under the guise of “development costs.” The complaint alleges that these “development costs” do not relate to any actual expenses incurred by Harvest or Benchmark. Rather, the complaint alleges, the payments coincide with Harvest’s and Benchmark’s need for funds to pay previous investors, expenses, and Folin’s salary.

The complaint also alleges that Folin and Benchmark caused Safe Haven to make loans to Harvest and Benchmark in excess of $3.9 million. Neither Benchmark nor Folin disclosed the loans. The loans allegedly violate several provisions of Safe Haven’s investment criteria including, that: (1) they were not supported by adequate collateral, (2) they voided the 5% net exposure requirement, and (3) they caused the portfolios to violate the “no leverage” provision.

Finally, the complaint alleges that Folin and Benchmark failed to disclose their advisory clients Benchmark’s dire financial situation and inability to sustain itself but for the monies it received under the guise of “development cost” and the loans from Safe Haven.

Eccleston Law represents individual and institutional investors to recover their investment losses caused by securities and investment fraud. Our attorneys also help victims of Ponzi schemes pursue recovery by submitting claims with receiverships established by the SEC or by assisting victims with the filing of a Theft Loss Tax Deduction with the IRS.

If you have lost money investing with Sam Folin, Benchmark, Harvest, or Safe Haven, your losses may be recoverable through securities arbitration. Please contact the Eccleston Law Offices at 312-332-0000 for a free, no obligation consultation.  

Eccleston Law Investigates National Securities Corporation and its Representative Matthew G. Portes Following FINRA Disciplinary Action

The attorneys at Eccleston Law have launched an investigation National Securities Corporation and its Chicago, Illinois-based representative Matthew G. Portes (CRD #4995542) following FINRA disciplinary action.  

According to FINRA, National Securities Corporation recently submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and ordered to pay a total of $175,000 in restitution to investors. Matthew Portes was fined $10,000 and suspended from association with any FINRA member in any principal capacity for six months.

Without admitting or denying the findings, National Securities and Matthew Portes consented to the described sanctions and to the entry of findings that the firm failed to have reasonable grounds to believe that certain private placements offered pursuant to Regulation D were suitable for customers.

FINRA's findings stated that National Securities Corporation, acting through Matthew Portes, as the firm’s Director of Alternative Investments/Director of Syndications, failed to adequately enforce its supervisory procedures to conduct adequate due diligence as it relates to an offering. The findings also stated that Matthew Portes and National Securities Corporation became aware of multiple red flags regarding an offering, including liquidity concerns, missed interest payments and defaults, that should have put them on notice of possible problems, but the firm continued to sell the offering to customers.

FINRA also found that National Securities Corporation, acting through Matthew Portes, failed to enforce its supervisory procedures to conduct adequate due diligence relating to other offerings. In particular, FINRA found that Matthew Portes reviewed the PPMs for these offerings and diligence reports others prepared, but the review was cursory. FINRA also found that the due diligence reports noted significant risks and specifically provided that its conclusions were conditioned upon recommendations regarding guidelines, changes in the PPMs and heightened financial disclosure of affiliated party advances, but National Securities Corporation did not investigate, follow up on or discuss any of these potential conflicts or risks with either the issuer or any third party.

FINRA also determined that National Securities Corporation, acting through Matthew Portes, failed to enforce reasonable supervisory procedures to detect or address potential “red flags” as related to these offerings; and that National Securities Corporation, acting through Portes, failed to maintain a supervisory system reasonably designed to achieve compliance with applicable securities laws and regulations.

If you have suffered losses investing in a private placement recommended by Matthew G. Portes or through National Securities Corporation, please call Eccleston Law Offices at (312) 332-0000 to discuss your recovery options.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by 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.

Promises Broken as Apple REIT 6, 7 and 8 Receive Maximum Amount of Redemption Requests

Apple REIT Six, Seven and Eight recently provided investors with its 2011 outlook.  Based on the reports, each of these REITs appears that it will pay out the maximum amount of redemptions allowed pursuant to the unit redemption program, which is $8 million per quarter. 

Specifically, each of the REITs reported the following to investors:

"Apple Six paid a total of approximately $7.5 million in shareholder redemptions for its regularly scheduled redemption date in April 2011 and plans to pay an additional $8 million in shareholder redemptions on its next regularly scheduled redemption date of July 20, 2011."

"Apple Seven paid a total of approximately $8 million in shareholder redemptions for its regularly scheduled redemption date in April 2011 and plans to pay an additional $8 million in shareholder redemptions on its next regularly scheduled redemption date of July 20, 2011."

"Apple Eight paid a total of approximately $8 million in shareholder redemptions for its regularly scheduled redemption date in April 2011 and plans to pay an additional $8 million in shareholder redemptions on its next regularly scheduled redemption date of July 20, 2011."

For the first time, this is a signal from the Apple REITs to investors who seeking liquidity or an exit from this investment that it may not be able to get out of the investment as the redemption requests have been maximized.  Even in light of this, investors have been reporting that David Lerner Associates is continuing to tell investors that they can submit redemption requests and expect to exit the investment through that process.

Many investors were promised (or led to believe) that they could get all of their money out of the Apple REITs after the first three years of investing.  However, this may no longer be the case as investors are finding themselves stuck in the Apple REITs due to the avalance of redemption requests the REITs are receiving. 

If you are an investor who is trying to get out of Apple REIT 6, 7 or 8, please contact one of our attorneys at 312-332-0000.  Our attorneys are representing investors who have suffered losses investing in the Apple REITs along with those who are seeking to rescind (get out of) their investment in these products.

Apple REIT Eight Finally Reduces Distribution Rate

In an 8-K filed with the SEC on July 1, 2011, Apple REIT Eight announced that it has decreased its distribution rate from 7 percent to 5 percent, or from $0.77 per share to $0.55 per share, based on an $11 share price. This adjustment is anticipated to begin with Apple REIT Eight’s July 15, 2011 distribution payment.

The company explained that "in some markets where Apple Eight owns hotels, recovery has been slower than anticipated and several of the Company’s hotels have not ramped up as quickly as projected. As such, the Company believes that it is prudent to lower the annualized distribution rate until such time as a recovery can be achieved."

This reduction in distribution rate may come as a great surprise to investors who rely on this dividend as part of their income.  Unfortunately, further reductions in distribution rates may occur if FINRA and/or the SEC forces a revaluation of the Apple REIT Eight lower than the $11 per share price that it currently maintains.  

If you have suffered a financial hardship as a result of this reduction in the Apple REIT Eight distribution rate, please contact one of our attorneys at 312-332-0000.  Our attorneys are representing investors who have suffered losses investing in the Apple REITs along with those who are seeking to rescind (get out of) their investment in these products.

Recovery Options for Desert Capital REIT Investors



Following Desert Capital REIT's recent Chapter 11 bankruptcy filing, the attorneys at Eccleston Law are continuing to investigate the Henderson, Nevada-based real estate investment trust along with several securities broker-dealers who sold this risky and illiquid investment product.

