Private Placements - Iorio Law PLLC

IHC Bankruptcy Monitor: Lender Agreements Approved as Fort Myers, Delray Beach and Melbourne Face Serious Loss Concerns

Iorio Law PLLC — Fri, 23 Oct 2026 11:15:44 GMT

Weekly Updates for Inspired Healthcare Capital DST Investors

October 23, 2026 | By August M. Iorio | Iorio Law PLLC

Updated October 23, 2026, incorporating the October 23 docket review.

Since our October 12 IHC Bankruptcy Monitor update, the Bankruptcy Court has entered property-specific sale orders and approved agreements with three secured lenders. Those developments move Inspired Healthcare Capital’s bankruptcy forward, but they do not establish how much Delaware statutory trust investors will recover. Read the October 12 update.

The most consequential new development for Fort Myers DST investors is the court’s October 20 approval of an agreement involving mortgage lender Stride Bank, the Debtors, and both official creditor committees. Separate agreements involving Pinnacle Bank and Provident Bank could affect several other DSTs.

The agreements’ economic terms remain sealed. Investors therefore should not assume that the lenders reduced their claims or that money has been set aside for beneficial-interest holders.

Meanwhile, the previously disclosed financial figures continue to raise particularly serious concerns for Fort Myers, Delray Beach, and Melbourne. Under those figures, the sale proceeds are insufficient to cover the lenders’ asserted payoffs and identified expenses. Grapevine presents a different picture: a positive preliminary remainder, but unresolved questions about allocation and the amount ultimately available to investors.

What Has Changed Since October 12?

Two developments distinguish this update from our last report.

First, the court entered written sale orders on October 13. These include Dkt. 1972 covering Fort Myers, Delray Beach, Dunedin, Melbourne, Largo, and Pinellas Park; Dkt. 1971 covering Augusta, Augusta vacant land, and Reno; and Dkt. 1973 covering Eugene, Las Vegas, and Grapevine.

Additional entered orders cover other communities, including Naperville, North Haven, Hamilton, Dartmouth, Candle Light Cove, New Braunfels, San Marcos, Round Rock, Brookhaven, Athens, Arlington Heights, and Eatonton.

Second, the court approved three lender stipulations on October 20. Dkts. 2080–2082 concern Stride, Pinnacle, and Provident, respectively.

An entered sale order authorizes a transaction. It does not, standing alone, establish that the transaction closed, that all proceeds were allocated, or that investors received a distribution. The materials reviewed for this update do not establish a finalized DST-by-DST recovery schedule.

Which IHC DSTs Face the Clearest Property-Sale Loss Concerns?

The financial information in the Debtors’ October 9 collateral-surcharge motion, Dkt. 1920, remains an important starting point. These are previously disclosed figures—not new October 20 settlement terms.

Community	Reported sale price	Lender-asserted payoff	Identified expenses	Preliminary remainder after both deductions
Fort Myers	$13.20 million	$12.61 million	$1.49 million	Approximately −$903,000
Delray Beach	$26.10 million	$28.90 million	$2.06 million	Approximately −$4.87 million
Melbourne	$10.00 million	$16.25 million	$1.32 million	Approximately −$7.57 million
Grapevine	$18.125 million	$15.57 million	$1.12 million	Approximately +$1.44 million

Amounts are rounded. The final column is illustrative arithmetic, not a court-approved distribution calculation. Payoff figures have different calculation dates, remain subject to dispute, and may be affected by subsequent agreements. The table does not resolve allocation between DSTs and affiliated operating entities.

The strongest inference from these figures is that Fort Myers, Delray Beach, and Melbourne investors face a substantial risk of losing significant principal, potentially including all amounts otherwise recoverable from residual property-sale proceeds. They do not establish final losses across every possible recovery source.

Fort Myers: A New Stride Agreement, but No Public Recovery Answer

Fort Myers illustrates why the October 20 agreements matter.

The previously disclosed $13.2 million sale price exceeds Stride Bank’s asserted $12,609,561 payoff by just $590,439. Identified expenses of $1,493,277 exceed that difference by $902,838.

On that calculation, there is no positive residual after paying both the asserted payoff and identified expenses in full.

The Debtors requested a $902,838 surcharge against Stride’s collateral. That request is intended to shift qualifying expenses to the lender’s collateral; it is not an additional expense on top of the $1.49 million.

On October 20, the court entered Dkt. 2080, approving a stipulation involving Stride, the Debtors, the Official Committee of Unsecured Creditors, and the Official Committee of DST Investors. The underlying stipulation was filed under seal at Dkt. 2067.

That is a meaningful development. However, the available information does not establish whether Stride reduced its payoff, agreed to a particular proceeds allocation, released held-back funds, or resolved the surcharge request.

The appropriate assessment is that Fort Myers continues to present serious principal-loss concerns, while the effect of the approved lender agreement remains unknown.

The previously identified $5 million holdback is not a promised investor recovery. It concerns proceeds subject to competing claims, rather than a separate pool that can simply be added to investor equity.

Delray Beach: The Asserted Debt Exceeds the Sale Price Before Expenses

For Delray Beach, the reported $26.1 million sale price falls approximately $2.8 million below the lender’s asserted $28.9 million payoff—even before expenses.

Adding approximately $2.06 million in identified expenses produces an illustrative shortfall approaching $4.87 million.

Those figures provide a concrete basis for concern that the property sale will leave no residual equity for DST investors if the asserted debt and identified costs are paid in full.

That conclusion remains conditional. Disputes over liens, lender claims, expense treatment, and proceeds allocation can affect the outcome. The figures nevertheless show why sale approval alone offers little assurance of principal recovery for Delray Beach investors.

Melbourne: A Particularly Large Gap Between Sale Price and Asserted Debt

Melbourne’s reported $10 million sale price is approximately $6.25 million below the lender’s asserted $16.25 million payoff. Identified expenses of approximately $1.32 million increase the illustrative shortfall to roughly $7.57 million.

This is a substantial gap before considering any return of investor capital.

The court’s October 20 approval of the Pinnacle stipulation at Dkt. 2081 is therefore relevant. Pinnacle is the successor by merger to Synovus, whose documented lending relationships include Melbourne, Brookhaven, and Reno.

However, the underlying agreement at Dkt. 2060 is sealed. Its precise scope and treatment of Melbourne cannot be determined from the approval alone.

Melbourne presents a serious risk of little or no residual property-sale recovery for beneficial-interest holders under the previously disclosed figures. Whether the approved agreement changes that assessment materially remains an unanswered question.

Grapevine: A Positive Preliminary Remainder Is Not Full Principal Recovery

Grapevine differs from the other three properties.

Its reported $18.125 million sale price exceeds the approximately $15.57 million asserted payoff and $1.12 million of identified expenses by roughly $1.44 million.

That positive remainder does not establish an investor distribution. Allocation between the DST and affiliated entities remains important, and the extent and priority of HPI’s liens are disputed in Adversary Proceeding No. 26-09012.

Nor does a positive remainder establish that investors will recover their original principal. That requires comparing the amount actually distributable to beneficial-interest holders with their invested capital.

The available information supports concern about Grapevine’s recovery, but does not support a reliable investor-loss percentage or a conclusion that its outcome will match Fort Myers, Delray Beach, or Melbourne.

Other DSTs Potentially Affected by the Lender Agreements

The October 20 approvals extend beyond Fort Myers.

Approved agreement	Documented lender relationships potentially affected	What remains unknown
Stride — Dkt. 2080	Fort Myers	Payoff treatment, allocation, holdback disposition, and surcharge resolution
Pinnacle — Dkt. 2081	Brookhaven, Melbourne, Reno	Precise property coverage and economic terms
Provident — Dkt. 2082	Dunedin, Candle Light Cove, Hamilton, North Haven	Treatment of interest, collateral proceeds, and other lender claims

These relationships identify properties worth monitoring. They do not establish that every listed DST received a concession or will sustain a particular loss.

For Augusta and Eugene, the October 13 sale orders are a procedural advance. The materials reviewed do not supply a new finalized distribution calculation for either DST. The shortfalls at Fort Myers, Delray Beach, and Melbourne should not be applied to them without property-specific evidence.

Financing and Interest Claims Remain Important

On October 20, the Debtors filed Dkt. 2085, seeking a Third Final Order concerning postpetition financing and cash-collateral use. The request includes liens, superpriority administrative claims, and protections for secured creditors.

The reviewed notice identifies a November 13 objection deadline and a November 17 hearing at 10:30 a.m. Eastern.

Separate Pinnacle and Provident postpetition-interest matters are also scheduled for November 17, according to Dkts. 2083 and 2089.

These matters can affect the proceeds remaining after higher-priority obligations are addressed. The notices do not establish that the requested amounts have been allowed, or how the sealed lender stipulations interact with those requests.

Discovery Developments: Pinnacle Withdraws Examination Request; Committee Hearing Set for November 6

Pinnacle Bank withdrew its emergency request to examine Chief Restructuring Officer M. Benjamin Jones under Bankruptcy Rule 2004. The withdrawal appears at Dkt. 2059. This ends that examination request, but does not establish that Pinnacle withdrew its other claims or objections, or explain the economic terms of its separate lender agreement.

Separately, Dkt. 2050 rescheduled the hearing on the Official Committee of Unsecured Creditors’ third supplemental Rule 2004 request and its request for discovery from the Debtors’ tax and auditing professionals to November 6, 2026, at 2:30 p.m. Eastern.

These proceedings concern efforts to obtain information. The discovery requests are not findings of wrongdoing, and the hearing notice does not establish that the requested discovery has been authorized.

What Investors Should Watch Next

The next meaningful recovery information will come from:

Confirmed closings and actual proceeds received.
Publicly available information about lender concessions and approved claim amounts.
Decisions concerning surcharge requests and disputed liens.
Allocation of proceeds between DSTs and affiliated operating entities.
Authorized distributions identifying what beneficial-interest holders will receive.

Current access to the docket in the FINRA-related adversary proceeding, Adv. Proc. No. 26-09006, remains incomplete. The October 23 review could not reliably verify whether additional activity occurred during October 17–22. Accordingly, this update does not confirm that the injunction remained unchanged during that period. Investors should have counsel verify the operative orders before taking action on an affected claim.

For investors evaluating losses, the essential distinction remains between property-sale proceeds, bankruptcy distributions, and potential recoveries through claims against other parties. The severe property-level shortfalls identified above do not determine every potential source of recovery.

About Iorio Law PLLC

Iorio Law PLLC represents investors in securities arbitration disputes involving Delaware Statutory Trusts and other complex alternative investments. If you invested in an Inspired Healthcare Capital DST and would like to discuss how the bankruptcy proceedings, property sales or potential claims involving the recommendation of the investment may affect your rights, you can contact Iorio Law PLLC for a confidential consultation.

