Securities Lawyers Blog
The law offices of Gana Weinstein LLP continue to investigate broker sales of the Walton Land Fund companies (Walton Land). Walton Land has been solicited many brokers across the country as investments in real estate. Walton Land is a highly speculative private placement that invests on vacant undeveloped properties that do not generate income. The hope is that one day in the far future Walton Land can sell the properties for a profit to someone else to develop. The problem is that Walton Land needs to pay carrying costs on the properties while they do not generate income. In addition, newsources have exposed that Walton Land makes a profit on these properties by selling them to the funds at a huge mark up
As a recent Bloomberg article exposed a “markup of five times Walton’s own price wasn’t unusual across hundreds of properties. In one 2008 investment vehicle, Walton bought 304 acres northeast of Atlanta at a price of $13,600 an acre in U.S. dollars, and syndicated it to investors at about $68,000 an acre.” In other words, Walton is sure to profit on its own deals by selling properties it bought for way cheaper to ignorant retail investors for many times the properties’ actual value. In addition, broker’s are paid huge commissions to never reveal these facts to their clients and get their “cut” of the land fraud. “Walton also was paying sales commissions as high as 13.25% in some cases, even though 6% is more typical for speculative investments, securities experts say.”