Articles Tagged with bankruptcy

Many investors in the Desert Capital REIT are wondering if there is a class action lawsuit pending at this time. The answer is NO. Burned clients at firms like Royal Alliance have no choice but to seek recovery though the FINRA arbitration process. Clients who lost money in Desert Capital are making two primary claims for recovery: suitability claims and misrepresentation/omission claims. The suitability claims relate to the clients age, actual investment objectives, net worth and other similar factors. For many purchasers of Desert Capital, they simply had too much of their liquid net worth in the investment. The other claims are fraud based claims like to misrepresentations and omissions. We believe for some of the purchasers of the REIT, the true risks were not made known. Given the recent bankruptcy, it appears as though the Desert Capital investment is a complete loss for purchasers. Arbitration claims have already been filed to recover these losses.

UPDATE 1: In June of 2011, Attorney Gerald Gordon told bankruptcy Judge Linda Riegle that Desert Capital Real Estate Investment Trust was withdrawing its objection to involuntary bankruptcy. The Henderson-based company will continue operations while the bankruptcy case proceeds under Chapter 11.

Update 2: Todd Parriott resigned as chief executive officer of Desert Capital effective May 31. The company agreed to contract with Morris Anderson & Associates of Chicago for management.

Stoltmann Law Offices is interested in speaking to those individuals who may have invested money with Jack Jarrell, an adviser with OAG Wealth Management in Kirkland, Washington. According to the Securities and Exchange Commission (SEC), Jarrell and another adviser, Jeffory Churchfield, sold promissory notes of the Providence Fixed Income Fund and Providence Financial Investments, which are purported to be investments in “factoring” of accounts receivable in Brazil. The SEC alleged that these companies did not account for the funds’ use of capital, and that they concealed the fact that they faced serious financial difficulties. The SEC subsequently alleged that the companies were ponzi schemes. Providence was unable to answer basic questions about the structure of its organization, use of investor proceeds and current financial situation.

Jarrell has been registered with OAG Wealth Management in Kirkland since December 2013. Jarrell filed for bankruptcy in 2010. If you or someone you know invested money with Jack Jarrell or OAG Wealth Management or with the Providence Fund, please call our Chicago-based law offices today to speak to an attorney. We may be able to help you bring a claim against OAG for investment losses. They may be responsible for losses and we sue firms such as OAG on a contingency fee basis. We only get paid if you recover your losses.

Stoltmann Law Offices is interested in hearing from investors who may have complaints regarding investments in the Vertical US Recovery Fund or the Vertical US Recovery Fund II. Both funds are securities offered through a private placement vehicle designed to raise capital for investments in mortgages or distressed mortgage notes. They were marketed by broker-dealers to retail investors. At least one of the funds may have stopped performing and may be subject to an Assignment for Benefit of Creditors, which is an alternative bankruptcy. It is possible that this has significantly depleted the value of certain investors’ interests in Vertical US Recovery Fund and Vertical US Recovery Fund II.

Private placements such as these are non-public offerings that are exempt from registration under federal securities laws. They allow broker-dealer firms to raise billions of dollars in the offering of private placements free from the cumbersome disclosures required of public securities. Typically, they are illiquid securities and issuers generally have no duty to offer liquidity to investors wishing to sell the placement back. Investors in these placements may only receive limited information about the placement’s issuer, as well as limited financial reporting about the security and its management. Many companies do not need to disclose information about their well-being or how well or poorly their investments are performing.

If you or someone you know has lost money in the Vertical US Recovery Fund or the Vertical US Recovery Fund II, we may be able to help recover that lost money in the Financial Industry Regulatory Authority (FINRA) arbitration claims process. Please contact us at your earliest convenience to speak to an attorney for free so we can discuss your options of recovering your investment losses.