This article is for informational purposes only and does not constitute legal, tax or investment advice. Bankruptcy proceedings can change quickly, and information concerning proposed or approved transactions may change before closing. The identification of any brokerage firm or financial professional does not constitute a finding of wrongdoing or liability. Past results do not guarantee future outcomes.

IHC Bankruptcy Monitor: Fort Myers Recovery Concerns and the Dispute Over Sale Proceeds

Iorio Law PLLC — Mon, 12 Oct 2026 12:17:52 GMT

Weekly Updates for Inspired Healthcare Capital DST Investors

October 12, 2026 | Week Ending October 10, 2026
By August M. Iorio | Iorio Law PLLC

The approval of Inspired Healthcare Capital’s property sales answered an important question: whether the transactions could move forward. A new bankruptcy filing addresses a different—and more consequential—question for Delaware statutory trust investors: How much money could remain after debt, expenses and competing claims are addressed?

On October 9, 2026, IHC and its affiliated debtors filed a motion seeking to charge certain operating and sale-related expenses against secured lenders’ collateral. The filing provides financial details concerning four communities: Fort Myers, Delray Beach, Melbourne and Grapevine. Those figures show why a property’s sale price cannot be treated as the amount available to its DST investors.

Fort Myers is particularly concerning. The motion lists a $13.2 million sale price, a lender-asserted payoff of approximately $12.61 million, and nearly $1.5 million in identified expenses. On the debtors’ calculation, the sale price is insufficient to cover both the lender’s full asserted payoff and all those expenses. That does not establish investors’ final recoveries, but it puts concrete numbers behind the concerns discussed in our first IHC Bankruptcy Monitor update.

Fort Myers: What the $13.2 Million Sale Price Actually Shows

The motion provides the following calculation for Inspired Senior Living of Fort Myers DST:

Item	Amount
Sale price reported in the motion	$13,200,000
Stride Bank’s asserted payoff, calculated through October 31, 2026	$12,609,561
Difference before the identified expenses	$590,439
Expenses identified in the debtors’ calculation	$1,493,277
Amount by which those expenses exceed the difference	$902,838

The distinction is significant. Subtracting Stride’s asserted payoff from the sale price produces approximately $590,000. But that is not $590,000 earmarked for investors. It is a preliminary difference before accounting for the expenses identified in the motion and before resolving how the sale proceeds should be allocated.

Although the debtors’ table labels that difference “Equity,” the table itself shows that the listed expenses exceed it. The filing therefore should not be read as a distribution statement for Fort Myers beneficial-interest holders.

The debtors seek permission to recover $902,838 from the lender’s collateral through a bankruptcy mechanism called a surcharge. That amount is not an additional expense on top of the $1,493,277. It is the portion of the listed expenses that exceeds the $590,439 difference between the sale price and the asserted payoff.

For Fort Myers investors, the filing raises serious concerns about whether the property sale will leave a meaningful amount available for their interests. But the correct conclusion remains narrower than a declaration of total loss: the debtors’ figures show insufficient proceeds to pay the full asserted mortgage payoff and all identified expenses; they do not establish a final investor recovery from the bankruptcy or from every potential source.

The distinction matters because the motion reserves challenges to lender payoff amounts, and its proposed order does not determine the allocation of proceeds between the DST and its affiliated master tenant.

Delray Beach, Melbourne and Grapevine: Three Different Financial Pictures

The October 9th motion also discloses sale prices, asserted lender payoffs and expenses for three other communities.

Community	Sale price	Asserted lender payoff	Identified expenses
Delray Beach	$26.10 million	Approximately $28.90 million	Approximately $2.06 million
Melbourne	$10.00 million	Approximately $16.25 million	Approximately $1.32 million
Grapevine	$18.125 million	Approximately $15.57 million	Approximately $1.12 million

Amounts are rounded. The Delray Beach and Grapevine payoffs are calculated through November 1, 2026; Melbourne’s is stated as of September 16, 2026. The debtors reserve rights concerning the lender-asserted amounts. Source: Dkt. 1920, pages 7, 14 and 15.

Delray Beach: The Asserted Loan Payoff Exceeds the Sale Price

For Delray Beach, the motion lists a $26.1 million sale price and an asserted lender payoff of approximately $28.9 million. The difference is approximately $2.8 million below the asserted payoff before the identified expenses are considered.

The debtors also identify approximately $2.06 million in expenses and seek to surcharge the lender’s collateral for that amount. These figures raise substantial concerns about a residual recovery from the property sale, while leaving the disputed claims, liens and allocation issues to be resolved.

Melbourne: A Larger Gap Between the Sale Price and Claimed Debt

Melbourne’s $10 million sale price is approximately $6.25 million below the stated lender payoff of approximately $16.25 million. That comparison does not include approximately $1.32 million in identified expenses.

The debtors seek a surcharge of those expenses against the lender’s collateral. As with Delray Beach, the filing presents a troubling picture for investors hoping the sale will produce substantial proceeds beyond the claimed debt. It does not, however, adjudicate the lender’s rights or establish the investors’ ultimate recovery.

Grapevine: An Apparent Surplus Is Still Not an Investor Distribution

Grapevine presents a different situation. Its $18.125 million sale price exceeds the approximately $15.57 million asserted payoff. The motion also identifies approximately $1.12 million in expenses.

But the motion expressly warns against treating that arithmetic as the final answer. The debtors state that the proceeds are sufficient to pay the asserted payoff and listed expenses in full only if the entire sale price is allocated to collateral securing HPI’s liens. The extent and priority of those liens are disputed.

The proposed order therefore reserves the debtors’ right to pursue a Grapevine surcharge of up to $1,120,919, rather than treating that amount as an additional surcharge already awarded.

For investors, Grapevine illustrates the other side of the same problem: even when a sale price exceeds the stated mortgage payoff, the difference is not automatically available to DST beneficial-interest holders.

Does the $5 Million Fort Myers Holdback Belong to Investors?

Not necessarily.

The October 9th motion identifies a $5 million holdback for Fort Myers, along with holdbacks of $4 million for Delray Beach, $3.3 million for Grapevine and $2 million for Melbourne. The debtors explain that certain confidential settlement agreements provide for money to be held in escrow subject to competing claims, including the surcharge claims.

A holdback means money is being set aside while claims to it are addressed. It does not mean that amount has been reserved for DST investors.

For Fort Myers, the $5 million holdback and the $590,439 difference between the sale price and Stride’s asserted payoff describe different things. The former is an escrow subject to competing claims; the latter is a preliminary calculation before the identified expenses. Neither establishes the amount that investors will receive.

The holdback also should not be added to the sale price as though it were extra proceeds, or subtracted again as though it were a separate expense. It concerns the treatment of proceeds while the competing claims are resolved.

The filing shows that some issues have been addressed through settlements, while specified claims against held-back proceeds remain preserved. That is different from saying either that all earlier objections remain unresolved or that sale approval settled every dispute.

Who Should Pay the Costs of Keeping the Properties Operating and Selling Them?

That is the central question raised by the surcharge motion.

The debtors argue that secured lenders benefited from expenditures needed to preserve the communities, maintain operations and complete the sale process. Those expenditures include investment-banking services, insurance, taxes, operating support and centralized back-office support. IHC is asking the court to make the lenders bear qualifying costs through recoveries from their collateral.

The operating-cost issue is important. According to the debtors, the communities did not generate enough operating income to remain operational without support during the bankruptcy. The debtors say they used debtor-in-possession financing proceeds to fund operating expenses and shared support services. Their argument is that selling operating senior-living communities preserved more value than selling facilities that had ceased operations. These are the debtors’ assertions supporting their request—not separate findings established by filing the motion.

The requested surcharges are $902,838 for Fort Myers, $2,064,311 for Delray Beach and $1,321,250 for Melbourne, with rights reserved concerning Grapevine. Alternatively, the debtors ask the court to limit the lenders’ liens on proceeds to account for expenses that are not recoverable through a surcharge.

A successful motion would not, by itself, authorize payments to DST investors. It would address how certain expenses are recovered and how much collateral proceeds remain subject to lender claims.

Why the Division Between a DST and Its Master Tenant Matters

The dispute is not simply about subtracting one mortgage balance from one sale price.

The motion describes structures in which a DST owns real estate and an affiliated master tenant owns other assets associated with the operating community. In Fort Myers, for example, the debtors state that the master tenant’s assets secure its obligations to the DST under the master lease, but do not secure the DST’s loan obligations to Stride.

That distinction helps explain why the allocation of a transaction’s value can be consequential. Money attributable to one debtor entity’s assets cannot simply be assumed to belong to another entity—or to that other entity’s investors.

The proposed order attached to the October 9th motion expressly states that it would not determine the allocation of sale proceeds between debtors, including a DST debtor and its applicable master tenant. It also preserves disputes concerning claims and liens.

In other words, even a ruling on the surcharge request would leave important investor-recovery questions unanswered.

InvestmentNews Coverage: The Headline Sale Price Is Not a Recovery Percentage

Bruce Kelly addressed these concerns in an October 9 InvestmentNews article, which quoted Iorio Law founder August M. Iorio:

“The sale prices may sound encouraging, but they don’t tell us how much money will actually make its way back to investors.”

The article compared the approximately $713 million property-sale figure with approximately $1.2 billion in securities sold to investors. That roughly 59% comparison is not an investor recovery rate. It does not deduct the debt and expenses illustrated in Docket No. 1920 or establish how much belongs to any particular DST. Investors should not interpret it as a promise to recover 59 cents on the dollar—or as a determination that their loss will be 41%.

What About Augusta, Eugene and the Other IHC Properties?

The four communities discussed in the October 9th motion should not be treated as a proxy for every IHC DST.

Our previous portfolio chart reported an announced contract price of $29 million for Augusta and $32.13 million for Eugene. Those were gross transaction prices, not estimates of distributions to investors. The earlier update also identified unresolved dispositions for Peachtree and St. Petersburg.

The October 9th motion addresses Fort Myers, Delray Beach, Melbourne and Grapevine. It does not provide a new property-specific recovery calculation for Augusta or Eugene, or establish new dispositions for Peachtree or St. Petersburg. Its figures should not be applied to those other investments.

The property-by-property chart in our first edition provides the earlier reported transaction information. For every property, the important milestones remain distinct: authorization to sell, completion of the sale, allocation of proceeds and authorization of investor distributions. A motion seeking payment of expenses is not proof that those later milestones have occurred.

