Former clients of SCI Real Estate Investments, LLC (SCI) appear to have the possibility for legal
remedies for their losses. SCI is an entity which operates as a real estate company here in the United States. Specifically, SCI acquires multi-family and retail properties as 1031 exchanges and investments to individual real estate buyers.

On February 11, 2011, the Los Angeles-based company filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Central District of California.
The confirmation hearing is set to take place on June 13, 2012 for the firm’s liquidation plan.

It turns out the most problematic offered by SCI is the SCI Capital Group Mezzanine Fund. This Fund invested in unsecured loans to SCI and its affiliates. The Fund, however, did not invest in real estate. The loans appear likely to be discharged by SCI’s bankruptcy filing. Further, SCI’s tenant-in-common (TIC) real estate investments have been negatively affected by the collapse of the real estate market.
This is a strong indicator of a complete loss for the investors who invested in TIC.

If you are an investor that has suffered losses investing with SIC, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

Eccelston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, and breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars
for investors.

Complaints have been initiated against Merrill Lynch broker, Giancarlo Ciocca. Former clients of Mr. Ciocca who have sustained losses in their Merrill Lynch accounts due to his alleged wrongful conduct have begun to seek recovery for the losses they sustained between 2007-2011.

In particular, in FINRA, he has four pending customer complaints. The grounds for these complaints have been for unsuitable investment recommendations, excessive trading, unauthorized trading, misrepresentations and omission of material facts, and providing the customer with fraudulent account statements.

In March 2011, Jason Schlesinger filed a Statement of Claim with the Financial Industry Regulatory Authority (FINRA) alleging breach of contract and seeking $1 million in compensatory damages, punitive damages, costs, and attorneys' fees. He also sought a declaration that Wells Fargo, LLC may not enforce the promissory note against him. In the Matter of the FINRA Arbitration Between: Jason Martin Schlesinger, Claimant v. Peter Yan Hong; Wallace Lawrence Key; Wells Fargo Adivsors, LLC, Respondents v. Jason Martin Schlesinger, Counter-Respondent.

In particular, Schlesinger (Claimant) alleged that he was fraudulently induced to join Wachovia Securities by a couple of promises. Those promises were: "a position in which he would be the sole broker in a start-up hub office specializing in high net worth investors; and that he would have access to a pool of names of so called orphan accounts left from a previous merger of Wachovia Securities and Gold West World Savings." See Statement of Claim.

Claimant understood this to be a promise that he would be entitled to receive all the leads of the bankers in the new office since he would be the only broker in the office. Respondents denied these allegations and asserted affirmative defenses.

In Wells Fargo Adivsor's (Respondent/Counter-Claimant) Counterclaim, it asserted that Claimant breached a promissory note (Note) executed by Claimant. It was alleged that when Claimant joined Wachovia the Note was executed for $925,306 on April 14, 2008. Furthermore, on July 16, 2010 the Note was amended and went down to $792,776. Respondent/Counter-Claimant requested the principal balance due on the Note ($734,052.27) plus 3.25% annual interest, costs, and attorneys' fees.

The FINRA Arbitration Panel (Panel) did not find fraud on behalf of the recruiters Respondents Peter Yan Hong and Wallace Lawrence Key. The Panel did find, however, there was considerable confusion on the part of Respondents as to why Claimant was paid only $87,000 for his first year at Wachovia Securities. There was also confusion on how it was calculated.

Ultimately, the Panel found Claimant liable and he was ordered to pay $734,052.27 to Respondent/Counter-Claimant Wells Fargo Advisors. In addition, the Panel found Respondent/Counter-Claimant Wells Fargo Advisors liable to Claimant and ordered it to pay him $100,000. Thus, the net final award that Claimant owed was $634,052.27.

In January 2011, Nicole Cannava filed a Statement of Claim with the Financial Industry Regulatory Authority (FINRA) seeking $68,117 in compensatory damages plus interest, attorneys' fees, costs, and expungement of her Central Registration Depository (CRD) as a result of alleged libel on her Form U5 and for wrongful termination. In the Matter of the FINRA Arbitration Between Nicole Alise Cannava, Claimant, v. Merrill Lynch Pierce Fenner & Smith Inc., Respondent. Merrill Lynch denied the allegations and asserted affirmative defenses.

In April 2012, the FINRA Arbitrator hearing the dispute found Merrill Lynch liable and ordered it to pay Cannava $68,117. In addition, the Arbitrator found defamation and recommended the expungement of the answers to Question 14J(1) on Cannava's Form U4 and Questions 7F(1) on her Form U5.

In the section "Termination Disclosure" in Form U4, Question 14J states: "Have you ever voluntarily resigned, been discharged or permitted to resign after allegations were made that accused you of: [V]iolating investment-related statutes, regulations, rules, or industry standards of conduct? [F]raud or the wrongful taking of property? [F]ailure to supervise in connection with investment-related statutes, regulations, rules or industry standards of conduct?"