Fortunately for investors, those who have suffered losses investing in non-traded REITs like Desert Capital may be able to recover their losses through securities arbitration.

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.

Eccleston Law is currently representing investors who have suffered losses in non-traded REITs such as Desert Capital REIT, Inc. in FINRA arbitration proceedings. If you are investor who has suffered losses investing in Desert Capital REIT, Inc. and would like a free, no obligation consultation about your recovery options, please contact one of our attorneys at 312-332-0000.

www.desertcapitallosses.com

Following Desert Capital REIT's recent Chapter 11 bankruptcy filing, the attorneys at Eccleston Law are continuing to investigate the Henderson, Nevada-based real estate investment trust along with several securities broker-dealers who sold this risky and illiquid investment product.

Fortunately for investors, those who have suffered losses investing in non-traded REITs like Desert Capital may be able to recover their losses through securities arbitration.

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.

Eccleston Law is currently representing investors who have suffered losses in non-traded REITs such as Desert Capital REIT, Inc. in FINRA arbitration proceedings. If you are investor who has suffered losses investing in Desert Capital REIT, Inc. and would like a free, no obligation consultation about your recovery options, please contact one of our attorneys at 312-332-0000.

www.desertcapitallosses.com

Investor Recovery Options Following Desert Capital REIT's Rise and Fall

According to its filings with the SEC, Desert Capital REIT, Inc., was a Maryland corporation formed in December 2003 as a real estate investment trust. When it first began conducting business, it specialized in the financing of real estate development projects by providing short-term mortgage loans to homebuilders and commercial developers in markets where Desert Capital believed that it possessed requisite skills and market knowledge, which were primarily in the western United States and Las Vegas in particular.

Historically, Desert Capital REIT invested in 12 to 18 month, first and second lien mortgage loans, consisting of acquisition and development, construction, and commercial property loans to both local and national developers and homebuilders. Desert Capital REIT derived its revenues primarily from interest payments received from mortgage investments funded with our equity capital and borrowed funds.

In late 2007, Desert Capital began experiencing a significant level of borrower defaults, and in 2008 and 2009 virtually all of Desert Capital's borrowers defaulted on their loans. As of March 31, 2011, Desert Capital had foreclosed on the property underlying its original mortgage loans on all but three loans. Due to the development stage of the properties at the time of foreclosure, which was primarily undeveloped or partially developed land, none of these properties are income producing and many have significant operating costs such as property taxes. The combination of significantly reduced interest income from performing loans, increased costs related to the ownership of non-income producing property, ongoing day-to-day operating costs of the Desert Capital, and the depressed real estate market, has had a materially adverse impact on Desert Capital's financial condition and has severely impacted Desert Capital's ability to conduct business as originally intended. With limited revenue from its investment portfolio, Desert Capital was forced to incur debt and sell properties as needed to generate operating capital and fund debt payments.

When Desert Capital began its investment strategy in 2004, it stated that its intent to either list Desert Capital REIT, Inc. stock on a national exchange or begin the liquidation of its portfolio by December 2011. Due to the collapse of the real estate market beginning in late 2007 and continuing into 2011, Desert Capital's business strategy, which was to invest in performing mortgage loans on a continuous basis, was cut short due to our lack of capital.

Desert Capital was been unable to make significant investments in mortgages since early 2008, and its investment portfolio of mortgage loans that existed at that time has been substantially foreclosed, resulting in a portfolio of real estate investments that are non-income producing and are valued at amounts significantly less than the original loan amounts.

Given the financial condition of the Desert Capital, the company recently conceded that listing Desert Capital REIT, Inc. stock on a national exchange is no longer a viable consideration. As a result, Desert Capital REIT is currently in the process of liquidating its assets as needed for liquidity purposes.

On May 5, 2011, an involuntary petition for protection under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101 et. seq., was filed against Desert Capital REIT, Inc. with the United States Bankruptcy Court for the District of Nevada, Las Vegas Division. Creditors with claims of over $43 million filed the petition to put Desert Capital into involuntary Chapter 11 bankruptcy. Some of these creditors include Taberna Preferred Funding VI, Taberna Preferred Funding VIII and Sage Trust.

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.

www.desertcapitallosses.com

Desert Capital REIT Investor Recovery Options Following Involuntary Chapter 11 Bankruptcy

On May 5, 2011, an involuntary petition for protection under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101 et. seq., was filed against Desert Capital REIT, Inc. with the United States Bankruptcy Court for the District of Nevada, Las Vegas Division. Creditors with claims of over $43 million filed the petition to put Desert Capital into involuntary Chapter 11 bankruptcy. Some of these creditors include Taberna Preferred Funding VI, Taberna Preferred Funding VIII and Sage Trust.

Although Desert Capital REIT initially objected to the involuntary bankruptcy, it is reported that in early June 2011, attorneys for Desert Capital REIT told Judge Linda Riegle that it was withdrawing its objection to the bankrupcy proceeding. In light of this development, investors are encouraged to explore their recovery options outside of the Chapter 11 bankruptcy process.

Investors who have suffered losses investing in non-traded REITs like Desert Capital may be able to recover their losses through the securities arbitration process administered by the Financial Industry Regulatory Authority ("FINRA").

The attorneys at Eccleston Law are currently representing investors who have suffered losses in non-traded REITs such as Desert Capital REIT, Inc. in FINRA arbitration proceedings. If you are investor who has suffered losses investing in Desert Capital REIT, Inc. and would like a free, no obligation consultation about your recovery options, please contact one of our attorneys at 312-332-0000.

 www.desertcapitallosses.com

Calling All Apple REIT 9 and Apple REIT 10 Investors To Join Class Action

Some investors have remarked that since there already is a class action pending (which we have brought), why should they themselves join the class action as a class representative?

The answer is two-fold.  First, class action participation allows the class rep to be involved in the actual prosecution of the case, strategy, settlement and so forth.  In other words, it reflects the difference between caring about the results versus not caring about the results. Anyone who cares about their investment in Apple REIT 9 and/or 10 and who has more than a few thousand dollars invested should want to take part as a class representative.

Second, it does not matter that a class representative already is in place. That’s because it always is preferred to have several class action plaintiffs on board.

Please call our attorneys at 312-332-0000 today to discuss this further.

UPDATE: Eccleston Law Expands Investigation of Desert Capital REIT

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.

www.desertcapitallosses.com

Eccleston Law Announces the Filing of Class Action Regarding Apple REITs

Eccleston Law Offices, P.C., Chimicles & Tikellis LLP, Labaton Sucharow LLP, and Stoltman Law Offices, P.C. announce that a securities class action lawsuit was commenced in the United States District Court for the Eastern District of New York on June 17, 2011 against defendants Apple REIT Ten, Inc. (“REIT Ten”), Apple REIT Nine, Inc. (“REIT Nine”), David Lerner & Associates, Inc. (“DLA”), David Lerner, Glade M. Knight, Bryan Peery, Kent W. Colton, Glenn W. Bunting, R. Garnett Hall, Jr., Ronald A. Rosenfeld, Anthony Francis Keating III, Lisa B. Kern, Bruce H. Matson, Michael S. Waters, and Robert M. Wily.  The lawsuit alleges claims under Sections 11, 12, and 15 of the Securities Act of 1933 on behalf of a Class of all persons who purchased or otherwise acquired REIT Nine and REIT Ten securities between June 16, 2008 and the present, inclusive (the “Class Period”), who suffered damages as a result of the actions complained of therein (the “Class”).