Investor Rights: Bankruptcy Recoveries and Brokerage Claims Involve Different Questions

The bankruptcy’s allocation of sale proceeds addresses what may remain from the investments and the debtor estates. A potential claim concerning a brokerage firm’s recommendation or sale of an investment addresses different conduct.

FINRA has reminded brokerage firms that recommending private placements requires a reasonable investigation of the issuer and security, alongside applicable best-interest or suitability, disclosure and supervisory obligations. Depending on the circumstances, a legal review may examine the firm’s due diligence, the investor’s financial needs and risk profile, concentration in illiquid investments, and material information disclosed or omitted before the recommendation. A disappointing investment result alone does not establish that a firm violated those obligations.

There is also an important procedural distinction for investors with claims involving both IHC and unrelated securities.

The September 16 Order Reaffirmed That Non-IHC Claims Are Outside the Injunction

On September 16, 2026, the Bankruptcy Court denied the motion to clarify its preliminary injunction. But the court expressly stated that the injunction applies to “IHC Investment-Related Claims, but only IHC Investment-Related Claims.” It reaffirmed footnote 36, which provides that the injunction does not prohibit investors from pursuing non-IHC causes of action against non-debtor defendants. (Adversary Proceeding No. 26-09006, Dkt. 135, paragraph 2.)

InvestmentNews also reported Iorio’s explanation that FINRA is leaving the handling of non-IHC claims to the parties and, ultimately, the arbitration panels in individual cases, including the resolution of objections and procedural disputes.

This distinction can matter for an investor whose arbitration includes both IHC investments and unrelated securities, such as a separate Versity-sponsored DST. The presence of an IHC claim should not automatically be treated as placing every unrelated claim within the injunction.

The September 16 order did not lift the injunction on IHC-related claims, and it does not guarantee that every mixed-investment arbitration will immediately proceed on its non-IHC claims. Investors and counsel must evaluate the particular claims, applicable court orders and case-specific procedural issues.

What Matters Next for DST Investors?

The next consequential developments are not simply additional announcements that sales have been approved. They are the records and rulings that establish:

Who bears the identified expenses, including the outcome of the surcharge requests and any related lender objections.
Who is entitled to the held-back proceeds, including the allocation between DSTs and master tenants and the resolution of competing claims.
What can actually be distributed, after verified closings and the relevant claims, costs and allocation issues are addressed.

Those questions follow directly from the relief requested and the issues expressly preserved in Docket No. 1920.

For Fort Myers investors in particular, the new filing offers reason for concern, not a final answer. The same is true—under different financial circumstances—for investors in Delray Beach, Melbourne and Grapevine.

A sale price tells investors what a buyer has agreed to pay. It does not, standing alone, tell them what they will receive.

Discuss Your IHC DST Investment With Iorio Law

Iorio Law PLLC represents investors in securities arbitration disputes involving Delaware statutory trusts and other complex alternative investments. Investors concerned about an IHC DST, the implications of the property sales, or the brokerage firm’s recommendation can contact Iorio Law for a confidential consultation. Relevant records include offering documents, account statements, communications with the financial adviser, and notices concerning the investment or bankruptcy.

IHC BANKRUPTCY MONITOR: Court Approves $713 Million Sale – What DST Investors Need to Know

Iorio Law PLLC — Tue, 06 Oct 2026 13:28:41 GMT

Weekly Updates for Inspired Healthcare Capital DST Investors

Updated October 6, 2026 | By August M. Iorio | Iorio Law PLLC

On October 5, 2026, the U.S. Bankruptcy Court for the Northern District of Texas granted Inspired Healthcare Capital’s motion to sell a substantial portion of its senior-living portfolio. The approved transaction package has been reported at approximately $713 million for 30 senior-living communities, marking one of the most significant developments since Inspired Healthcare Capital Holdings, LLC and its affiliates filed for Chapter 11 bankruptcy in February. Source: Law360

For Inspired Healthcare Capital (“IHC”) Delaware Statutory Trust (“DST”) investors, however, the sale approval does not mean that investors are about to receive $713 million – or that an investor’s recovery can be calculated from the sale price of his or her property.

The transactions still must proceed through the closing process. Secured debt and other property-level obligations must be addressed, transaction expenses and bankruptcy costs must be accounted for, and – in several instances – the court must determine how sale proceeds should be allocated among DST entities and related operating or master-tenant entities. Those allocation issues were among the subjects litigated during the sale hearing. Background: Bloomberg Law

As of October 6, 2026, no final recovery percentage or distribution date has been established for IHC DST investors.

This is the first edition of the IHC Bankruptcy Monitor, a new Iorio Law PLLC series providing weekly updates for Inspired Healthcare Capital DST investors. We will review the bankruptcy docket throughout the week, publish a comprehensive update each week, and issue additional reports when significant breaking developments occur.

IHC Bankruptcy: Key Developments as of October 6, 2026

IHC and 160 affiliated entities remain in Chapter 11. The cases are jointly administered under In re Inspired Healthcare Capital Holdings, LLC, et al., Case No. 26-90004 (MXM), in the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division. Joint administration is for procedural purposes only; it does not mean that the assets and liabilities of all 161 debtors have simply been combined.
Thirty-one IHC DST entities are Chapter 11 debtors. The U.S. Trustee subsequently appointed an Official Committee of DST Investors to represent DST investors’ interests in the bankruptcy proceedings.
The court approved IHC’s major asset-sale motion on October 5, 2026. Contemporary reporting describes the approved sale package as approximately $713 million involving 30 senior-living communities.
Approval does not establish investor recoveries. Disputes concerning allocation of sale proceeds and other issues remain important, and completed closings must still be distinguished from court-authorized sales.
Certain IHC-related FINRA claims against broker-dealers remain subject to a preliminary injunction. The injunction is presently scheduled to expire on November 21, 2026, unless modified or extended; appeals remain pending.

What Is the Inspired Healthcare Capital Chapter 11 Bankruptcy About?

Inspired Healthcare Capital and its affiliates filed voluntary Chapter 11 petitions on February 2, 2026.

The IHC enterprise is unusually complex. The bankruptcy encompasses 161 debtor entities, including operating companies, investment funds, development entities, master tenants and 31 separate DST debtors. Before bankruptcy, IHC stated that it had raised more than $1.2 billion in cash from thousands of fund, DST and development investors.

A Chapter 11 bankruptcy generally allows a company to remain in possession of its assets and continue operating while restructuring its financial affairs under court supervision. A debtor may also seek court permission under Section 363 of the Bankruptcy Code to sell assets outside the ordinary course of business. U.S. Courts Chapter 11 overview

That is essentially what has happened here.

Although Chapter 11 is often described as a “reorganization,” the IHC cases have developed into a sale-driven restructuring. IHC obtained authority for a court-supervised marketing and bidding process, identified stalking-horse bidders, conducted an auction process, designated successful bidders, and then sought court approval of the resulting transactions. See IHC sale filings

The October 5 ruling represents a major transition in the case: the focus now begins shifting from obtaining authority to sell assets toward closing transactions, determining what net proceeds remain, allocating those proceeds among the appropriate debtor entities, resolving claims, and ultimately determining what can be distributed to investors and other stakeholders.

Current Status of Each IHC DST and Property

The U.S. Trustee’s records identify 31 IHC DST entities currently in Chapter 11.

Successful-bidder notices filed in September disclosed contractual sale prices for 29 DST-linked properties. The Bankruptcy Court has now granted the overarching sale motion, but as of this update we are treating these transactions as court-authorized sales with closing and final proceeds allocation still pending, rather than reporting them as completed investor dispositions.

IHC DST	Senior-Living Property	Announced Contract Price	Current Status
Inspired Senior Living of Appleton DST	Ballard Glenn	$16,550,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Arlington Heights DST	Mariella of Arlington Heights	$8,500,000	Sale authorized; closing/allocation pending
IHC – Ashbrook DST	Salterra at Ashbrook	$5,600,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Athens DST	Orchard at Athens	$32,629,700	Sale authorized; closing/allocation pending
Inspired Senior Living of Augusta DST	Thrive at Augusta	$29,000,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Brookhaven DST	Orchard at Brookhaven	$27,597,221	Sale authorized; closing/allocation pending
IHC – Candle Light Cove DST	Candle Light Cove, Easton	$23,947,700	Sale authorized; closing/allocation pending
Inspired Senior Living of Carson Valley DST	Salterra at Carson Valley	$8,415,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Chesterfield DST	Salterra at Chesterfield	$5,150,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Dartmouth DST	The Residence at Cedar Dell	$31,750,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Delray Beach DST	Azalea at Delray Beach	$26,100,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Dunedin DST	Salterra Senior Living at Dunedin	$17,800,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Eatonton DST	Harbor at Harmony Crossing	$10,834,450	Sale authorized; closing/allocation pending
Inspired Senior Living of Eugene DST	The Archer Senior Living at Crescent Park	$32,130,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Fort Myers DST	Salterra Senior Living at Fort Myers	$13,200,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Grapevine DST	Mariella of Grapevine	$18,125,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Hamilton DST	Azalea at Hamilton	$87,270,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Lake Orion DST	Mariella of Lake Orion	$10,250,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Largo DST	Salterra Senior Living at Largo	$7,600,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Las Vegas DST	Salterra at Las Vegas	$23,155,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Melbourne DST	Salterra Senior Living at Melbourne	$10,000,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Mequon DST	Teal Shores	$20,650,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Naperville DST	Arbor Terrace Naperville	$47,580,000	Sale authorized; closing/allocation pending
Inspired Senior Living of New Braunfels DST	The Blake at New Braunfels	$51,500,000	Sale authorized; closing/allocation pending
Inspired Senior Living of North Haven DST	The Landing of North Haven	$62,300,000	Sale authorized; closing/allocation pending
IHC – Peachtree DST	Property not identified in successful-bid notices reviewed	Not publicly identified	Remains in Chapter 11; disposition unresolved
Inspired Senior Living of Pinellas Park DST	Salterra Senior Living at Pinellas Park	$7,300,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Reno DST	Mariella of Reno	$34,500,000	Sale authorized; closing/allocation pending
Inspired Senior Living of Round Rock DST	Mariella of Teravista	$15,000,000	Sale authorized; closing/allocation pending
Inspired Senior Living of San Marcos DST	Mariella of Sage Spring	$25,000,000	Sale authorized; closing/allocation pending
Inspired Senior Living of St. Petersburg DST	Salterra at St. Petersburg	Not publicly identified	Remains in Chapter 11; disposition unresolved

Table note: The September successful-bidder disclosures also identified a separate Augusta vacant-land parcel with an announced price of approximately $4.03 million. The contractual prices shown above are gross transaction prices – not estimated distributions to DST investors. The September notices provided prices for the 29 DST-linked properties listed above; Peachtree and St. Petersburg were not among the notices in which we located an announced successful-bid price.

