Articles Posted in Investor Alert

Investors who were solicited to invest in Direct Lending Investments (DLI) in Glendale, California by their financial advisor may have actionable claims to recover their money.  This week, the Securities and Exchange Commission (SEC) charged registered investment advisor Direct Lending Investments LLC with a fraud spanning multiple years that caused an $11 million over charge of management and performance fees to its private funds https://www.sec.gov/litigation/litreleases/2019/lr24432.htm.  The company allegedly fraudulently inflated it annual returns by 2 percent to 3 percent per year for multiple years.

According to the SEC:

Brendan Ross, DLI’s owner and then-chief executive officer, arranged with QuarterSpot to falsify borrower payment information for QuarterSpot’s loans and to falsely report to Direct Lending that borrowers made hundreds of monthly payments when, in fact, they had not. The SEC alleges that many of these loans should have been valued at zero, but instead were improperly valued at their full value, because of the false payments Ross helped engineer.

On Monday, the Idaho Department of Finance released its annual list of top investor threats. Among the things to look out for are unsolicited investments, especially those involving promissory notes, oil and gas deals and real estate investment opportunities, including real estate investment trusts (REITs). The top threats were determined by surveying members of the North American Securities Administrators Association. They include:

  1. Unregistered Products/Unlicensed Salesmen: The offer of securities by an individual without a valid securities license should be a red flag for investors, as should pitches of investments as “limited or no risk” and high returns.
  2. Promissory Notes: Most promissory notes available to retail investors must be registered as securities with the Securities and Exchange Commission (SEC) and the states in which they are sold. Average investors should be cautious about offers of promissory notes with a duration of nine months or less, which in some instances, do not require registration at the federal level. Short term notes that appear to be exempt from securities registration have been the source of most fraudulent activity involving promissory notes.

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