The Complaint alleges, among other things, that: (1) REIT Nine’s and REIT Ten’s registration statements and prospectuses failed to disclose material information concerning the value of shares of prior Apple REITs, which pursued nearly identical investment strategies and whose share value had declined significantly, (2) the operations and investment model pursued by REIT Nine and REIT Ten was virtually guaranteed to lose investors’ capital, and (3) DLA solicited purchases of REIT Nine and REIT Ten by means of false and misleading statements concerning the distributions paid by prior Apple REITs.

Reps At David Lerner Associates Exploring Other Employment Opportunities May Have Defenses To Their Training Agreements

As we understand it, reps at David Lerner Associates are spending their time not providing investment services and earning sales commissions, but instead attempting to answer countless questions about the underlying misrepresentation and omissions relating to Apple REITs, FINRA’s disciplinary action against the firm and other related issues.

Reps sometimes are innocent victims, especially with product cases, where they have been duped by their firms just as the clients have been duped by their firms.

Under those circumstances, reps may have defenses to their David Lerner Associates Training Agreements.  We understand that David Lerner Associates may seek to enforce such agreements, but there may a number of defenses to such an action.  For example, a common defense may be that a rep effectively was not able to continue to earn a living at the firm, or that it was immoral for the rep to continue to wish to be employed at the firm.

Eccleston Law maintains a robust employment law practice for financial advisers nationwide and would be pleased to discuss a rep’s particular facts to determine if such defenses may exist.

BREAKING NEWS: FINRA Charges David Lerner Associates With Soliciting Investors to Purchase Apple REITs Without Fully Investigating Suitability

On May 31, 2011, FINRA filed a complaint against David Lerner Associates of Syosset, New York with soliciting investors to purchase shares in Apple REIT Ten without conducting a reasonable investigation to determine whether it was suitable for investors.  FINRA also charged David Lerner Associates with providing misleading information on its website regarding the Apple REIT Ten distributions. 

To read a copy of the FINRA complaint, click here.

FINRA alleged that starting in at least 2004, the Apple REITs have unreasonably valued their shares at a constant price of $11 per share, notwithstanding market fluctuations and the decline of the commercial real estate market, while maintaining distributions of 7 to 8 percent by leveraging the REITs through borrowings and returning capital to investors.  

As the sole distributor of the Apple REITs, FINRA alleged that David Lerner Associates did not question the Apple REITs unchanging valuations despite the downturn in the commercial real estate market.

Rather than conduct due diligence into those valuations and distribution irreguities to determine that these securities were suitable for investors, FINRA alleged that David Lerner accepted the valuations and continued to record them on customer account statements. 

In its solicitation of customers to purchase Apple REIT Ten, FINRA alleged that David Lerner Associate’s website displayed distribution rates for all of the previous Apple REITs.  FINRA alleged that these figures were misleading and omitted material information because they did not disclose the recent distribution rate reductions or that distributions far exceeded income from operations and were funded by debt or a return of investor’s capital.

To many investors, this development may come as a surprise. Many investors were not fully informed of the risks involved in purchasing an Apple REIT and believed that this investment was suitable for their investment objectives, age, and risk tolerance. 

If you have invested in any of the Apple REITs upon the recommendation of David Lerner Associates, please contact one of our attorneys at 312-332-0000.  Our attorneys are representing investors who have suffered losses investing in the Apple REITs along with those who are seeking to rescind (get out of) their investment in these products.

SEC Files Complaint Against Daren L. Palmer and Trigon Group, Inc. for Operating a $40 million Ponzi Scheme

The Securities and Exchange Commission has alleged that that Daren L. Palmer ("Palmer"), a resident of Idaho Falls, Idaho, and his investment business Trigon Group, Inc. ("Trigon"), a Nevada corporation, raised at least $40 million as part of a Ponzi scheme that has defrauded at least 55 investors.

According to the SEC's complaint, from at least 1996 until October 2008, Palmer and Trigon defrauded investors by representing that invested funds would be used in a riskless trading program that earned annual returns of 20 percent or more. The complaint alleges that Palmer and Trigon sold securities in the form of promissory notes and investment contracts in unregistered transactions, and told investors that their principal would be invested in indexes, S&P 500 options or futures, currency futures and stocks in a way that would generate high returns with no risk. The Complaint alleges that, instead, Palmer and Trigon were using funds put into the program by later investors to pay fictitious returns to earlier investors in a classic Ponzi scheme. The Commission's Complaint further alleges that Palmer used investor funds to build a partially completed $12 million home in Idaho Falls, Idaho, to purchase snowmobiles, to pay himself compensation of $25,000 to $35,000 a month, and for other personal expenses. The Complaint also alleges that while Palmer told investors he was licensed to sell securities, he has never been licensed to sell securities and that neither Palmer nor Trigon is registered with the Commission in any capacity.

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.

If you are an investor that has suffered losses investing with Daren L. Palmer or Trigon Group, your losses may be recoverable through securities arbitration.  Please contact one of our attorneys at 312-332-0000 to discuss your recovery options. 

Eccleston Law Launches Investigation of Former Illinois Broker Edward Lynn Moskop Following SEC Criminal Indictment

The attorneys at Eccleston Law have launched an investigation of former Bellville, Illinois broker Edward Lynn Moskop and his firm, Financial Services Moskop and Associates, Inc., following a criminal indictment.

The Securities and Exchange Commission announced that on May 19, 2011, a federal grand jury returned a two-count indictment against Edward Lynn Moskop, a former registered representative and licensed insurance broker from Belleville, Illinois.  Moskop, age 62, was indicted on charges of mail fraud and money laundering. 

The indictment alleges that Moskop, operating as Financial Services Moskop and Associates, Inc., acted as a securities broker for several customers by making investments on their behalf.  According to the indictment, from 1991 to 2010, Moskop persuaded customers to provide him with funds for investment, but instead of making the investment, he kept the funds for his own use.

The indictment alleges that Moskop obtained by fraud approximately $2,400,000 from 25 victims.  According to the indictment, Moskop's victims included his relatives, individuals referred by trusted friends and attorneys, a local Veterans of Foreign War Post, and long-time customers of his insurance business.  The criminal case is being prosecuted in the U.S. District Court for the Southern District of Illinois.   The criminal charges against Moskop are related to the conduct underlying the SEC's civil action against Moskop and his company, Financial Services Moskop & Associates. 

The SEC had previously filed an emergency civil action in the United States District Court for the Northern District of Illinois to halt an ongoing fraud on investors conducted by Moskop and his company.  In its complaint, the SEC alleged that from 1989 until the filing of the SEC's action against Moskop and his company, Moskop misappropriated most of the life savings of at least two elderly investors.  On the same day the SEC filed its case, the Honorable Rebecca R. Pallmeyer, United States District Court Judge, granted the SEC's motion for emergency relief, entering a temporary restraining order against Moskop and his company and an order freezing their assets. On Nov. 27, 2010, the court entered a preliminary injunction against Moskop and his company and continued the order freezing their assets. 