We will update this chart each week as sale orders are entered, transactions close, proceeds are allocated, additional assets are sold, or investor recovery information becomes available.

Why a $713 Million Sale Does Not Mean $713 Million Is Available to IHC Investors

This distinction is critical.

A DST property’s sale price is not the same thing as the equity available to its DST investors.

Before investors can know what a particular property sale may produce for them, the bankruptcy process may have to account for, among other things, secured mortgage debt and other liens; debtor-in-possession financing and court-approved financing obligations; taxes and closing adjustments; transaction expenses; bankruptcy professional fees and administrative expenses; other allowed claims or reserves; and disputes over how proceeds should be allocated between a DST that owns real estate and affiliated master-tenant or operating entities.

That last issue has already become important in the IHC case. During the sale proceedings, certain lenders and other parties objected to aspects of the transactions and raised concerns over how proceeds would be divided among the entities involved. The October 5 ruling permits the sales to proceed while leaving certain proceeds-related issues for later resolution. Background: Bloomberg Law

The number that ultimately matters is the net amount attributable to the DST after debt, expenses, allocations, claims and other obligations are resolved.

Which Broker-Dealers Sold Inspired Healthcare Capital DSTs?

IHC did not distribute its DST investments through a single brokerage firm.

Public bankruptcy records state that, beginning in 2020, Emerson Equity LLC served as IHC’s managing broker-dealer and worked with soliciting dealers and recommending advisers to market IHC private placements, including DST interests. IHC’s bankruptcy complaint specifically identifies Emerson as the managing broker-dealer and Aurora Securities, LightPath Capital, the firm identified in the complaint as Quincy Wells Capital “in interest of Great Point Capital,” and Realized Financial as soliciting dealers.

Public records, SEC filings, court filings, brokerage financial statements and reported investor claims identify the following firms in connection with the sale or distribution of IHC DSTs:

Emerson Equity LLC; American Alternative Capital, LLC; Concorde Investment Services, LLC; Aurora Securities, Inc.; LightPath Capital, Inc.; Great Point Capital, LLC; Realized Financial, Inc.; TCFG Wealth Management, LLC; Kingswood Capital Partners, LLC; 1031 Securities, Inc.; and Cabin Securities Inc.

The evidence concerning each firm is not identical, and the list may grow as additional records become public.

For example, SEC Form D filings for the Augusta, Fort Myers and Eugene DST offerings identify American Alternative Capital, LLC as the recipient of sales compensation. SEC Form D example

Concorde Investment Services has stated in a sworn bankruptcy-court declaration that it helped IHC sell 100% of the beneficial interests in the Augusta DST and Fort Myers DST and approximately 20% of the Eugene DST. (Docket No. 1454, Delongchamp Declaration, paragraph 5.)

The IHC bankruptcy complaint itself identifies Aurora Securities, LightPath Capital and Realized Financial as soliciting dealers. It identifies Quincy Wells Capital “in interest of Great Point Capital”; Quincy Wells has publicly stated that it was newly formed in 2026 and did not participate in the historical IHC transactions, which it says were conducted through Great Point Capital.

Other public records identify additional firms. For example, 1031 Securities’ audited financial statements disclose that six of its customers invested in IHC investment vehicles and that one FINRA arbitration was pending as of year-end 2025. 1031 Securities audited financial statements

The identification of a broker-dealer as having sold, distributed or been involved with an IHC investment is not a finding that the firm or any financial adviser engaged in wrongdoing or is liable for an investor’s losses. Those issues depend on the facts of the individual recommendation, the firm’s due diligence and supervision, the disclosures made to the investor, applicable law and other circumstances.

What Happens Next in the IHC Bankruptcy?

The October 5 sale ruling is important, but it is not the end of the bankruptcy.

As of the morning of October 6, the court docket reflects that the sale motion was granted. We have not treated the individual property transactions as closed merely because the sale was authorized.

First, the sale documentation and closings. Final orders and transaction documents will establish the precise terms under which the approved transactions may close. Applicable closing conditions must then be satisfied and ownership of the properties transferred.

Second, debt repayment and calculation of net proceeds. Property-level secured lenders and other obligations may substantially affect how much equity remains from an individual transaction.

Third, allocation of sale proceeds. This may be one of the most consequential phases for DST investors. The IHC structure frequently involved a DST that owned the real estate and an affiliated master tenant or operating entity. Disputes over how value should be allocated among those entities can directly affect what remains at the DST level.

Fourth, resolution of claims and bankruptcy expenses. The estates must address claims, objections, reserves, professional fees and other administrative obligations before final distributions can be determined.

Fifth, a Chapter 11 plan or other court-approved wind-down structure. Chapter 11 ordinarily culminates in a plan governing how the estate’s remaining assets and proceeds will be treated and distributed. As of this update, no confirmed Chapter 11 plan establishes final recoveries for IHC DST investors. U.S. Courts Chapter 11 overview

Finally, distributions. Only after the relevant sales close, net proceeds and allocations are known, claims are resolved and a distribution mechanism is approved will investors have a clearer answer to the central question: How much will I recover from my IHC DST through the bankruptcy?

What About Claims Against the Broker-Dealer That Recommended an IHC DST?

A potential claim against the brokerage firm or financial professional that recommended an IHC investment raises issues distinct from determining an investor’s distribution through the bankruptcy.

However, there is an important procedural complication right now.

On July 24, 2026, Bankruptcy Judge Mark X. Mullin entered a preliminary injunction temporarily halting more than 100 IHC-related FINRA arbitrations and other proceedings involving IHC’s broker-dealer network and former CEO Luke Lee. On September 16, the court rejected a request that would have narrowed aspects of the injunction. The injunction is presently scheduled to remain in effect through November 21, 2026, unless the bankruptcy court or an appellate court modifies or extends it. Appeals concerning the injunction remain pending. AltsWire report on the September ruling

That issue is separate from whether an investor ultimately possesses a viable claim. Investors can still evaluate their circumstances, preserve relevant documents and obtain legal advice concerning potential claims while the injunction remains in place. Iorio Law PLLC encourages all DST investors to contact our law firm to review their legal rights.

We will continue tracking the injunction and related appeals as part of the IHC Bankruptcy Monitor.

Frequently Asked Questions About the IHC Bankruptcy

Did the Bankruptcy Court approve the sale of IHC’s properties?

Yes. On October 5, 2026, a Texas bankruptcy judge gave IHC authority to sell 30 senior-living communities for approximately $713 million. Law360 report

Have the IHC DST property sales closed?

Not necessarily. Court approval authorizes the transactions to proceed but is not the same thing as verifying that every individual transaction has closed. The IHC Bankruptcy Monitor will distinguish between a proposed sale, an approved sale and a completed closing.

How much will IHC DST investors recover?

It is too early to determine. No final recovery percentage has been established for IHC DST investors. The answer will depend on the particular DST, property sale price, debt, expenses, allocation of proceeds, claims and other bankruptcy obligations.

Are all IHC DSTs part of the bankruptcy?

The Chapter 11 cases include 31 specifically identified DST debtor entities. Investors should determine the precise legal name of the DST they own because different IHC investment vehicles can have materially different assets, debts and recovery prospects.

When will IHC DST investors receive bankruptcy distributions?

No final distribution date has been announced. Investors should expect additional proceedings involving closings, proceeds allocation, claims and ultimately a Chapter 11 plan or other court-approved distribution process before final recoveries are known.

What is a Section 363 sale?

Section 363 of the Bankruptcy Code allows a Chapter 11 debtor, after notice and court approval, to sell property outside the ordinary course of business. Under appropriate circumstances, property can be sold free and clear of liens and other interests, with creditor rights addressed through the sale proceeds and applicable court orders. U.S. Courts Chapter 11 overview

Can an IHC investor pursue the brokerage firm that sold the investment?

Yes. However, potential broker-dealer claims are fact-specific and distinct from the investor’s bankruptcy recovery. Iorio Law PLLC encourages all DST investors to contact our law firm to review their legal rights.

IHC Bankruptcy Monitor: What We Will Track

The IHC Bankruptcy Monitor will be updated weekly for Inspired Healthcare Capital DST investors. We will follow property closings; purchase-price changes; mortgage and secured-debt payoffs; allocation of proceeds between DSTs and affiliated entities; estimated investor equity and recoveries; developments involving Peachtree and St. Petersburg; Chapter 11 plans and disclosure statements; objections and settlements; significant investigations; the FINRA injunction and appeals; and material hearings and deadlines.

When a development is significant enough that investors should not wait for the weekly report, we will publish a separate IHC Bankruptcy Monitor Breaking News update.

About Iorio Law PLLC

Iorio Law PLLC Investigates Baker Tilly Capital, LLC Over Block 216 QOF, LLC and Opportunity Zone Fund Sales

Iorio Law PLLC — Fri, 07 Mar 2025 03:14:39 GMT

Update: On July 22, 2025, Ready Capital Corporation (NYSE: RC), the lender for the Block 216 Tower, took over ownership of the mixed-use project in downtown Portland, Oregon. The acquisition of the Ritz-Carlton Portland project occurred through a consensual deed-in-lieu arrangement with the developer. This event confirms a likely complete loss of the nearly $64 million in equity raised from investors.

Visit Iorio Law PLLC’s Block 216 Investor Recovery Center for more information regarding our law firm’s investigation.

Iorio Law PLLC, a nationally recognized securities arbitration law firm, is investigating Baker Tilly Capital, LLC, for its role in selling private placement Qualified Opportunity Zone (QOZ) funds, including Block 216 QOF, LLC. This investigation focuses on potential misconduct related to the sale of these high-risk investments to retail investors, particularly in light of recent reports indicating that Block 216, a prominent skyscraper project in Portland, Oregon, featuring the Ritz-Carlton Oregon, may be facing foreclosure.

Block 216: A Struggling Opportunity Zone Investment

Block 216, a mixed-use skyscraper in Portland, OR, was marketed as a flagship Opportunity Zone project designed to deliver significant tax benefits and returns to investors through the Block 216 QOF, LLC fund. However, recent developments suggest the project is struggling financially, with reports pointing to a potential foreclosure. This news raises serious questions about the viability of the investment and the due diligence conducted by Baker Tilly Capital, LLC, before it was recommended to investors.

Qualified Opportunity Zone funds, like Block 216 QOF, LLC, are private placement offerings intended to spur economic development in distressed areas while offering investors tax deferrals and potential gain exclusions. These investments come with substantial risks, including limited liquidity, long lock-up periods, and economic uncertainties tied to underdeveloped regions. The looming foreclosure threat to Block 216 underscores these risks and highlights potential issues with how the investment was vetted and sold.

