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.