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.

If you are an investor that has suffered losses investing with Edward Moskop or Financial Services Moskop and Associates, Inc., your losses may be recoverable through securities arbitration.  Please contact one of our attorneys at 312-332-0000 to discuss your recovery options.  

UPDATE: Eccleston Law Expands Investigation of Baker Tilly Capital (f/k/a Virchow Krause & Company) For Private Placement Losses

The attorneys at Eccleston Law have expanded their investigation of Baker Tilly Capital (formerly known as Virchow Krause & Company, LLP) for losses that investors have suffered in private placement investments. 

The attorneys believe that Baker Tilly Capital sold at least three, highly risky private placements including: The Orchard at Picacho, Cahava Investor, LLC and S&L Orlando, LLC. Investors are also believed to have been sold interests in Key Lime Cove Water Park.  The true risks of these investments may not have been properly disclosed to investors, and these investments may not have been suitable for investor’s needs given their financial resources, risk tolerance, and investment objectives.

The Orchard at Picacho was purportedly a real estate development project which was created to purchase 930 acres of undeveloped land in Pinal County Arizona. Approximately $30.55 million was raised for this project, which was closed out on March 16, 2006.  According to a statement of claim that was recently filed with FINRA, at the time of the offering no plan had been submitted to the county, no zoning changes had been proposed to city council and no plan was in place to bring water and other basic services to the proposed development site.

Cahava Investor, LLC was a similar real estate development project called Cahava Springs.   Virchow Krause sought to raise approximately $17 million for this project.  For this service, the Virchow Krause was positioned to receive an 8% commission that would have yielded them a total fee of $1,360,000 for the entire offering.

S & L Orlando, LLC believed to be yet another private placement sold by Virchow Krause to investors.  This investment was sold as being a secure, short term 9-month investment that offered principal protection. S&L Orlando is believed to have sold a total of $3.2 million in these notes and successfully acquired a loan in the amount of $18,550,000 which was to be used to purchase of hotel-condo units in a hotel complex located in Orlando, Florida. The notes sold to investors were subordinate to this loan, which held a first mortgage position on the property. S&L was allegedly going to operate the unit as a Crowne Plaza Hotel, with the management of the property handled by S&L Hospitality, LLC, a Wisconsin LLC. According to the PPM, an entity called VAF sub-CDE III, LLC, an affiliate of Virchow Krause and the accounting arm Virchow Krause, LLP, acquired this property for $23.5 million. However, the investors in this project are believed to have sustained a complete loss on the investment.

Upon information and belief, these private placements were sold by accountants (who are also FINRA registered brokers) to their accounting clients in certain midwestern states including Wisconsin. 

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.

If you are an investor that has suffered losses investing with Virchow Krause, Baker Tilly Capital, or if you have lost money investing in The Orchard at Picacho, Cahava Investor, Cahava Springs, Key Lime Cove, or S&L Orlando, your losses may be recoverable through securities arbitration.  Please contact one of our attorneys at 312-332-0000 to discuss your recovery options.  

UPDATE: Eccleston Investigates China Voice Holdings Corp. Following Emergency Asset Freeze and Ponzi Scheme Allegations; Investors Suffering Losses Encouraged to Come Forward

The attorneys at Eccleston Law have expanded their investigation of China Voice Holding Corporation following an SEC emergency asset freeze allegations that it was nothing more than an $8.6 million Ponzi scheme.  Investors suffering losses in China Voice are encouraged to contact our attorneys to discuss their recovery options.

The SEC recently obtained a court order freezing the assets of China Voice, which trades in the over-the-counter (OTC) market.  China Voice purported to have a portfolio of telecommunications products and services in both the U.S. and China. 

The SEC alleges that China Voice’s CFO David Roland Allen, and his associates Alex Dowlatshahi and Christopher Mills, promised investors in a series of offerings of limited partnerships that they would earn profits of at least 25 percent on their investments.  Investors were falsely told that their money would be loaned to companies that had a track record and large profit margins. Contrary to these representations, Allen and his associates used investor money to pay back earlier investors, to funnel money to China Voice, and for personal use.

In addition to these Ponzi scheme charges, the SEC has filed a complaint against China Voice, its former Chairman and CEO William F. Burbank, IV, and David Allen for a series of fraudulent company statements about its financial condition and business prospects.  The SEC alleges that China voice overstated its business prospects, failed to discloses the significant loans that it needed to fund its operations, and that

In addition to these charges, the SEC has charges two China Voice shareholders, Gerald Patera and Ilya Drapkin, for helping David Allen finance stock promotion campaigns to pump up the company's stock price. These campaigns included a blast fax campaign orchestrated by Robert Wilson, who also is charged in the SEC's complaint. The spam faxes were sent to thousands of people at once and contained false and misleading statements about China Voice and who was paying for the faxes. At the same time they were spending more than a million dollars on stock promotion, Patera and Drapkin dumped millions of shares of the company into the market.

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.

If you are an investor that has suffered losses in China Voice Holdings, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.  

Two Chicago Businessmen Charged with Operating Fraudulent Scheme Defrauding More than $16 Million from 300 Investors

Following an FBI investigation of the now defunct Palatine, Illinois-based real estate investment company Michael Franks, LLC, federal prosecutors have charged Michael Morawski and Frank Constant with fraud.   

Federal prosecutors allege that between 2006 and 2010, Michael Franks raised more than $16 million from at least 300 investors by offering passive ownership interests in various multi-family residential properties located in Illinois, Texas and Alabama.  The defendants represented that they would use investor funds to acquire, improve and operate specific apartment complexes.  The investments purportedly carried interest rates of between 8 and 30 percent per year. 

Contrary to these representations, prosecutors allege that Morawski and Constant, through Michael Franks, engaged in a scheme to defraud investors my misrepresenting the nature of the investments and the use of investor funds.  Furthermore, the prosecutors allege that the defendants operated a Ponzi scheme by continually using funds raised from new investors to pay earlier investors.  The defendants are also believed to have used investor money to pay employees, to make commission payments to other individuals, and to make payments for personal expenses such as country club memberships. 

Eccleston Law represents individual and institutional investors to recover their investment losses caused by securities and investment fraud. Our attorneys also help victims of Ponzi schemes pursue recovery by submitting claims with receiverships established by the SEC or by assisting victims with the filing of a Theft Loss Tax Deduction with the IRS.

If you have lost money investing with Michael Franks, LLC, Michael Morawski, or Frank Constant you may be eligible for an immediate theft loss tax deduction.  Under a new IRS safe harbor rule, you may be eligible for an immediate theft loss tax deduction of 95% of your losses, or 75% of your losses if you pursue third-party recovery. Please contact the Eccleston Law Offices at 312-332-0000 for more details.  