Baker Tilly’s Claims Under Scrutiny

In the offering materials for Block 216 QOF, LLC, Baker Tilly Capital, LLC emphasized its “specialization in Opportunity Zone real estate investments” and “unique qualifications” as a trusted advisor. The firm also touted a “rigorous independent due diligence” process, suggesting that investors could rely on their expertise to mitigate risks. Yet, the current financial distress of Block 216 calls into question whether this due diligence was as thorough as promised—or if material risks were inadequately disclosed to investors.

As securities arbitration attorneys, we at Iorio Law PLLC are concerned that Baker Tilly Capital, LLC may have failed to meet its obligations under securities laws. Broker-dealers and investment advisors are required to conduct reasonable due diligence on private placement offerings and ensure recommendations are suitable for their clients. If Baker Tilly misrepresented the stability of Block 216 QOF, LLC or overlooked red flags during its vetting process, investors who suffered losses may have grounds to recover their funds through FINRA arbitration claims.

Upon information and belief, broker Tracey Nguyen was one of the Baker Tilly Capital brokers who sold shares of Block 216 QOF, LLC.

Why Investors Should Act Now

The potential foreclosure of Block 216 is a red flag for anyone who invested in this Opportunity Zone fund through Baker Tilly Capital, LLC. Private placements like Block 216 QOF, LLC are illiquid and complex, often marketed to high-net-worth individuals seeking tax advantages. However, when projects falter, investors can face significant financial losses—losses that might have been avoided with proper disclosure and oversight.

Iorio Law PLLC is actively investigating whether Baker Tilly Capital, LLC:

Failed to conduct adequate due diligence on Block 216 QOF, LLC.
Misrepresented the risks or overstated the potential returns of the investment.
Recommended the fund to investors for whom it was unsuitable, violating FINRA’s suitability rules.

If you invested in Block 216 QOF, LLC, or other Opportunity Zone funds sold by Baker Tilly Capital, LLC, you may be entitled to pursue a securities arbitration claim to recover your losses. Our firm has a proven track record of helping investors nationwide recover millions in damages caused by broker misconduct, with 15 years of experience in FINRA arbitration cases.

Baker Tilly Capital, LLC (CRD No. 115333)

Baker Tilly Capital, LLC is a broker-dealer based in Madison, Wisconsin. Baker Tilly Capital, with eight branch offices and approximately 40 registered representatives, has been a FINRA member since 2001. The brokerage firm is a limited-purpose broker-dealer and offers private placement investment opportunities in real estate and other alternative investments to accredited investors.

In 2023, Baker Tilly Capital was censured and fined by FINRA after the regulator conducted an examination that revealed the firm had permitted material changes to the terms of two related private placement offerings (QOFs) in violation of Exchange Act Rule 10b-9 and FINRA Rule 2010. Specifically, FINRA alleged the following:

In 2019, Baker Tilly Capital served as the private placement agent for two related private placement offerings in federally designated qualified opportunity zones.
In March 2019, the original private placement memorandum (PPM) for the offering stated that a closing would not occur until the offering met a minimum contingency of $16 million in investor subscriptions.
However, the issuer amended the PMM in June 2019 to state that an initial closing of approximately $6 million would take place later that month. The issuer conducted the June closing so that certain investors would not lose the tax benefits of their investment. Because the early closing was a material change to the terms of the offering, Baker Tilly Capital was required to, but did not, terminate the offering and return investor funds at that time.
Additionally, amendments to the PPM in June and August 2019 provided for the first time that, in addition to investor subscriptions, alternative funding sources obtained by the manager of the offering could count toward the minimum contingency amount. The alternative funding could include deferred developer fees, a construction loan, and other sources not involving investor subscriptions. Again, because this was a material change to the terms of the offering, Baker Tilly Capital was required to, but did not, terminate the offering and return investor funds at that time.
Ultimately, the issuer conducted a closing in August 2019 with only $10.925 million in investor subscriptions, including $2.95 million raised for the June closing, below the required $16 million minimum contingency.
Therefore, Respondent willfully violated Exchange Rule 10b-9 and FINRA Rule 2010.

Contact Iorio Law PLLC for a Free Consultation

If you suffered financial losses in Block 216 QOF, LLC, or any other Qualified Opportunity Zone fund sold by Baker Tilly Capital, LLC, we urge you to contact Iorio Law PLLC immediately.

For updates on our investigation into Baker Tilly Capital, LLC, and the Block 216 QOF, LLC fund, visit our Block 216 Investor Recovery Center. If you’ve been affected by this or similar Opportunity Zone investments, let us help you fight for the compensation you deserve.

📞 Call: (646) 330-4624
📧 Email: info@iorio.law
📍 Location: One World Trade Center, 85th Floor, New York, NY 10007
🖊️ Free Case Review: Contact Form

We offer free, confidential consultations to review your investment account and assess your legal options. Our securities arbitration lawyers work on a contingency fee basis—meaning you pay no legal fees unless we recover compensation for you.

Call us toll-free at (646) 330-4624 to speak with attorney August M. Iorio. Time is critical in securities arbitration cases, as statutes of limitations may apply. Don’t wait to protect your rights.

About Iorio Law PLLC

Iorio Law PLLC is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have over 15 years of experience as securities arbitration lawyers and have helped investors recover investment losses in over 800 cases. The firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

This blog was published by August Iorio when he was a Partner at his previous firm and has been updated to reflect Iorio Law PLLC’s new contact information. To evaluate any potential claims, contact securities arbitration lawyer August Iorio for a free consultation contact Iorio Law PLLC at info@iorio.law or (646) 330-4624.

David Lerner Associates Customers Seek up to $1 Million in Damages for Energy 11, Energy 12, and Spirit of America Energy Fund (SOAEX) Investments

Iorio Law PLLC — Thu, 28 Sep 2023 14:30:51 GMT

An elderly couple in their upper 80s filed a FINRA arbitration claim against David Lerner Associates, Inc. (“David Lerner Associates”) to recover losses and damages of up to $1 million. The couple, represented by our securities arbitration law firm, alleges that David Lerner Associates recommended an unsuitable investment strategy to invest and concentrate a significant portion of their retirement savings and net worth into risky and high-commission energy-sector securities that were proprietary to David Lerner Associates, Inc.: (1) Energy 11, L.P. (“Energy 11”); (2) Energy Resources 12, L.P. (“Energy 12”); and the Spirit of America Energy Fund (“SOAEX”).

The arbitration claim also alleges that David Lerner Associates and its broker, Robert Rasbach, misrepresented and omitted material information about the investment strategy and the energy investments, including:

That investing in Energy 11 and Energy 12 involved a “high degree of risk” and was only appropriate for investors willing and able to assume the risk of a “speculative, illiquid, and long-term investment.”
Energy 11 and Energy 12 were risky energy start-ups that were run by individuals with no experience in the oil and gas industry who were “wildcatting,” or drilling for oil and natural gas in unproven areas that have no concrete historical production, with its success tied to the energy industry and the ability of the partnerships to engage in a “liquidity event.”
Energy 11 and Energy 12 were “blind pool” investment vehicles that put very few restrictions on what and how they could invest.
The risks related to concentrating a significant portion of their portfolios into the volatile and risky energy sector.

Customers of David Lerner Associates, Inc. that have purchased proprietary energy-related securities from David Lerner, including Energy 11 and SOAEX, should contact New York securities arbitration law firm Iorio Law PLLC for a free and confidential consultation and review of their legal rights.

Iorio Law PLLC represents investors that have disputes with their financial advisors or brokerage firms, such as David Lerner Associates, Inc.

Energy 11, Energy 12, and SOAEX

Energy 11 and Energy 12 are illiquid and high-risk limited partnerships that were sold exclusively by David Lerner Associates. Each limited partnership was formed to acquire and develop oil and gas properties. The partnerships were “blind pools,” meaning at the time of the initial offering, the partnership had not identified any properties for acquisition.

Additionally, the partnerships’ objectives included making distributions to investors and, five to seven years after the termination of the offering, engaging in a liquidity event. Each limited partnership’s ability to make a return of capital distributions to its partners and to engage in a liquidity event was substantially dependent on the performance of the oil and gas properties in which the partnerships invested.

According to the Energy 11 and Energy 12 prospectuses, investments in the partnerships involve a “high degree of risk,” and these limited partnership interests were appropriate only for investors willing and able to assume the risk of a “speculative, illiquid, and long-term investment.”

Energy 11 suspended distributions to its limited partners in March 2020 before resuming them at a reduced rate in late 2021. Energy 11 accumulates unpaid distributions based on an annualized return of seven percent (7%), and all accumulated unpaid distributions are required to be paid before a final payout can occur. As of December 31, 2022, the unpaid payout accrual for the period from March 2020 through November 2021 totaled $2.387671 per common unit, or approximately $45 million.

In addition, as of Energy 11’s most recent 10-Q filing with the SEC, the limited partnership had $20.38 million in total liabilities for the quarter ended June 30, 2023.

The following is a summary of Energy 11’s current liabilities, including accrued unpaid distributions:

Total Liabilities: $20.38 million
Unpaid Accrued Distributions: $45 million
Total Liabilities 45+ Unpaid Accrued Distributions: $65.38 million.

The Spirit of America Energy Fund (SOAEX) is a mutual fund created for customers of David Lerner Associates that invests 80% of its net assets in energy and energy-related companies. The Spirit of America Energy Fund primarily invests in energy-related entities such as exploration, production, and transmission companies, as well as Master Limited Partnerships (“MLPs”). The fund’s investment objective is to provide investors with long-term capital appreciation and current income. SOAEX’s stock price has plummeted since 2015.

David Lerner Associates, Inc.

David Lerner Associates, Inc. is an SEC-registered broker-dealer and FINRA member with six branch offices in New York, Connecticut, New Jersey, and Florida. David Lerner is notorious in the securities industry and has been sanctioned numerous times by securities regulators, including censures, injunctions, monetary fines, and restitution orders.

David Lerner Associates was the exclusive dealer-manager for Energy 11 and received 6% in selling commissions. David Lerner Associates is also entitled to a contingent incentive fee of up to an amount equal to 4% of gross proceeds of units sold. Based on public disclosures, it appears that David Lerner Associates has received over $22 million in seller commissions for selling Energy 11 to its customers and is potentially entitled to an additional $15 million in contingent incentive fees.

