Securities Lawyers Blog

The Parking REIT (MVP REIT II) Investment Loss Options

July 23, 2018 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating investor losses in The Parking REIT (formerly known as the MVP REIT II) a non-traded real estate investment trust (Non-Traded REIT). According to the firm’s website, the REIT owns parking lots and claims that Americans own more than 253 million passenger vehicles and that an investment in the REIT provides benefits including, low operating and maintenance costs, potential for long-term capital appreciation, redevelopment opportunities, a fragmented Industry, and heavy demand.

However, the board of The Parking REIT announced that it would be suspending the company’s distributions. The Board claims that the move is intended to focus on preserving capital in order to maintain sufficient liquidity to continue to operate the business and maintain compliance with debt covenants, including minimum liquidity covenants, and to seek to enhance the value of the company for stockholders through potential future acquisitions. The elimination of dividends is never a good sign for a REIT.

Because The Parking REIT in non-traded there are no market pricing for the value of the securities. Secondary market sources for non-traded REITs are currently pricing the REIT at $12.17 per share based on a tender offer. This is a far drop from the sale price of $25 per share when the REIT issued shares to investors.

Jeffrey Eglow Subject to Multiple Complaints Alleging Unsuitable Alternative Investments

July 23, 2018 | by Staff Attorney

Securities firm Gana Weinstein LLP is investigating Newbridge Securities Corporation (Newbridge Securities) broker Jeffrey Eglow (Eglow). According to BrokerCheck records, Eglow has been subject to 4 customer complaints and one criminal action. The majority of these disputes involve unsuitable, over-concentrated alternative investments.

In May 2017, a customer alleged that Eglow overcharged customers fees for trading which resulted in damages of $48,758. The customer’s request for damages was fully remedied by the court.

In July 2016, a customer alleged that Eglow placed over-concentrated investments in Unit Investment Trusts (UITs) and energy securities which was unsuitable to the customer and resulted in unrealized losses. In addition, Eglow leveraged Exchange-Traded Funds (ETF) in long positions also resulted in losses to the customer. The case was settled at $115,000.

Edward Davig Subject to One Customer Complaint Alleging $500,000 in Losses

July 23, 2018 | by Staff Attorney

The securities attorneys at Gana Weinstein LLP are investigating claims against Packerland Brokerage Services, Inc. (Packerland Brokerage) broker Edward Davig (Davig).

According to BrokerCheck records, Davig has been subject to six customer complaints, one of which is still pending. The majority of these customer complaints involve unsuitable recommendations in oil and gas securities.

In April 2018, a customer alleged that Davig recommended the client to invest in unsuitable, illiquid oil and gas Master Limited Partnership investment which generated many losses for the client. The client has requested $500,000 for damages. This dispute is still pending.

Advisor Howard Utz Under FBI and SEC Investigation Over Securities Dealings

July 22, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Howard Utz (Utz), formerly associated with Hazard & Siegel, Inc. (Hazard & Siegel) in Mars, Pennsylvania was terminated by his firm concerning allegations that Utz’s failed to report outside business activities, engaged in private securities transactions, and accepted checks from clients made personally payable to Utz and subsequent conversion to personal use.

In addition, in May 2018 the Federal Bureau of Investigation opened an investigation into Utz but have not disclosed any details of the investigation. Similarly, in January 2018 the Securities and Exchange Commission (SEC) opened an investigation into Utz’s activities but again there are no disclosures concerning the nature of the investigation.

At this time, the selling away claims against Utz are unclear as to the exact nature and extent of the activity. Utz has outside business disclosures including Noble and Utz Enterprises – a rental property business. In addition, Utz discloses Utz Financial Services – his investment d/b/a among other disclosures.

Essex Capital Corporation Charged By SEC In $80 Million Fraud – Investor Recovery Options

July 22, 2018 | by Staff Attorney

The attorneys at Gana Weinstein LLP are reviewing court documents and complaints related to The Securities and Exchange Commission’s (SEC) charge that an equipment leasing company – Essex Capital Corporation (Essex) – and its founder Ralph Iannelli (Iannelli) defrauded investors in connection with sales of over $80 million in promissory notes.

In the pleading the SEC called Iannelli a securities fraud recidivist and alleged that his Essex from 2014 through 2017 sold investments through the sale of promissory notes that paid typically 8.5% per annum. The SEC claimed that investor returns were supposed to be based on the strength of Essex’s equipment leasing model. However, the SEC charged that between 2014 and 2017 Iannelli raised over $80 million from approximately 70 promissory note investors through materially false and misleading information. The SEC claims that Iannelli protected only his own financial interests and siphoned millions out Essex to himself from 2014 to the present.

According to the SEC, Essex sold approximately $8.4 million in promissory notes to 21 Daniel Investment Associates (Daniel Investment) clients since 2014 and approximately $23.36 million from Granger Management LLC (Granger) since 2015. Granger clients invested through a pooled investment fund.

Borland Capital Group and Belize Infrastructure Fund Recovery Options

July 21, 2018 | by Staff Attorney

The Securities and Exchange Commission (SEC) charged Brent Borland (Borland), the owner of a alternative investment firm, with misappropriating approximately $6 million in investor funds that were supposed to finance the construction of an international airport in Belize. The SEC alleges that between 2014 and 2017, Borland sold more than $21 million of promissory notes in two companies – Borland Capital Group LLC and Belize Infrastructure Fund I, LLC – to dozens of investors as bridge financing for development of an international airport in Placencia, Belize. Borland also purportedly promised investors that their investments would be protected by pledges of real estate as collateral.