The Financial Industry Regulatory Authority (FINRA) is expecting a massive wave of arbitration claims against brokers and their brokerage firms in the coming months, thanks to bad energy investments. Because of the huge drop in oil prices, many of the cases being discovered are ones in which an adviser put too much of a client’s money into energy investments that turned out to be basically worthless as U.S. oil prices collapsed. Many of the customers are elderly and too much of their portfolios were put into risky oil and gas investments. And adviser must take into account if the investment is suitable for the client or not, and age, net worth, investment objectives and risk tolerance play large factors in determining this. Many advisers put much of their client’s money into oil and gas and energy investments, because the commissions were high. Now, with oil prices tumbling, it is a very bad situation for those whose portfolio was concentrated in the resources. High-yield default rates in the energy sector are expected to spike to 20% this year from about 7% at the end of 2015, and less than 1% in December 2014, according to Fitch ratings. The trailing 12 month default rate among exploration and production companies will jump even higher by the end of 2016, to between 30% and 35%, also Fitch estimates.

Another issue investors could see is that many do not become aware of the extent of their losses until they receive their year-end statements from their broker, or around the month of April. This could very well solidify the fact that analysts are predicting many more arbitration claims in the coming month and months ahead. Some client’s money was concentrated almost exclusively in oil and gas investments and these individuals are expecting to be hit especially hard. Some of the investments include: Linn Energy, AmeriGas Partners and British Petroleum, among others. Linn Energy, in a filing with the Securities and Exchange Commission (SEC) on Tuesday stated that a Chapter 11 bankruptcy filing may be “unavoidable.” This means serious trouble for investors. Call us today if you have experienced losses with Linn Energy or other oil and gas or energy investments. We may be able to help you bring a claim against your brokerage firm to recover your money.

The Securities and Exchange Commission (SEC) recently charged Steven Zoernack and his firm, EquityStar, for concealing past incidents and providing false and misleading statements to investors. Allegedly, Zoernack and his company, EquityStar, which he owned and operated, sold more than $5.6 million of interests in two private investment funds to over 40 investors. The SEC claims that Zoernack withdrew $1 million of the investors’ funds in secret. He also allegedly made certain that customers would not find out about his two past fraud convictions, his bankruptcy filling and other money related violations. The SEC statement also alleged that he hired a firm to manipulate internet search results of his name by flooding the internet with fraudulent information indicating his success as a fund manager and investor. He also allegedly used aliases to provide the illusion that EquityStar was larger than just himself, provided false data to Morninstar Inc. to receive a five star rating and distributed false advertising materials. Zoernack did not register himself or his funds with the SEC or any state. He is currently awaiting the scheduling of a public hearing before an administrative judge.

Citigroup was recently sued for fraud by investors and creditors of a bankrupt Mexican oil services firm over claims that they were harmed by a loan scheme. The same scheme caused the bank to cut 2013 profit by $235 million and fire at least 12 people. The bank’s loans allegedly led to the collapse of the Mexican firm, Oceanografia SA, and caused Rabobank Groep, a Dutch lender, to lose at least $1.1 billion, according to a lawsuit filed Friday in Florida federal court. Rabobank and other investors separately filed a negligence suit in Delaware state court against auditor KMPG LLP.

Citigroup’s Mexican subsidiary, Banamex, made short-term loans to Oceanografia, which worked for state-run Petroleos Mexicanos, or Pemex. Pemex then repaid the bank for the loans. According to Citigroup Chief Executive Officer Michael Corbat, $400 million of accounts receivable from Oceanografia were fraudulent. He is now working with Mexican authorities to find out who perpetrated the crime. Many investors claim that the bank conspired with Oceanografia to accept falsified work estimates, even when the firm became increasingly dependent on cash advances to survive. Then Pemex repaid the bank with millions of dollars in interest. Mexican authorities placed Oceanografia in bankruptcy and later charged several Citigroup employees with crimes, according to a complaint, which claims that the bank violated the Racketeer Influenced and Corrupt Organization Act and engaged in fraud while breaching its fiduciary duty. It is seeking compensatory and punitive damages.

