NEW YORK, July 31, 2014 (GLOBE NEWSWIRE) -- New York City based securities fraud attorneys , Fitapelli Kurta, announced the filing of fourteen individual customer arbitration cases against various broker-dealers related to the sale and marketing of failed real estate investments. The cases all involved investments issued by Griffin Capital, Covington Realty Partners, Triple Net Properties LLC and NNN Realty Advisors. The complaints, which were filed against several brokerage firms, involve the marketing of real estate private placements to 1031 investors, many of whom were elderly retirees. The arbitration complaints were filed through the Financial Industry Regulatory Authority, or FINRA.
The complaints allege that the firms and its brokers recommended highly complex and risky real estate private placements to unsophisticated and elderly investors. According to the complaints, these investments fell short of the promises by the broker dealers and either resulted in foreclosures or suspended dividends, often wiping out a large portion of the investor's nest egg.
The investments were in real estate special purpose entities called Delaware Statutory Trusts. The entities are designed to enable investors to defer the payment of capital gains tax; however the fees and risks associated with them often outweigh the tax savings. In every case filed the fees paid for each real estate investment outweighed the potential tax savings. In one investment, the broker-dealer was paid over $800,000 in commissions, which was 10% of the capital raised for an investment in an apartment complex in Tennessee. The apartment complex was foreclosed upon earlier this year by its lender.
According to Fitapelli Kurta partner Marc Fitapelli, "The unfortunate aspect of these complaints is that the brokers all have long histories of customer complaints involving these investments. The most egregious example of which is a broker with 19 other disclosed complaints involving failed real estate investments."
In addition to filing the fourteen customer arbitration cases, Fitapelli Kurta sent a letter to FINRA and the Securities and Exchange Commission urging the organizations to tighten existing regulations pertaining to the sale and marketing of Delaware Statutory Trusts. According to partner Jonathan Kurta, "These investments are highly complex and fee laden. As the economy improves and investment capital becomes more accessible, it is incumbent that FINRA and the SEC take action today to avoid investor losses years from now."
If you would like to know more about these cases or Fitapelli Kurta's letter to FINRA and the SEC, please contact Marc Fitapelli at 212-658-1501 or Jonathan Kurta at 212-658-1502.
A document accompanying this release is available at http://media.globenewswire.com/cache/32466/file/27936.pdf
