Articles Tagged with REITS

On June 10, 2019, the Illinois Securities Department, Massachusetts Securities Division, New Hampshire Bureau of Securities Regulation, and New Jersey Bureau of Securities each charged Glenn C. Mueller of West Chicago, Illinois, and his companies for selling unregistered securities. Mueller developed his scheme for over 40 years, building a web of at least 32 real estate development companies and selling at least $47 million of unregistered securities in the form of promissory notes in these companies to consumers. He referred to these promissory notes as “CD alternatives”, “CD IRAs”, or represented them as being real estate investment trusts (“REITs”). His companies include, but are not limited to, Northridge Holdings, Ltd., Eastridge Holdings, Ltd., Southridge Holdings, Ltd., Cornerstone II Limited Partnership,  Unity Investment Group I, 561 Deere Park Limited Partnership, 1200 Kings Circle Limited Partnership, & 106 Surrey Limited Partnership (collectively referred to as “Mueller Entities”). Mueller organized Northridge in North Dakota with the subsidiaries incorporated in Illinois.

Northridge, founded by Mueller in 1984, is the primary property management company through which Mueller ran his scheme and is the general partner of many of his other limited partnerships. Mueller, through Northridge and the Mueller Entities, owned properties through the Chicagoland area. Mueller set up a “CD Account” through the Northridge website for investors. Once Northridge received the funds, he solicited investors to use the funds in their Northridge CD Account to invest in his various companies.

The Illinois Securities Department filed a Temporary Order of Prohibition against Mueller, Northridge, and several of the Mueller Entities. Mueller solicited 140 Illinois residents to invest over $19 million through 244 promissory notes. Some of these investments were sold to clients in their IRAs.

Former Ohio-based SA Stone Wealth Management broker Christopher Wendell was recently discharged from the firm. Mr Wendell was terminated following allegations he “violated firm policy regarding selling away, unsuitably invested assets in real estate investment trusts and sold low-cost mutual funds to purchase higher-cost mutual funds.” He also recommended unsuitable investments and executed unauthorized trades. These are all against securities laws and internal firm policies. He also unsuitably invested assets in real estate investment trusts (REITs) and sold low-cost mutual funds to purchase higher-cost mutual funds and recommended unsuitable investments. Firms like SA can be sued for this misconduct. To find out how to recover your losses, please call us today at 312-332-4200 to speak to an attorney. The call is free with no obligation. Wendell was previously registered with IDS Life Insurance Company in Minneapolis, Minnesota, American Express in Minneapolis, WRP Investments in Celina, Ohio and most recently with SA Stone Wealth Management in Celina from 2014 until 2017. This is according to FINRA records.

AdobeStock_90383187-1-300x194Recently, the Financial Industry Regulatory Authority (FINRA) fined Purshe Kaplan Sterling Investments (PKS) almost $3.4 million to be paid in restitution to a Native American tribe, after the tribe allegedly paid excessive sales charges on purchases of non-traded real estate investment trusts (REITs) and Business Development Companies (BDCs). Allegedly, a PKS representative, Gopi Vungarala, was the tribe’s broker, as well as its Treasury Investment Manager responsible for its portfolio. FINRA found that Vungarala was able to misrepresent to the tribe that PKS would not receive commissions on its purchases, when, in reality, it would, and subsequently convinced the tribe to invest more than $190 million in non-traded REITs and BDCs. This was because PKS failed to reasonably supervise Mr. Vungarala and failed to establish procedures designed to mitigate risk and oversee the broker. Vungarala himself received more than $9 million in commissions from the tribe’s investments and FINRA fined PKS $750,000 for its failure to supervise the sale of these securities.

Vungarala and PSK also failed to identify that more than 200 of the tribe’s purchases were eligible for discounts because of the volume. If the tribe had received the commissions for which it was eligible, Vungarala would have only made $6 million in commissions. PKS still did not take reasonable steps to verify this after FINRA and the REIT issuer provided inquiries about the discount transgression. These transgressions occurred between April 2009 and October 2014. REITs and BDCs tend to be extremely high-risk and illiquid investments, not suitable for all investors. Because of this fact, the broker and brokerage firm must do due diligence on the investor to make sure that all investments are suitable. If he/she and/or the firm does not, the firm may be liable for losses. To find out how you can sue PSK for investment losses, please call 312-332-4200 today for a free consultation with one of our attorneys. There is no obligation. We sue firms such as PSK in the FINRA arbitration forum for investors on a contingency fee basis only.

AdobeStock_69736117-2-300x200Did you lose money with Michael Spears, a registered broker with IMS Securities? If so, the attorneys at Stoltmann Law Offices may be able to help you recover your losses in the Financial Industry Regulatory Authority (FINRA) arbitration forum on a contingency fee basis. We may be able to bring a claim against his firm, IMS Securities, for failing to reasonably supervise him. Mr. Spears was accused of negligence, failure to supervise, misrepresentation, breach of fiduciary duty, and other claims. He was accused of selling direct participation products (DPPs) such as non-traded real estate investment trusts (REITs) and other alternative investments. REITs and other DPPs are typically risky and illiquid investments that are not suitable for all investors. A broker must take into account an investor’s age, net worth, investment objectives and risk tolerance, among other factors when recommending an investment. If he does not, his investment firm may be liable for losses. Mr. Spears is registered with IMS Securities in Houston, Texas and has been since May 2002. He has two pending customer disputes against him. If you lost money with Michael Spears, you may be able to sue IMS Securities. Please call 312-332-4200 to speak to an attorney. The call is free with no obligation.

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