Allegedly, Oceanografia’s cash advance requests were subject to a two-step approval process by Citigroup to verify that documents submitted accurately reflected the terms of its contracts with Pemez. In at least 66 cash requests, Citigroup did not satisfy either step, failing to detect falsified documents, according to the complaint. Subsequently, Citigroup increased the cash flow to the firm to try to extract money from Pemex.

Stoltmann Law Offices has learned that Energy & Exploration Partners of Fort Worth is seeking Chapter 11 bankruptcy protection after suppliers and service companies sought payment for unpaid bills. The company owns about 61,000 net acres in Texas and Wyoming, with the Texas holdings located mostly in Woodbine and Eagle Ford shales. The company made the filing after Schlumberger Technology, Baker & Hughes, and Cactus Pipe & Supply initiated an involuntary bankruptcy against the company. Several other oil and gas companies have filed for bankruptcy recently, what with the price of oil dropping sharply. Our securities law office is interested in speaking to investors who were recommended to invest in oil and gas by their broker. If so, you may have a case against your brokerage firm because not all oil and gas investments are suitable for every retail investor. They tend to be risky and illiquid. A brokerage firm can be sued for not reasonably supervising their brokers and we take these cases on a contingency fee basis, which means we do not make money unless you recover. The call to us is free. Please call today.

Shares of Energy Tranfer Equity plunged after the company disclosed that it was making a change to the Chief Financial Officer of its general partner. Meanwhile, master limited partnerships (MLPs) and other peers were downgraded by research firm Robert W. Baird. MLPs are publicly traded partnerships that receive tax benefits and often own oil assets. The downgrade comes because of the bankruptcy of exploration and productions companies, fund outflows and macroeconomic conditions. Other companies that were downgraded include EnLink Midstream (ENLC) ONEOK Partners (OKS), Plains All American (PAA) and Plains GP Holdings. Thomas Long will replace Jamie Welch as CFO of Energy Transfer Equity. Long is currently the CFO of Energy Transfer Partners, LLC which owns Energy Transfer Partners, LP, another MLP. Please call our law offices is you have experienced losses in MLPs.

Stoltmann Law Offices is investigating United Mortgage Trust which sells non-traded real estate investment trusts (REITs). REITs are securities that invest in real estate through property or mortgages and often trade on major exchanges like a stock. They typically offer higher dividends than other products and that is why they tend to be risky investments. A broker must take into account the investor’s age, net worth, investment objectives, and risk objective before recommending a security. If he or she does not, his or her brokerage firm could be held responsible for investment losses. Lack of liquidity is often a concern for investors and REITs are subject to recent developments in the Residential Sub-prime Mortgage Market, a higher risk of default than conventional mortgage loans, market and business conditions and bankruptcy of borrowers, among other factors. If you lost money in United Mortgage Trust, please call our securities law firm to discuss your options with one of our attorneys. The call is free with no obligation. We sue firms such as United Mortgage Trust to recover losses for investors.

Stoltmann Law Offices is investigating Paul Raisig, a former broker with Leonard Securities in Oklahoma City, Oklahoma. The Financial Industry Regulatory Authority (FINRA) accused him of churning a customer account, which is excessive trading in a customer account to generate large commissions for the broker. He was terminated from Leonard Securities in 2013 and filed for Chapter 7 bankruptcy. He was registered with PAS Inc. from May 1992 until May 1994, Century Investment Group in San Diego, California from May 1994 until February 1996, Service Asset Management in Dallas, Texas from March 1996 until October 1997 and Leonard Securities in Oklahoma City, Oklahoma from October 1997 until July 2013. He has two customer disputes against him, one of which is currently pending. He is not licensed within the industry. If you lost money with Paul Raisig, his former firm, Leonard Securities may be responsible for investment losses. Please call our securities law firm in Chicago at 312-332-4200 to speak with an attorney about your options. The call is free with no obligation.

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