Eccleston Law Investigates Brett S. Kleese and BSK Enterprises, LLC following SEC Administrative Proceedings

The attorneys at Eccleston Law have launched an investigation of Mesa, Arizona resident Brett S. Kleese, BSK Enterprises, LLC, and Rosand Enterprises, Inc. following SEC administrative proceedings and a 2009 Arizona Corporation Commission cease and desist order.

From about October 2007 through May 2008, Kleese offered and sold at least 57 investors approximately $3 million of unregistered promissory notes issued by BSK.  The promissory notes contained promises by BSK to repay the investors principal plus interest.  Kleese told investors that BSK would lend their funds to Rosand Enterprises, which Rosand would use as collateral to pay for the construction of low-cost, prefabricated housing in Chicago.  Kleese also told investors that their funds would be deposited into an Illinois law firm’s trust account, and that none of the money would be withdrawal because it was to be used by Rosand as collateral for the line of credit and that the account was covered by a bond.

Contrary to these representations, the funds sent to Rosand were withdrawn from the trust account which was not covered by a bond.  Kleese admitted that he did not adequately disclose these facts to investors.

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.

If you are an investor that has suffered losses investing with Brett S. Kleese, BSK Enterprises or Rosand Enterprises, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

Apple REIT Nine Strikes Large Natural Gas Deal to its Investors' Surprise; Potential Conflicts of Interest Abound

Most investors in Apple REIT Nine believe that the company is focused on acquiring and operating hotel properties across the nation.  However, to the surprise of many investors, in 2009 Apple REIT Nine decided to get into a business that has little or nothing to do with acquiring and operating hotels – the natural gas business.

In 2009, Apple REIT Nine purchased 410 acres of natural-gas producing land located near Fort Worth, Texas.  Apple REIT 9 ended up paying $147 million for this land.  The company quickly entered into a 40 year lease with Chesapeake Energy Corporation. 

Fast forward to 2011, when Apple REIT Ten (the next Apple REIT sold by David Lerner Associates) elected Anthony Francis “Chip” Keating, III to Apple REIT Ten’s Board of Directors.  According to its SEC filings, Mr. Francis previously “served as the Real Estate Development Manager for Chesapeake Energy Corporation in Oklahoma City, Oklahoma from March 2007 to March 2010. While at Chesapeake, Mr. Keating closed and transacted over $850 million in real estate transactions ranging from corporate headquarters, sale leasebacks, field offices, investment properties and land for natural gas drill sites.”

It is clear that Anthony Keating, III worked at Chesapeake Energy when Apple REIT Nine entered into this natural gas leasing arrangement.  While the SEC filing does not say whether or not Mr. Keating was involved in the Apple REIT Nine deal, his appointment to the Board of Apple REIT Ten certainly raises questions about undisclosed conflicts of interest, and Apple REIT Nine’s entry into the natural gas business.

Did investors realize that they would ultimately end up investing in a company that would be involved in the natural gas business? Probably not. 

But for those investors in Apple REIT Nine who do not want to participate in natural gas investments, due to the illiquid nature of their investment in Apple REIT Nine they may be “stuck” in this illiquid investment indefinitely.

If you have invested in Apple REIT Nine upon the recommendation of David Lerner Associates and you are surprised by the company’s foray into the natural gas business, or if your understanding of the investment is inconsistent with the information made above, please contact one of our attorneys at 312-332-0000.  Our attorneys are representing investors who have suffered losses investing in Apple REIT Nine along with those who are seeking to rescind (get out of) their investment in this product.

Apple REIT Eight’s Distributions and Redemptions May Be Unsustainable

IRS rules mandate that REITs, such as Apple REIT Eight, must pay out at least 90% of their taxable income to investors in order to maintain REIT status for tax purposes.  Most REITs are structured so that their distributions and redemptions meet, or just barely exceed this minimum threshold. 

In contrast, Apple REITs, including Apple REIT Eight, are generally sold as “safe” investments that carry a consistent 7% return on principal whether or not the economy is good or the underlying properties are generating income. As a result of this consistent rate of return, the Apple REITs (including Apple REIT Eight) must pay investors dividends whether or not there is a positive cash flow.

Some recent 10-K filings from Apple REIT Eight support this conclusion:

• 2007: 30% ordinary income and 70% return of capital;
• 2008: 53% ordinary income and 47% return of capital;
• 2009: 33% ordinary income and 67% return of capital; and
• 2010: 42% ordinary income and 58% return of capital.

Based on the illustration above, in every year except in 2008 the return of capital to investors exceeded the ordinary income generated by Apple REIT Eight. What this may mean for investors is that the distributions and redemptions largely are coming from offering proceeds and debt.

In light of the recent 8-K SEC filing that announced another $20 million loan that was personally guaranteed by Glade M. Knight, Apple REIT Eight’s Chairman and Chief Executive Officer, it seems likely that Apple REIT Eight is being forced to borrow to meet continue to meet investor distribution and redemption requests.   Moreover, the fact that lenders required that this loan be personally guaranteed by the assets of Glade Knight himself suggests that lenders are not be confident in Apple REIT Eight’s ability to continue to borrow money to pay investor distributions and redemptions.

If you have invested in Apple REIT Eight upon the recommendation of David Lerner Associates and if you are concerned about the ability of Apple REIT Eight to continue to pay distributions or meet redemption requests, please contact one of our attorneys at 312-332-0000.  Our attorneys are representing investors who have suffered losses investing in Apple REIT Eight along with those who are seeking to rescind (get out of) their investment in this product.

Apple REIT Eight SEC Filing Highlights Unit Redemption Program’s Half-Truths

Eccleston Law is assisting Apple REIT Eight investors who are unable to redeem their investments. 

Some investors report being told that David Lerner Associates representatives told investors, at the point of sale, that they would be able to redeem a portion of their investment after the first year, and would be able to redeem their entire investment after three years.

However, those same investors were not told of Apple REIT Eight’s ability to 1) change the purchase price (value) for redemptions and 2) to modify, suspend or terminate the redemption program, both in its sole discretion.  As reflected in Apple REIT Eight’s March 21, 2011 10-K filing with the SEC, Apple REIT Eight made the following disclosure:

Item 5. Market For Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

Unit Redemption Program

Effective in October 2008, the Company instituted a Unit Redemption Program to provide limited interim liquidity to its shareholders who have held their Units for at least one year. Shareholders may request redemption of Units for a purchase price equal to 92% of the price paid per Unit if the Units have been owned for less than three years, or 100% of the price paid per Unit if the Units have been owned more than three years. The maximum number of Units that may be redeemed in any 12-month period will be three percent of the weighted average number of Units outstanding during the 12-month period immediately prior to the date of redemption. The Company reserves the right to change the purchase price for redemptions, reject any request for redemption, or otherwise amend the terms of, suspend, or terminate the Unit Redemption Program. As of December 31, 2010, the Company has redeemed approximately 2.8 million Units in the amount of $29.0 million under the program. The redemptions represent 100% of the redemption requests as of the last scheduled redemption date in 2010, which was October 2010. In January 2011, the first scheduled redemption date of 2011, the Company redeemed in accordance with the Unit Redemption Program on a pro-rata basis approximately 61% of the requested redemptions, or a total of $8.0 million. (emphasis added)

If you have invested in Apple REIT Eight upon the recommendation of David Lerner Associates and if your understanding of the redemption program is inconsistent with the disclosure made above, please contact one of our attorneys at 312-332-0000.  Our attorneys are representing investors who have suffered losses investing in Apple REIT Eight along with those who are seeking to rescind (get out of) their investment in this product.