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Ahmed Gheith (Gheith) and two other registered representatives of Paulson Investment Company, LLC (Paulson Investment) may have been a referral source to Borland’s fraud. As our firm previously reported, FINRA alleged that two registered representatives informed Gheith about a private offering related to a real estate development in Belize. The investment was described as a short-term note meant to raise money for the development of an airport and Gheith thereafter referred several customers to invest. FINRA alleged that Gheith was paid $93,165 for his role in soliciting and referring the customer.

According to the SEC, instead of using the funds for their intended purpose Borland used millions of dollars of investor funds for personal expenses and unrelated business expenses, including mortgage and property tax payments on his Florida mansion, luxury automobiles, and almost $2.7 million to pay off credit cards.

Customers Allege Jerry Raines Recommended Investments in the Woodbridge Mortgage Fruad

July 20, 2018 | by Staff Attorney

The law offices of Gana Weinstein LLP continue to investigate the Woodbridge Group of Companies and the Woodbridge Mortgage Funds (Woodbridge). The Securities and Exchange Commission (SEC) has alleged that the Woodbridge operated a billion-dollar Ponzi scheme ensaring about 8,400 investors. Woodbridge solicited hundreds of disreputable insurance agents and investment brokers to sell its false notes that the firm claimed to be backed by mortgages. In plain sight to regulators, Woodbridge engaged in a nationwide investment fraud by offering the sale of unregistered securities.

One of Woodbridge’s agents was Jerry Raines (Raines) formerly associated with HD Vest Investment Services (HD Vest). A dozen clients have alleged that Raines recommended Woodbridge causing a near complete loss of their investments. Federal securities laws and the FINRA rules require firms to monitor and supervise its employees, like Raines, in order to detect and prevent brokers from offering investments in this fashion. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction with the public. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including recommending fraudulent investments.

The signs that the Woodbridge Funds was a giant fraud debacle ware all apparent. Woodbridge and its agents have been sanctioned by multiple state regulators for offering unregistered securities. Going back to May 2015, the Massachusetts Securities Division imposed a bar on the Woodbridge Mortgage Investment Funds and ordered the companies to permanently cease and desist from selling unregistered or non-exempt securities in the Commonwealth of Massachusetts.

Financial Advisor Todd Meier Terminated Over Customer Misconduct

July 20, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former Feltl & Company (Feltl) broker Todd Meier (Meier) has been discharged for failure to follow firm policies and procedures with regards to interactions with a client. This discharge occurred in April 2018. The termination occurred shortly after Meier was subject to a customer complaint alleging churning or excessive trading that occurred from 2009 through 2012 causing $363,443 in damages. The claim was settled for $125,000.

In addition, Meier has been subject to numerous tax liens and declared bankruptcy in 2015. Such disclosures on a broker’s record can reveal a financial incentive for the broker to recommend high commission products or services. FINRA discloses information concerning a broker’s financial condition because a broker’s inability to handle their own personal finances has also been found to be material information in helping investors determine if they should allow the broker to handle their finances.

When brokers engage in excessive trading, sometimes referred to as churning, the broker will typical trade in and out of securities, sometimes even the same stock, many times over a short period of time. Often times the account will completely “turnover” every month with different securities. This type of investment trading activity in the client’s account serves no reasonable purpose for the investor and is engaged in only to profit the broker through the generation of commissions created by the trades. Churning is considered a species of securities fraud. The elements of the claim are excessive transactions of securities, broker control over the account, and intent to defraud the investor by obtaining unlawful commissions. A similar claim, excessive trading, under FINRA’s suitability rule involves just the first two elements. Certain commonly used measures and ratios used to determine churning help evaluate a churning claim. These ratios look at how frequently the account is turned over plus whether or not the expenses incurred in the account made it unreasonable that the investor could reasonably profit from the activity.

Lawrence Fawcett Barred By FINRA and Subject to Churning Complaints

July 16, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former Westpark Capital, Inc. (Westpark Capital) broker Lawrence Fawcett (Fawcett) has been subject to five customer complaints, two regulatory actions and one termination for cause. Fawcett was barred by FINRA from the securities industry in March 2018 after failing to appear for testimony in connection with an investigation regarding Fawcett’s outside business activities. At around the same time Fawcett was terminated by Westpark Capital on allegations that he conducted business from a non-disclosed location and made false representations to the firm.

In December 2017 Fawcett was sanctioned by FINRA on allegations that he recommended unsuitable mutual fund transactions to a customer by recommending 12 different mutual fund families instead of obtaining favorable breakpoint discounts for the customer.

In addition, many of the customer complaints against Fawcett concern high frequency trading activity also referred to as churning or excessive trading. In May 2018 a customer filed a complaint alleging excessive trading, churning, and unsuitable transactions seeking $33,271 in damages. The claim is currently pending.

FINRA Suspends Charles Lundell for Unauthorized Trading

July 16, 2018 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating the regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Charles Lundell (Lundell). According to BrokerCheck records, Lundell was suspended by FINRA in November 2017 for executing unauthorized trades in customers’ non-discretionary accounts. In addition, Lundell has been subject to two customer disputes, a regulatory action sanctioned by the New York Stock Exchange (NYSE), and two discharges from member firms.

In November 2017, FINRA found that Lundell violated the NASD Conduct Rule 2510(b) and FINRA Rule 2010 by executing unauthorized transactions in five of his customers’ non-discretionary accounts. From January to February 2017, Lundell exercised discretion of $252,912 of four equity securities in his customers’ accounts and sold $65,788 of one of the equity securities without customer or firm approval. FINRA fined Lundell $5,000 and suspended him for 30 days.

In addition, in March 2017, Lundell was discharged from First Allied Securities, Inc. for violating the firm policy regarding the execution of unauthorized transactions without the firm’s required approval.