FINRA has brought numerous actions against brokers and supervisors who sold or supervised the sale of David Lerner Associates’ proprietary energy-sector securities. Those include:

FINRA v. Abbe Jan Wollins, AWC No. 2019063686205 (June 20, 2023)
- “Between August 2015 and April 2018, while associated with [David Lerner Associates], Willins recommended that two customer accounts invest in limited partnerships formed to acquire and develop oil and gas properties without having a reasonable basis to believe those illiquid investments were suitable for the customers. Therefore, Wollins violated FINRA Rules 2111 and 2010.”
- “Customers A and B were a retired married couple who held an investment account with DLA. In August 2015, when Wollins recommended that they invest in an illiquid limited partnership, Customers A and B were approximately 82, retired, and receiving pension and social security benefits and savings. Between August 2015 and December 2016, at Wollins’ recommendation, Customers A and B invested a total of $128,907 in one of the limited partnerships. Wollins also recommended that senior Customer C invest $25,000 in one of the limited partnerships. At the time of his investment, Customer C was 93 and, received social security benefits, and took required withdrawals from an IRA. Customer C understood that his investment in the limited partnership would supplement his monthly income with these returns. Wollins’ recommendations that Customers A, B, and C invest in the energy partnerships were not suitable given their investment profiles. Wollins received $2,448.30 in commissions from these investments.”
FINRA v. Rande Aaronson, AWC No. 2019063686204 (May 30, 2023)
- “From January 2015 through October 2019, branch manager Aaronson failed to reasonably supervise sales of two illiquid oil and gas limited partnerships, Energy 11, L.P. (E11) and Energy Resources 12, L.P. (E12), to ensure that the sales were suitable for customers given their investment profiles, as required by FINRA Rule 2111 and the firm’s policies and written supervisory procedures (WSPs). Therefore, Aaronson violated FINRA Rules 3110 and 2010.”
- “E11 and E12 are illiquid limited partnerships that registered representatives at DLA sold to their customers. Each limited partnership was formed to acquire and develop oil and gas properties. Additionally, the partnerships’ objectives included making distributions to investors and, five to seven years after the termination of the offering, engaging in a liquidity event. Each limited partnership’s ability to make a return of capital distributions to its partners and to engage in a liquidity event was substantially dependent on the performance of the oil and gas properties in which the partnerships invested. According to the E11 and E12 prospectuses, investments in the partnerships involve a “high degree of risk,” and these limited partnership interests were appropriate only for investors willing and able to assume the risk of a “speculative, illiquid, and long-term investment” (emphasis added).
- “The firm’s WSPs also included a policy specific to a customer’s change of their risk tolerance, as reflected on each customer’s Suitability Profile. The policy prohibited changes to a customer’s risk tolerance solely for the purpose of qualifying the account to engage in a certain transaction. Branch managers had the supervisory responsibility to review Suitability Profiles, to assess the appropriateness of any risk tolerance changes on Suitability Profiles, and to accept and sign Suitability Profiles.”
FINRA v. Russ Kory, AWC No. 2019063686203 (September 2, 2022)
- “Between August 2015 and September 20 19, while associated with David Lerner Associates, Kory recommended that three firm customers invest in the firm’s proprietary limited partnerships formed to acquire and develop oil and gas properties without having a reasonable basis to believe those illiquid investments were suitable for the customers. Therefore, Kory violated FINRA Rules 2111 and 2010.”
- “Each limited partnership was formed to acquire and develop oil and gas properties located onshore in the United States. The partnerships were “blind pools,” meaning at the time of the initial offering, the partnership had not identified any properties for acquisition. The partnerships’ objectives included making distributions to investors and, five to seven years after the termination of the offering, to engage in a liquidity event. Each limited partnership’s ability to make return of capital distributions to its partners and to engage in a liquidity event was substantially dependent on the performance of the properties in which the partnerships invested. Additionally, according to the prospectuses, investments in the partnerships involve a “high degree of risk” (emphasis added).
FINRA v. Jeffrey D. Basford, AWC No. 2019063686202 (August 15, 2022)
- “During the course of a FINRA investigation into potential unsuitable sales of proprietary energy products at the firm, Basford declined to appear for on-the-record testimony requested pursuant to FINRA Rule 8210.”
FINRA v. Charles Bonilla, AWC No. 2020067626001 (February 8, 2021)
- “Between December 2015 and December 2017, while associated with David Lerner Associates, Bonilla recommended that his customers invest in energy sector securities without having a reasonable basis to believe those investments were suitable. Due to Bonilla’s failure to conduct reasonable diligence, there were potential risks and costs of the investments, among other things, that Bonilla did not adequately understand. Accordingly, Bonilla violated FINRA Rules 2111 and 2010.”
- “The fund’s holdings are concentrated in energy-related securities, and the fund’s performance is largely dependent on the condition of the energy industry.”

About Iorio Law PLLC

Iorio Law PLLC is investigating claims on behalf of David Lerner Associates’ customers who purchased Energy 11 and SOAEX.

To read more about the investigation, please click on the following links:

Energy 11, L.P. and Energy Resources 12 L.P.: How to Recover Investment Losses from David Lerner Associates, Inc.

Investor Update: Energy 11, L.P.’s Substantial Debt and Missed Accrued Distributions Could Take Years to Pay Off

Former GPB Capital Executive Pleads Guilty to Wire Fraud

Iorio Law PLLC — Wed, 07 Jun 2023 16:15:21 GMT

On Tuesday, June 6, 2023, Jeffrey Lash, a former executive of GPB Capital Holdings, pleaded guilty to one count of wire fraud in federal court in Brooklyn, NY.

In 2021, a federal grand jury brought criminal charges against Lash, David Gentile (founder and owner of GPB Capital), and a third individual, Jeffry Schneider. The charges are related to their management of the company, which has been described as a “Ponzi-like scheme.” In February 2021, the SEC also charged GPB Capital, Ascendant Capital, and Ascendant Alternative Strategies with running a Ponzi-like scheme that raised roughly $1.7 billion from over 17,000 investors, many of whom were retirees.

The criminal complaint alleged that Mr. Gentile, Mr. Lash, and Mr. Schneider used new money invested by retail investors to cover the promised 8% returns to prior investors, yet failed to disclose the source of the distributions to investors.

Mr. Lash could face more than 15 years in prison as a result of the guilty plea for his alleged role in the Ponzi-like scheme. Sentencing is scheduled for October 4, 2023.

A trial for Mr. Gentile and Mr. Schneider is scheduled to begin in June 2024.

Since February 2021, GPB Capital has been operating under the supervision of a court-appointed monitor. Despite liquidating a significant portion of the firm’s assets, the company’s managers have struggled to devise a plan for distributing the cash at their disposal to investors and other claimants.

The court-appointed monitor and the United States Securities and Exchange Commission have recommended putting GPB Capital into receivership, a court-appointed tool that would put the entire company, its assets, and all financial and operating decisions under the control of a single court-appointed receiver. The proposal has been contested by the company’s owner, David Gentile. The Court has yet to act on the receivership proposal.

GPB Capital had stated on its website in April 2023 that it could not come up with a distribution plan or make any distributions to investors until the court rules on a receivership. Limited partners have not received distributions since 2018, while their invested capital remains in limbo.

According to the recent regulatory filings, it appears that GPB Capital is holding back a significant reserve to cover potential liabilities arising out of numerous regulatory, ligation, arbitration, and other proceedings. The company disclosed that any liability originating from such actions could result in an outflow of cash, which would most likely not occur until 2024 at the earliest.

Further, GPB Capital’s partnerships, such as GPB Automotive, GPB Holdings, GPB Holdings II, GPB Waste Management, or GPB Cold Storage, are setting aside a large amount of money to cover the legal expenses of its current and former officers, directors, principals, representatives, and affiliates, for any legal expenses and costs they are incurring connected within the numerous litigations and disputes that are currently pending. GPB Capital has disclosed in regulatory filings that distributions may be delayed or withheld until such reserves are no longer needed or the escrow period expires.

GPB Fraud and Brokerage Firms’ Liability

GPB Capital Holdings LLC, a private-equity firm based in New York, was established in 2013. It acted as the primary partner of several investment funds, including GPB Holdings, LP, GPB Holdings II, LP, GPB Automotive Portfolio, LP, GPB Waste Management, LP, and GPB Cold Storage, LP.

In February 2021, the SEC accused GPB Capital, Ascendant Capital, and Ascendant Alternative Strategies of orchestrating a Ponzi-like scheme, defrauding nearly 17,000 retail investors across the nation and gathering approximately $1.7 billion via securities issued by GPB Capital.

GPB Capital solicited capital from private retail investors via private placement offerings, which were sold by nearly sixty broker-dealers and investment advisory firms across the country. However, significant concerns have been raised regarding the broker-dealers’ failure to conduct proper due diligence regarding GPB Capital and the GPB funds.

The Financial Industry Regulatory Authority (FINRA) mandates that “reasonable diligence” provides the firm or associated person with a clear understanding of the potential risks and rewards of the recommended security or strategy. Brokerage firms may have neglected to conduct sufficient due diligence into GPB Capital and its funds before selling the private placement offerings to their clients, possibly overlooking numerous red flags, including detecting whether distributions were being paid out from operating revenue or from invested capital. In the case of GPB Capital, the operating revenues of its partnerships were not sufficient to cover the company’s promised 8% distributions, yet the payouts continued. Brokerage firms either failed to detect these discrepancies or ignored them.

Investors may have legal recourse against brokerage firms or investment advisory firms due to such due diligence failures or other sales practice violations. It’s important to note that filing an arbitration claim does not prevent an investor from receiving potential future distributions from the GPB funds.

Investors can potentially recover investment losses by filing claims against broker-dealers or investment-advisory firms that sold GPB private placement offerings for large commissions.

Through 2021, GPB Capital investors have won over $2.4 million in monetary awards in 10 out of 12 (over 83%) arbitration claims that have proceeded to a final hearing.

What Can GPB Investors Do?

Our firm is a leading securities arbitration law firm based in New York, NY, is investigating claims on behalf of defrauded investors who were victims in the GPB funds scheme. Investors who have purchased GPB Automotive, GPB Holdings, GPB Holdings II, or GPB Waste Management through a broker or brokerage firm have successfully recovered investment losses by filing securities arbitration claims.

Our law firm pursues FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.