Eccleston Law Investigates New Jersey Investment Adviser Sandra Venetis Following SEC Fraud Charges

The attorneys at Eccleston Law have launched an investigation of Sandra Venetis, a Branchburg, N.J.-based investment adviser and three of her firms, Systematic Financial Services, Inc., Systematic Financial Associates, Inc., and Systematic Financial Services, LLC, for allegedly operating a multi-million dollar offering fraud involving the sale of phony promissory notes to investors, many of whom are retired or unsophisticated in investments. Venetis recently pleaded guilty to defrauding investors out of more than $13.6 million in a Ponzi scheme and using $7 million to settle gambling debts.

The SEC recently alleged that since 1997, Venetis and the three entities that she founded, owned, or controlled obtained more than $11 million from at least 127 investors. Venetis, acting on behalf of the three entities, solicited and obtained funds from clients and others to invest in promissory notes, fixed income investments, or other side investments.  Venetis allegedly told some investors that the promissory notes were guaranteed by the Federal Deposit Insurance Corporation and would earn interest of up to 11 percent per year that would be tax-free due to a loophole in the tax code.  She is believed to have told investors that she would use their money to fund loans to doctors that would be backed by Medicare reimbursement payments to those doctors. Instead of making investments, Venetis allegedly looted investor funds to pay business debts and personal expenses accrued from international travel, gambling, and home mortgages and property taxes. She also allegedly funneled cash to her relatives.

The SEC's complaint also named three relief defendants for the purposes of recovering investor assets now in their possession: Jennifer Venetis (Venetis's daughter); Kevin Persley (Venetis's brother); and Venetis LLC (an entity owned and controlled by Venetis).

SEC Sanction Against David Lerner Associates Highlights Problems With Selling Illiquid REITs To Customers

In 2004, David Lerner Associates agreed to a Cease and Desist Order with the SEC involving the sale of unsuitable REITs to 4 customers of the firm. Regarding one of Lerner’s employees, the SEC Order reads that the employee made investment recommendations "that his customers purchase illiquid REIT securities on margin collateralized by the customers' bond holdings were contrary to the objectives of his customers who desired highly-liquid bond or tax-free bond issues. The margin purchases of illiquid REIT securities using the customers' liquid bonds as collateral effectively rendered the customers' holdings illiquid. The customers could not obtain cash by selling the REIT securities, which were illiquid, or by selling bonds, which collateralized the REIT securities." 

Ultimately, three customers "sustained losses arising from the illiquid REIT securities that Merl purchased for their accounts, as follows: (1) an 86-year old customer lost $103,281; (2) a 75-year old customer lost $37,778; and (3) a 55-year old customer lost $34,420".

Regarding another one of Lerner’s employees, the SEC Order states that the employee's "recommendation and offer of securities that were unsuitable for his customer violated Section 17(a) of the Securities Act. [The employee's] investment recommendations were contrary to the objectives of his customer, a married, middle-aged man with two children residing in his home. The customer wanted a diversified investment for the approximately $30,000 in his IRA account. This IRA account constituted nearly all of the customer's savings and was the customer's financial safety net. [The employee's] concentrated the customer's IRA account in an illiquid REIT security and did not provide the diversification that the customer desired. [The] customer sustained a loss of $6,518 arising from the illiquid REIT securities [the employee] purchased for his IRA account."

Fast forward to 2011, attorneys at Eccleston Law Offices are hearing from customers of David Lerner Associates that they believe that their investments in Apple REITs (and other Lerner investments) are unsuitable.  As part of Lerner’s agreement to the SEC sanctions, the firm promised that it would not recommend its investments in an unsuitable fashion in light of the customer’s investment objectives and financial situation.  The ongoing investigation calls into question whether Lerner has kept its promise to the SEC.

For further information, or to discuss your claims, distributions not made, redemption requests not honored, and investment losses suffered at the hands of David Lerner Associates, contact Eccleston Law Offices at 312-332-0000.

UPDATE: Eccleston Law Expands Investigation of California-Based Torrey Pines Securities for Unregistered Private Placement Offering

Following an SEC order censuring Torrey Pines Securities, Inc., the attorneys at Eccleston Law have expanded their investigation of the Del Mar, California broker-dealer for the offer and sale of unregistered securities through a private placement offering and for the failure to reasonably supervise Dennis Lee Keating II. 

According to SEC documents, starting in August 2006, Dennis Lee Keating, II, who was a registered representative and part-owner of Torrey Pines Securities, allegedly raised over $17 million from friends, family and Torrey Pines Securities’ customers in a private, unregistered offering of securities.  Keating is believed to have lulled investors in with false assurances that they would receive a return on their investment. 

Jack Smith, the President and CEO of Torrey Pines Securities was alleged to have the overall supervisory responsibility for the firm during the relevant time periods.  Although Torrey Pines securities had a policy prohibiting selling securities outside of the firm, the firm failed to develop adequate systems for supervisors and the compliance department to monitor adherence with the provisions.  According to the SEC, a number of suspicion events concerning Keating’s outside business activities came to the attention of the supervisors and/or compliance staff at Torrey Pines Securities, which may have allowed Torrey Pines Securities to detect and possibly prevent Keating’s activities. 

Eccleston Law represents individual and institutional investors to recover their investment losses caused by securities and investment fraud. Our attorneys also help victims of Ponzi schemes pursue recovery by submitting claims with receiverships established by the SEC or by assisting victims with the filing of a Theft Loss Tax Deduction with the IRS.

If you have lost money investing with Dennis Lee Keating II or with Torrey Pines Securities, your losses may be recoverable through securities arbitration.  Please contact Jim Eccleston at the Eccleston Law Offices at 312-332-0000 to discuss your case.     

Attorneys Investigate WFP Securities and Western Financial Advisors For Allegedly Recommending Unsuitable Investments To Clients

Our attorneys have launched an investigation of California-based WFP Securities, Western Financial Advisors, and WFP Securities Corporation for allegedly recommending the purchase of unsuitable, highly speculative investments to their clients. Louis Schooler is believed to be the president of Western Financial Planning and his brother, John Evan Schooler, is believed to be president of WFP Securities and Western Financial Advisors. WFP Securities is located in Cornerstone Court in Sorrento Valley, California.

Investors who have suffered losses investing with any of these firms are encouraged to contact us to discuss their recovery options.

Upon information in belief, the firms failed to conduct thorough due diligence on certain securities that turned out to be Ponzi schemes and sold investors products that may not have been suitable for their investment needs.  The investments at issue include, but are not limited to Medical Capital, Desert Capital Real Estate Investment Trust, Provident Royalties, and other such investments. 