In the section "Termination Disclosure" in Form U5, Question 7F it states: "Did the individual voluntarily resign from your firm, or was the individual discharged or permitted to resign from your firm, after allegations were made that accused the individual of: [V]iolating investment-related statutes, regulations, rules or industry standards of conduct? [F]raud or the wrongful taking of property? [F]ailure to supervise in connection with investment-related statutes, regulations, rules or industry standards of conduct?"

Specifically, the Arbitrator recommended that the answers to the above questions be changed from "Yes" to "No," and also the Disclosure Reporting Pages that accompany the questions be enitrely expunged. Lastly, the Arbitrator recommended that the "Reason for Termination of Discharge" in the Form U5 be replaced with "Voluntary."

Many large institutions have been bustling around while attempting to implement a plan to retain business. This is because of older brokers who continue to age and who have even older clients. On April 18th, a six-person panel at the Securities Industry and Financial Markets Association (Sifma) addressed this issue of succession planning.

Chief administrative officer private wealth management at Robert W. Baird, Scott Falk, said there are two approaches that work well for their organization to talk transferring business to a younger advisor:

First, there are Baird qualified teams which is a creative group with various generations of advisors. Within this team there are certain rules and incentives to carry this on. Second, there is the codified succession planning. Baird has put together a binder of information and in turn formalized a program to make it easier for advisors to prepare in advance and accomplish succession plans.

Specifically, business growth begins to slow down, usually through attrition (either for health reasons or age), for advisors aged around 50. The problem typically comes to fruition when it comes time to sell their book and advisors do not have much left. It is said the most serious concern is when advisors reach the average age of 59 and do not have a plan in place to recruit younger representatives. Advisors fall victim to this problem when they fail to plan to transfer client relationships and the problem is right there in front of them. Not to mention, the number of advisors to take over the book is not very deep.

Another solution for this problem was created by RBC Wealth Management - US. That firm created a plan that creates a team with an "anchor," which facilitates conversation between the advisors. An "official" team, according to the firm, has to have a formal strategy with roles and responsibilities as well as a succession plan for death and/or disability.

There are other firms that have used different spins on the aforementioned plans to prevent this issue from occurring. Either way it is nice to see that firms are recognizing the issue of the aging base of brokers and have been active to implement plans to remedy the problem.

Investors in Apple REITs sold by David Lerner Associates have little chance of getting their frozen funds of the illiquid real estate investments following the rejection of consolidation talks by a special committee of the Apple REIT board of directors. 

The recent 8-K reads as follows:

"As previously announced, the board of directors of Apple REIT Eight, Inc. (the “Company”) authorized the evaluation of a potential consolidation transaction in which the Company, Apple REIT Six, Inc., Apple REIT Seven, Inc. and Apple REIT Nine, Inc. would be combined, and designated a special committee of all of its non-management directors to continue the evaluation process. The board of directors of each of Apple REIT Six, Inc., Apple REIT Seven, Inc. and Apple REIT Nine, Inc. (the “other Apple REITs”) also appointed a special committee. The Company announced today that the special committee of its board, and the special committee of the board of each of the other Apple REITs, have recommended to their respective full boards not to move forward with the potential consolidation transaction at this time. The Company’s board and the board of directors of each of the other Apple REITs have accepted the recommendation of its special committee and determined not to move forward with the potential consolidation transaction at this time.

The Company will evaluate any future potential liquidity events as appropriate for the Company. These events which, as previously disclosed, the Company expects to pursue within approximately seven years of the initial closing in its best efforts offering of its units may include a listing of its common shares on a national exchange, disposition of all of its assets in a manner permitting distributions to shareholders or a merger, consolidation or other combination. The timing and taking of any of these actions would be subject to and conditioned on the Company’s board of directors determining the action to be prudent and in the best interests of the shareholders. However, the Company is under no obligation to take any of these actions, and these actions, if taken, might be taken after the seven year period mentioned above."

If you are an investor that has suffered losses investing with David Lerner in the Apple REITs, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

Investors who suffered losses with Robert Van Zandt may still be able to pursue their recovery options following the annoucnment that Robert Van Zandt was arrested  and charged in a 35 count indictment for operating a massive multi-million dollar Ponzi scheme spanning a number of years.

According to the indictment and statements, Robert Van Zandt turned real estate investment opportunities into a Ponzi scheme starting in approximately 2008 by guaranteed high rates of return to new investors in his real estate projects that may have been impossible to build. Instead of using it to develop real estate, Bob Van Zandt allegedly used to pay previous investors or for his own personal use.  It is believed that he raised over $4.6 million from February 2008 through January 2011 alone.

If you are an investor that has suffered losses investing with Robert Van Zandt, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.