Our firm is actively investigating claims on behalf of GPB investors who purchased the security through a broker-dealer or registered investment advisor, including:

Aegis Capital Corp.
Aeon Capital Inc.
American Capital Partners
Arkadios Capital
Ausdal Financial Partners, Inc.
Avere Financial Group, LLC
Axiom Capital Management, Inc
BCG Securities, Inc.
Cabot Lodge Securities LLC
Calton & Associates, Inc.
Capital Financial Services, Inc
Capital Investment Group, Inc.
Cascade Financial Management, Inc.
Crystal Bay Securities, Inc.
David A. Noyes & Company
Dempsey Lord Smith, LLC
Detalus Securities, LLC
DFPG Investments, Inc.
DH Hill Securities, LLLP
Dinosaur Financial Group, L.L.C.
Geneos Wealth Management, Inc.
Emerson Equity LLC
Financial West Group
Great Point Capital LLC
HighTower Securities, LLC
IBN Financial Services, Inc.
Innovation Partners, LLC
International Assets Advisory, LLC
Investment Architects, Inc.
Kingsbury Capital, Inc.
Landolt Securities, Inc.
Lion Street Financial, LLC
Lowell & Company, Inc.
McDonald Partners LLC
MML Investor Services
Moloney Securities Co., Inc.
Money Concepts Capital Corp
MSC – BD, LLC
National Securities Corporation
Newbridge Securities Corporation
Orchard Securities, LLC
Pariter Securities, LLC
Purshe Kaplan Sterling Investments
Private Client Services, LLC
Royal Alliance Associates, Inc.
SagePoint Financial, Inc.
Sandlapper Securities, LLC
Silber Bennett Financial, Inc.
Stephen A. Kohn & Associates, Ltd.
Uhlmann Price Securities, LLC
United Planners Financial Services
Vanderbilt Securities, LLC
Vestech Securities, Inc.
Western International Securities, Inc.
WestPark Capital, Inc.
Whitehall-Parker Securities, Inc.
Wilmington Capital Securities, LLC
Woodbury Financial Services, Inc.

About Iorio Law PLLC

Roshan Perera: SEC Charges Former Aegis Capital Broker with Fraud – Long Island, NY

Iorio Law PLLC — Tue, 28 Mar 2023 00:30:43 GMT

The Securities and Exchange Commission has charged former Aegis Capital Corp. broker Surage Kamal Roshan Perera and his firm, Janues Capital Incorporated, with fraud and obtaining emergency relief in court, including a temporary restraining order and an asset freeze. The SEC alleges that from February 2022 until March 2023, the Bellrose, NY broker defrauded at least one investor out of millions of dollars by lying about investment opportunities and strategies concerning training losses and using funds received from others to give the victim the promised returns in a Ponzi-like scheme. According to his public disclosure report, Mr. Perera was registered as an investment broker with Aegis Capital Corp until September 12, 2022.

In a separate action, the U.S. Attorney’s Office for the Eastern District of New York filed criminal charges against Mr. Perera. He was arrested on Monday, March 27, 2023, and arraigned on a 16-count indictment charging him with securities fraud, investment advisor fraud, wire fraud, and money laundering, in connection with a scheme to induce an investor to purchase stock in companies that traded on the NASDAQ and New York Stock Exchange (NYSE).

Customers of Mr. Perera or Aegis Capital Corp. who have suffered financial losses as a result of Mr. Perera’s negligence or misconduct can contact our New York securities arbitration law firm for a free and confidential consultation and review of their legal rights.

Iorio Law PLLC represents investors that have disputes with their financial advisors or brokerage firms, such as Aegis Capital Corp.

Securities and Exchange Commission v. Surage Kamal Roshan Perera and Janues Capital Incorporated, 2:23-cv-02316

On March 27, 2023, the United States Securities and Exchange Commission (“SEC”) filed a lawsuit in federal court against Mr. Perera and his firm, Janues Capital Incorporated (“Janues”), alleging that from February 2022 until March 2023, Mr. Perera defrauded at least one investor (“Investor A”) out of millions of dollars by lying about investment opportunities and strategies; misappropriating the investor’s money by, in part, not purchasing the securities she subscribed to through Janues and using a substantial portion of her money to engage in high volume, highly leveraged trading in other securities; lying to her about non-existent investment profits; and concealing large trading losses.

According to the complaint, Mr. Perera falsely told Investor A that his firm had access to specific restricted securities at discounted prices through connections with large institutional investors. Investor A first met Mr. Perera through a mutual friend when Mr. Perera was a registered broker of Aegis Capital Corp.

Mr. Perera also allegedly claimed to exercise a trading strategy—which he called “options straddles”—that would not only prevent any trading losses but also, for some of the supposed investments, guarantee returns on the investment of at least 9% and up to as much as 50%. Perera’s false promises convinced the investor to give him approximately $4.3 million.

According to the lawsuit, Mr. Perera did not use Investor A’s funds to purchase the securities she had subscribed to and did not engage in the promised “options straddles” to prevent trading losses and generate the profits he had guaranteed. Instead, he transferred at least $3.5 million of Investor A’s funds to a brokerage account in the name of his wife, Nishani Alahakoon, and used those funds to engage in highly speculative, leveraged trading, which resulted in over $3 million in trading losses.

Mr. Perera allegedly concealed his misappropriation of Investor A’s funds and his trading losses by providing Investor A with phony trade confirmations and account statements that falsely showed the expected returns and by using funds received from other sources to partially repay the investor victim.

The SEC’s complaint alleges that Mr. Perera and Janues violated antifraud provisions of the federal securities laws. Mr. Perera also was charged with aiding and abetting Janues’ alleged violations. The SEC’s complaint names Nishani Alahakoon, whose brokerage account Perera and Janues traded, as a relief defendant.

Financial Advisor Surage Kamal Roshan Perera (CRD No. 4716321)

Roshan Perera had 18 years of experience in the securities industry and was associated with 11 different brokerage firms, including five different firms that have been expelled from the securities industry by the Financial Industry Regulatory Authority (“FINRA”). Mr. Perera was registered with Aegis Capital Corp from April 18, 2018, through September 12, 2018.

According to his public disclosure report with FINRA, Mr. Perera has been the subject of at least one customer dispute, which included allegations of unauthorized trading. The 2009 dispute was settled.

Investors who have disputes with their financial advisors and brokerage firms can file securities arbitration claims to resolve the disputes and seek recovery of investment losses.

FINRA’s BrokerCheck tool can be used to obtain Mr. Perera’s complete and updated disclosure report.

Aegis Capital Corp. – A Duty to Supervise

Selling away is when a financial advisor solicits a customer to participate in a private securities transaction that is “away” from the firm. In other words, when a broker recommends a transaction to buy or sell a security that is not offered or approved by the brokerage firm where the financial advisor is employed or registered.

A brokerage firm can be held responsible for its financial advisors’ conduct in “selling away” cases under certain circumstances.

Pursuant to FINRA Rule 3280, when a broker-dealer approves a private transaction away from the firm, the firm assumes legal responsibility for the trade. There are no exceptions to this rule. Broker-dealers can be held responsible for the conduct of their financial advisors in connection with these approved transactions.

Even if a transaction is not approved by a firm, a brokerage firm can also be held liable if the financial advisor acted with apparent authority or the investor reasonably believed that the advisor’s activities were approved or part of the broker’s services.

Brokerage firms like Aegis Capital Corp. must properly supervise financial advisors and customer accounts. Brokerage firms must also establish and maintain a reasonably designed system to oversee account activity, such as private securities transactions, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.

Our Law Firm Files GPB Automotive Claim Against Aegis Capital Corp

Aegis Capital Corp. Ordered to Pay Nearly $2.7 Million for Supervisory Failures Related to Rampant Excessive and Unsuitable Trading

How to Recover Financial Losses or Obtain a Free Consultation

If you have suffered investment losses with Mr. Perera or Aegis Capital Corp or suspect other inappropriate activity occurred in your investment or retirement account, contact New York securities arbitration attorney August Iorio of Iorio Law PLLC. August Iorio can be reached at info@iorio.law or toll-free at (646) 330-4624 for a free and confidential review of your legal rights.

About Iorio Law PLLC

Law Firm Investigating Dempsey Lord Smith, LLC for the Sale of GWG L Bonds and GPB Capital Funds

Iorio Law PLLC — Thu, 14 Jul 2022 15:58:37 GMT

Our firm is a securities arbitration law firm based in New York, NY, is investigating potential lawsuits and securities arbitration claims against Dempsey Lord Smith, LLC for its sale of L Bonds issued by GWG Holdings, Inc. (GWGH) and limited partnerships created by GPB Capital Holdings, LLC.

On March 21, 2022, the Financial Industry Regulatory Authority (FINRA) ordered Dempsey Lord Smith, LLC (“Dempsey Lord Smith”) to pay nearly $100,000 in monetary fines and restitution for negligently omitting to tell four investors in an offering related to GPB Capital Holdings, LLC (“GPB Capital”) that the issuer failed to timely make required filings with the Securities and Exchange Commission (“SEC”), including filing audited financial statements. In addition, FINRA accused Dempsey Lord Smith of making unsuitable recommendations of GPB Capital securities to four investors. Dempsey Lord Smith consented to the sanctions.

Additionally, upon information and belief, Dempsey Lord Smith was a part of a network of broker-dealers who sold the speculative, high-risk, and illiquid GWG L Bonds. GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for Chapter 11 bankruptcy in April 2022. Many GWG L Bond investors are skeptical that they will receive any significant portion of their principal back. Investment News has reported that one anonymous GWG L bond investor estimates that the GWG L Bonds may now be worth 20 to 30 cents on the dollar.

Investors who purchased GWG L Bonds or any GPB Capital Funds through Dempsey Lord Smith, LLC or any other broker-dealer are encouraged to contact Iorio Law PLLC (www.gwglawyer.com) for a free and confidential consultation and to review their legal rights. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

For the latest on Iorio Law PLLC’s investigation of GWG L Bonds, including a key event timeline, visit our firm’s investigation page: Iorio Law PLLC’s Investigation of GWG L Bonds.

Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Western International Securities, Inc.

GWG L Bond Investors Seek Recourse After GWG Holdings, Inc. Files for Chapter 11 Bankruptcy

GPB Investors Have Won Monetary Awards in 10 of 11 Arbitration Cases This Past Year

About GWG L Bonds

An L bond is a financial product created by GWG Holdings, Inc. The L Bonds are speculative, high-risk, and illiquid alternative investment offerings.

Initially, GWG Holdings pooled money from bond investors to purchase life insurance policies on the secondary market, paid the policy premiums, and then collected the death benefit when the insured individual passed away. However, beginning in 2018, GWG Holdings used the investor capital to invest in a new business model, exposing the company to riskier alternative assets. Many GWG L Bond investors were utterly unaware that GWG materially reoriented its business model, which, in our view, made it a much bigger credit risk. Additionally, many GWG L bond investors were not told by their financial advisors that GWG used investor capital to pay out the high distributions owed to other GWG L Bond investors in a Ponzi-like scheme.

GWG Holdings offered the L Bonds with a maturity ranging from 2 to 7 years and paying an interest rate of 5.50% to 8.50%.

GWG L Bonds were likely not suitable for investors with a low-to-moderate risk tolerance or investors who had liquidity needs.

