A Tenants in Common fraud claim resulted in an award against a major brokerage firm earlier this month. According to records obtained from the Financial Industry Regulatory Authority (FINRA), ProEquities was hit with a $448,000 arbitration award last week after a customer complained about a failed tenant in common investment.
Suzy Asad filed a complaint in March of 2012 claiming that her broker securities fraud, elder abuse and breach of fiduciary duty. The complaints all relate to an unidentified Tenants in Common (TIC) investment. Although ProEquities vehemently denied the charges, the arbitration panel sided with Ms. Asad.
A change in IRS policy lead to the widespread proliferation of TICs in recent years. Although many TIC funded projects are legitimate, the industry has attracted a number of fraudsters and scam artists.
Many TIC investments were sold through stockbrokers and investment advisers. Stockbrokers like the commissions TICs offer that are often 500% higher than traditional investments. With the higher commissions, however, comes a duty to perform due diligence and insure the investment is legitimate. Thats where many brokers got lazy.
Unfortunately, when a Tenants in Common fraud occurs, it is often only the brokerage firm that has the ability to pay claims. (ProEquities has 1548 brokers operating out of 847 offices. It should be able to pay the award. As we just saw with Allied Beacon, however, just one Tenants in Common fraud judgment can shutter a small brokerage firm.)
Recent large scale Tenants in Common frauds include DBSI and Cabot Investments. (The principals of DBSI were indicted on federal criminal charges. Several agencies are now investigating Carlton Cabot.)
If you believe you were the victim of Tenants in Common fraud, act quickly. Several brokerage firms went under after selling many TIC investments. CapWest closed their doors after being with awards involving DBSI and Carlton Cabot. The earlier you make a claim, the better your chances of recovery.
Another reason to act quickly is that in some instances, TIC investors could be held liable for losses beyond your initial investment. That’s right, sometimes you can be responsible for unpaid mortgages and the like on the underlying property.
The Tenants in Common fraud lawyers at Mahany & Ertl represent TICs in a wide variety of settings. We can help pursue cases against third parties who sold the investments (often insurance agents, investment advisers or stockbrokers) and can defend you against foreclosure and claims for personal guaranties. Unlike some law firms, we will gladly represent groups of investors if there is an identity of interest.
For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct dial).
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and San Francisco, California. Services available in many jurisdictions.
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