Our attorneys represent 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.

If you are an investor that has suffered losses investing with WFP Securities, Western Financial Advisors, Western Securities Corporation, Louis Schooler or John Evan Schooler, your losses may be recoverable through securities arbitration.  Please contact us at 312-332-0000 to discuss your recovery options.  

Eccleston Law Launches Investigation of AIC, Inc. and its Agents and Subsidiaries Following Offering Fraud and Ponzi Scheme Charges

The attorneys at Eccleston Law have launched an investigation of Richmond, Virginia-based AIC, Inc. and its President and CEO, Nicholas D. Skaltsounis, along with AIC’s subsidiary, Community Bankers Securities, LLC, John B. Guyette of Greenley, Colorado and John R. Graves of Pensacola, Florida for their roles in the offering fraud and Ponzi scheme.

In addition, the attorneys at Eccleston Law are also investigating several AIC subsidiaries, including Allied Beacon Partners, Inc. (f/k/a Waterford Investor Services, Inc.), Advent Securities, Inc., and CBS Advisors, LLC, along with their registered representatives for their role in the fraudulent scheme.

The SEC alleged that from January 2006 through November 2009, Nicholas Skaltsounis, directly and through registered representatives associated with CB Securities, including John Guyette and John Graves, fraudulently offered and sold as much as $7.7 million in AIC promissory notes and stock to at least 74 investors in at least 14 states, many of whom were elderly, unsophisticated brokerage customers of CB Securities. Skaltsounis, Guyette, and Graves allegedly misrepresented and omitted material information to investors relating to, among other things, the safety and risk associated with the investments, the rates of return on the investments, and how AIC would use the proceeds of the investments.

The SEC further alleged that AIC promised to pay interest and dividends up to 12.5% on the promissory notes and stock knowing that it did not have the ability to pay those returns. Skaltsounis is believed to have used the money raised from new investors to pay back principal and returns to existing investors in a Ponzi scheme manner. To the detriment of investors, by December 2009, the Ponzi scheme collapsed when Skaltsounis could no longer solicit investments and recruit new investors to pay back existing investors.

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.

If you are an investor that has suffered losses investing, AIC, Community Bankers Securities, Nicholas Skaltsounis, John Graves, John Guyette, Allied Beacon Partners, Waterford Investor Services, Advent Securities, or CBS Advisors, your losses may be recoverable through securities arbitration.  Please contact Jim Eccleston at the Eccleston Law Offices at 312-332-0000 to discuss your recovery options.  

James Eccleston Named An Illinois Super Lawyer for 2011

Eccleston Law Offices is pleased to announce that James Eccleston has once again been named an Illinois Super Lawyer.  He has been recognized as a Super Lawyer every year since its inception in Illinois in 2005.  

Each year Law & Politics mails approximately 47,000 ballots to active lawyers in Illinois to nominate the best lawyers they observed in action. The selection process includes peer recommendations, blue ribbon panel review, and independent research on each nominee.  Only 5% of the attorneys in Illinois are chosen each year. 

Jim's work is recognized nationally by other peer review organizations as well.  Martindale-Hubbell has bestowed the distinguished AV® Peer Review Rating (the highest possible rating for both integrity and ethics).  A third independent rating service has designated him as an Illinois Leading Lawyer for Employment Law.

Eccleston Law Continuing Its Investigation Into The Provident Royalties Fraud And Brokerage Firms That Sold Those Securities

The attorneys at Eccleston Law are continuing their investigation into Provident Royalties, LLC following the SEC allegation of a $485 million offering fraud and Ponzi scheme orchestrated by three Dallas businessmen through Provident Royalties.

The SEC alleges that from at least June 2006 through January 2009, Provident made a series of fraudulent securities offerings involving oil and gas assets through a number of broker-dealers who sold private placements to more 7,700 investors throughout the United States.  While Provident's entities made some direct retail sales of securities, the bulk of the sales were made by retail broker-dealers who sold the stock to retail investors nationwide.

Provident falsely promised investors yearly returns of up to 18 percent and misrepresented to investors that 85 percent of the funds raised through the offerings would be used to purchase interests in oil and gas real estate, leases, mineral rights, and interests, exploration and development.  Contrary to these representations, Provident allegedly used less than 50 percent of investor funds for their stated purpose, and the proceeds from later offerings were used to pay expenses related to earlier offerings and returns to investors in those offerings.

Eccleston Law has uncovered the following list of some of the broker-dealers making sales of Provident Royalties, the total sales they made, and the commissions they generated from these sales. 

Firm name	Total sales	Total commission paid to BD
Advisory Group Equity Services Ltd.	$110,000	$70,650
AFA Financial Group LLC	$2,455,000	$456,150
American Portfolios Financial Services Inc.	$585,000	$66,650
Asset Management Strategies LLC	$220,000	$2,250
Ausdal Financial Partners Inc.	$100,000	$2,250
Barron Moore Inc.	$250,000	$96,750
Boogie Investment Group Inc.	$410,000	$110,150
Brookstone Securities Inc.	$460,000	$76,500
Callaway Financial Services Inc.	-	$22,500
Calton & Associates Inc.	$300,000	$40,750
Capital Financial Services Inc.	$33,655,000	$5,510,725
CapWest Securities Inc.	$21,745,000	$3,058,700
Chester Harris & Co.	$340,000	$297,500
Community Bankers Securities LLC	$2,780,000	$355,950
Crescent Securities Group	-	$9,375
David Harris & Co. Inc.	$850,000	$94,000
DeWaay Financial Network LLC	$850,000	$134,525
Eagle One Investments LLC	$360,000	$42,500
Empire Financial Group Inc.	$2,750,000	$234,200
Empire Securities Corp.	$205,000	-
E-Planning.com Securities Inc.	$3,765,000	$483,925
First Allied Securities Inc.	$380,000	$11,250
Gk Securities LLC	$50,000	-
Grant Bettingen Inc.	$215,000	$19,350
GunnAllen Financial Inc.	$22,255,000	-
Harrison Douglas Inc.	$1,830,000	$569,900
Independent Financial Group	$495,000	-
INVEST Financial Corp.	$100,000	-
Investlinc Securities LLC	$2,095,000	$183,275
Investors Capital Corp.	$3,400,000	$427,975
J.P. Turner & Co. LLC	$11,600,000	-
Jesup & Lamont Securities Corp.	$100,000	$13,500
Kaiser & Co.	$100,000	$160,650
Lighthouse Capital Corp.	$250,000	$33,750
Main Street Securities LLC	$205,000	$45,450
Matheson Securities LLC	$100,000	$37,800
Milkie Ferguson Investments Inc.	$4,145,000	$480,350
Morrow Wealth Management	$30,000	-
National Securities Corp.	$3,665,000	$437,250
Newbridge Securities Corp.	$25,000	$15,750
NEXT Financial Group Inc.	$33,485,000	$3,190,200
Okoboji Financial Services Inc,	$21,910,000	$2,261,225
Private Asset Group Inc.	$2,015,000	$204,150
Provident Asset Management	$50,000	-
QA3 Financial Corp.	$32,585,000	$6,974,450
Questar Capital Corp.	$250,000	$24,125
Securian Financial Services Inc.	$50,000	-
Securities America Inc.	$17,995,000	$3,723,475
Securities Network LLC	$215,000	$89,550
SII Investments Inc.	$100,000	-
Sterling Enterprises Group Inc.	$100,000	$13,000
Summit Brokerage Services Inc.	$560,000	$81,000
Unaffiliated Broker-Dealer	$150,000	-
United Equity Securities LLC	$660,000	$173,200
United Securities Alliance Inc.	$550,000	$401,850
Waterford Investor Services Inc.	-	$2,250
Wedbush Morgan Securities Inc.	$325,000	-
WestPark Capital Inc.	$785,000	$114,250
WFP Securities Corp.	$6,755,000	$1,286,775
Williams Financial Group Inc.	$175,000	-
Workman Securities Corp.	$9,045,000	$1,239,025
	$250,990,000	$33,380,775

If you have lost money investing in Provident Royalties, you may be able to recover your losses through arbitration.  Contact Jim Eccleston at the Eccleston Law Offices at 312-332-0000 to discuss your case.     

 

ECCLESTON LAW ISSUES INVESTOR ALERT FOR CARR MILLER CAPITAL FOR AN ALLEGED $40 MILLION PONZI SCHEME TO DEFRAUD INVESTORS

The attorneys at Eccleston Law have launched an investigation of New Jersey based investment advisory firm Carr Miller Capital for allegedly operating a $40 million Ponzi scheme. Also under investigation are Everett Charles Ford Miller, Ryan J. Carr, and Brian P. Carr, who are believed to have orchestrated the fraud.

Carr Miller Capital sold nine-month notes that purportedly offered rates of return ranging between 10% and 15% annually. Investors were told that they could redeem these notes at the end of the term or could continue to renew their notes for additional nine-month terms.

However, in typical Ponzi-scheme fashion, it is believed that over $8 million of monies received from new investors were sent to earlier investors as interest payments.  Approximately $14 million of investor funds were used to support the extravagant lifestyle of the managers of Carr Capital, which included luxury vacations, automobiles, and to purchase a New Jersey Devils sky box at the Prudential Center in Newark, New Jersey. The remaining $16 million was invested in various hedge funds and other speculative investments not authorized by or disclosed to investors, such as film production companies and oil and gas drilling deals.

Eccleston Law represents individual and institutional investors to recover their investment losses caused by securities and investment fraud through litigation and arbitration. Our attorneys also help victims of Ponzi schemes pursue recovery by submitting claims with receiverships established by the SEC or by assisting victims with the filing of a Theft Loss Tax Deduction with the IRS.

If you have lost money investing with Car Miller Capital or have information about this Ponzi scheme, please contact Jim Eccleston at 312-332-0000.     

ECCLESTON LAW LAUNCHES INVESTIGATION OF ILLINOIS RESIDENT DANIEL SPITZER AND HIS NETWORK OF ENTITIES FOR OPERATING A $105 MILLION PONZI SCHEME

The SEC announced securities fraud charges and obtained an emergency asset freeze against Daniel Spitzer, a purported fund manager residing in North Barrington, Illinois, for operating an alleged $105 million Ponzi scheme impacting over 400 investors.  The SEC also sought charges by the following entities that were controlled by Spitzer:

• Kenzie Financial Management, Inc.;
• Kenzie Services LLC;
• Draseena Funds Group, Corp.;
• Nerium Management Co.;
• Aneesard Management LLC;
• DN Management Co. LLC;
• Arrow Fund, LLC; Arrow Fund II, LLC;
• Conservium Fund, LLC;
• Nerium Currency Fund, LLC;
• Senior Strength Q Fund, LLC;
• SSecurity Fund, LLC;
• Three Oaks Advanced Fund, LLC;
• Three Oaks Currency Fund, LP;
• Three Oaks Fund, LP; Three Oaks Fund 25, LLC;
• Three Oaks Senior Strength Fund, LLC; and
• USFirst Fund, LLC.

The SEC alleges that from 2004 through 2010, Spitzer orchestrated a fraud, using the above entities, related sales agents and third party participants, to induce investors to invest in his investment funds that purportedly were engaged in foreign currency trading.  Investors falsely were told that Spitzer’s funds had never lost money and had historically produced returns that in some cases exceeded 180 percent. 

Instead of investing this money, Spitzer created a classic Ponzi scheme by using money raised from new investors to pay earlier investors.  Spitzer also misappropriated investor funds to pay for unrelated business and personal expenses.  To conceal his fraud from investors, Spitzer created false statements that led investors to believe that their investments were actually profitable.

This fraud involved over 400 investors and over $105 million, the majority of which was used to repay investors in a Ponzi-like manner.  Spitzer used a complicated network of offshore bank accounts to pay the business expenses of his companies while living an extravagant lifestyle.

Eccleston Law represents individual and institutional investors to recover their investment losses caused by securities and investment fraud, directly against the wrongdoer as well as indirectly against individuals and firms that referred investors. Our attorneys also help victims of Ponzi schemes pursue recovery by submitting claims with receiverships established by the SEC and by assisting victims with the filing of a Theft Loss Tax Deduction with the IRS.

If you have lost money investing with Daniel Spitzer or any of his entities, or have information about this Ponzi scheme, please contact Jim Eccleston at the Eccleston Law Offices at 312-332-0000.     

Eccleston Law Investigates Hedge Fund Manager Arthur Nadel and his Feeder Funds for Securities Fraud

Arthur Nadel (“Nadel”), the former Florida hedge fund manager, is being investigated by Eccleston Law for bilking investors out of more than $160 million.

Nadel managed the following companies and funds that he used to defraud investors: 

1. SCOOP CAPITAL, LLC,
2. SCOOP MANAGEMENT, INC.
3. SCOOP REAL ESTATE, L.P.,
4. VALHALLA INVESTMENT PARTNERS, L.P.,
5. VALWALLA MANAGEMENT, INC.,
6. VICTORY IRA FUND, LTD,
7. VICTORY FUND, LTD,
8. VIKING IRA FUND, LLC,
9. VIKING FUND, LLC, AND
10. VIKING MANAGEMENT, LLC

Labeled as a “mini-Madoff”, Nadel managed a series of funds that took in $392 million from investors, but lost approximately $162 million when the stock market collapsed.  The SEC alleged that Nadel began covering up these losses by falsely stating the value of the investments in the funds by as much as $300 million. 

The attorneys at Eccleston Law are looking for information related to Nadel, as well as information on any “feeder funds” that might have funneled investor money into Nadel’s funds.  Feeder funds may be considered liable for failure to conduct proper due diligence on Nadel and his funds. 

If you have information about Arthur Nadel or any of the feeder funds linked to him, or if you are an investor that lost money with Nadel, your losses may be recoverable through arbitration.   Contact Jim Eccleston at the Eccleston Law Offices at 312-332-0000 to discuss your case.