On April 20, 2022, GWG filed for Chapter 11 bankruptcy. According to the bankruptcy filings, the SEC has been investigating the sales practices of brokerage firms related to GWG L Bonds. It has been recently reported that the SEC’s investigation began in May 2021. We believe that this regulatory investigation includes the sales practices of Emerson Equity and its regional broker-dealers, such as Dempsey Lord Smith.

Last month, the SEC’s investigation led to its first lawsuit as the regulator filed a lawsuit against Western International Securities, Inc., and several of its brokers in a federal court in California. The firm is accused of failing to perform due diligence regarding the inherent risks associated with GWG L Bonds and recommending these risky products to customers in situations where they were not in the best interest of the firm’s customers.

Brokerage firms like Western International Securities, Inc. and Dempsey Lord Smith are required to make investment recommendations that are suitable and in the best interest of their customers. Brokerage firms and financial advisors must also disclose all material facts and risks of a security when making a recommendation. Firms and brokers must also conduct reasonable due diligence on products they offer before recommending them to any clients. When a firm or advisor fails to meet these standards of conduct, they can be held liable for damages.

Investors who purchased GWG L Bonds should contact New York Securities arbitration law firm Iorio Law PLLC for a free and confidential consultation to review their legal rights.

About GPB Capital Funds

GPB Capital is a New York-based alternative asset management firm founded in 2013. GPB Capital serves as the general partner for limited partnerships formed to acquire income-producing companies. GPB Capital had four flagship funds, which were sold as private placement offerings:

GPB Holdings, LP / GPB Holdings Qualified, LP.
GPB Automotive Portfolio, LP.
GPB Holdings II, LP.
GPB Waste Management, LP.

In February 2021, the SEC charged GPB Capital, Ascendant Capital, and Ascendant Alternative Strategies with running a Ponzi-like scheme that raised roughly $1.8 billion from securities issued by GPB Capital. In addition, David Gentile, the owner and chief executive of GPB; Jeffry Schneider, the owner and CEO of Ascendant Capital LLC; and Jeffrey Lash, a former GPB managing partner, are all facing criminal and civil fraud charges. The SEC believes that as many as 17,000 retail investors nationwide have been defrauded.

GPB Capital raised capital from private retail investors through private placement offerings that were sold by approximately sixty broker-dealers and investment advisory firms across the country, including Dempsey Lord Smith. In total, the GPB funds have collectively raised over $1.8 million in capital from investors. While GPB Capital and financial advisors used promises of steady, 8% dividends from investment gains to lure investors, “a significant portion of GPB’s distributions were paid directly from investor funds,” according to numerous civil and criminal complaints. There are serious concerns that broker-dealers may have failed to conduct reasonable due diligence about GPB Capital and the GPB funds.

FINRA has stated that “reasonable diligence” means that the firm’s and/or broker’s due diligence “must provide the firm or associated person with an understanding of the potential risks and rewards of the recommended security or strategy.”

Brokerage firms may have failed to conduct reasonable diligence into GPB Capital and the GPB funds before selling the private placement offerings to their customers. The firms’ compliance departments likely ignored or missed many red flags.

For example, according to the SEC’s complaint, beginning in August 2015, GPB Automotive Portfolio LP began to use investor funds to make distributions to other investors. However, GPB Automotive Portfolio’s private placement memorandum stated that distributions would be made from the limited partnership’s operations. The private placement memorandum was updated in June 2016 to disclose that the limited partnership may use investor capital to make distributions, but it had “no present plans to do so,” despite already doing so. These statements were false and misleading. At the time the PPM was issued, GPB Automotive Portfolio had used over $2.5 million of investor capital to pay distributions.

The false statements by GPB Capital were also discoverable by brokerage firms who sold the private placement offering to retail investors for large up-front commissions, including Dempsey Lord Smith. For example, in 2016, GPB Automotive Portfolio’s financial reports revealed that the fund made $14.3 million in distributions to investors; however, it recorded only $5.4 million of income from operations. The significant gap between the amount in distributions paid out to investors and the entity’s operating income should have been a huge red flag to brokerage firms. Instead, the red flag was ignored, and GPB Automotive Portfolio was sold to retail investors by brokerage firms and investment advisory firms. This is just one example of how brokerage firms may have failed their due diligence obligations.

As a result of due diligence failures, or other sales practice violations, GPB investors may have legal claims against brokerage firms or investment advisory firms.

FINRA and Dempsey Lord Smith entered into FINRA Letter of Acceptance, Waiver, and Consent No. 2019061213901 (the “AWC”) on June 23, 2022, after FINRA alleged that between May 4, 2018, and June 29, 2018, Dempsey Lord negligently omitted to tell four investors in an offering related to GPB Capital that the issuer failed to timely make required filings with the SEC, including filing audited financial statements. FINRA also alleged that between September 1, 2015, and June 8, 2018, certain Dempsey Lord registered representatives made unsuitable recommendations of GPB Capital securities to four investors. By virtue of the foregoing, Dempsey Lord violated FINRA Rules 2111 and 2010.

Specifically, related to the allegations that Dempsey Lord Smith negligently failed to tell four investors material information concerning a GPB Capital Offering in 2018, FINRA alleged:

From 2013 through 2018, GPB Capital launched several limited partnerships, each focused on acquiring controlling interests in certain private-sector companies.
As relevant here, the GPB Capital limited partnerships included GPB Automotive Portfolio, LP (Automotive Portfolio), GPB Cold Storage, LP (Cold Storage), GPB NYC Development, LP (NYC Development), and GPB Waste Management (Waste Management).
These GPB Capital limited partnerships raised capital by selling limited partnership interests to retail investors. GPB Capital sold the limited partnership interests through, among other channels, broker-dealers.
The securities GPB Capital sold, including those issued by Automotive Portfolio and Holdings II, were not registered. Instead, the limited partnership interests were sold pursuant to Regulation D of the Securities Act of 1933.
These four GPB Capital limited partnerships raised a combined amount of more than $1 billion from investors between July 2013 and August 2018.
The GPB Capital offering documents stated that the limited partnership interests were all illiquid securities that were intended to be held by only “sophisticated investor[s]” who were “able to bear the economic and other risks of [an] investment in the [limited partnership interests] for an indefinite period of time.” The offering documents further stated that the GPB Capital limited partnership interests were “highly speculative investments which involve a high degree of risk of loss of the entire investment.” Such risks involved, among other things, GPB Capital’s lack of an operating history and significant expenses, including commissions GPB Capital typically paid to brokerage firms equal to 8% of the gross proceeds of each sale.
Dempsey Lord first learned of GPB Capital in or around late 2013. After conducting due diligence on each offering, Dempsey Lord approved Automotive Portfolio for sale by the firm’s registered representatives in April 2015 and then approved Cold Storage in July 2015, NYC Development in April 2016, and Waste Management in August 2016.
On July 10, 2017, GPB Capital filed a lawsuit in New York against one of its former operating partners who had allegedly failed to acquire certain automotive dealership interests (the New York Litigation). In connection with the New York Litigation, the former partner asserted various counterclaims against GPB Capital and alleged that GPB Capital had falsified financial statements to conceal that GPB Capital was defrauding its investors. GPB Capital denied the former partner’s allegations, and the litigation remains pending.
On April 27, 2018, GPB Capital released what it characterized as important updates regarding the audited financial statements for certain of its limited partnerships, including Automotive Portfolio. The letters, which were sent to broker-dealers that sold GPB Capital-related investments, including Dempsey Lord Smith, stated that GPB Capital was in the process of registering certain classes of securities issued by certain of the limited partnerships, including Automotive Portfolio, with the SEC. As part of that process, Automotive Portfolio was required to file audited financial statements. The letters further stated that the delivery of Automotive Portfolio’s audited financial statements (which were due to be filed by April 30, 2018) would be delayed pending the completion of a forensic audit. Specifically, GPB Capital disclosed that it and its auditors “determined that it would be prudent to hire a third-party firm to complete a forensic audit in order to endeavor to put [the former partner’s] counterclaims and other allegations to rest.” The offering documents for Automotive Portfolio were not timely amended to disclose that the partnerships would be delayed in filing their audited financial statements with the SEC.
Dempsey Lord learned of the delays and GPB Capital’s stated intention to complete a forensic audit. Between May 4, 2018, and June 29, 2018, Dempsey Lord sold four limited partnership interests in Automotive Portfolio without informing the customers that the issuer had not timely filed its audited financial statements with the SEC or the reasons for the delay. The delays in filing audited financial statements were material information that should have been disclosed. Dempsey Lord’s four sales of interests in Automotive Portfolio totaled $323,000, and the firm received a total of $25,840 in commissions from these sales.
By negligently omitting material facts, Dempsey Lord violated FINRA Rule 2010.

Specifically, related to the allegations that Dempsey Lord Smith made four unsuitable sales of GPB Capital Securities:

FINRA Rule 2111(a) requires that a member or an associated person must have a reasonable basis to believe that a recommended transaction is suitable for the customer.
One of the three main obligations associated with this Rule is “customer-specific” suitability. The Supplementary Material in Rule 2111.05(b) states that “[t]he customer-specific obligation requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile, as delineated in Rule 2111(a).” A customer’s investment profile includes, among other things, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, and risk tolerance.
Between September 1, 2015, and June 8, 2018, Dempsey Lord registered representatives recommended and sold GPB Capital securities to four customers that were unsuitable in light of the customers’ investment profiles. All of these sales were reviewed and approved by firm principals. The customers include:
Customer A who made a $100,000 Cold Storage investment in September 2015. At the time of the investment, Customer A was 56 years old with an annual income and net worth that did not qualify her as an accredited investor as required to invest in Cold Storage. Customer A’s GPB investment also violated the firm’s internal concentration guidelines because the sale caused Customer A to exceed the 20% concentration threshold for combined holdings of alternative investments, including private placements. In addition, Customer A’s investment purpose was to save for retirement, and the customer ranked “speculation” as her least important investment objective (out of five options).
Customer B who made a $50,000 NYC Development investment in June 2016. At the time of the investment, Customer B was 52 years old with an annual income and net worth that did not qualify her as an accredited investor, which was required to invest in NYC Development. Moreover, Customer B had limited investment knowledge with no prior limited partnership experience and an investment purpose to save for retirement.
Customers Cl and C2 were a married couple who made a $50,000 Waste Management investment in April 2017. At the time of the investment, Customer Cl was over 76 years old and retired, and Customer C2 was over 66 years old and retired. While the customers’ net worth was just over the minimum amount to qualify as an accredited investor, because they already held two other GPB limited partnership interests, the sale of the $50,000 Waste Management investment caused them to exceed the firm’s 20% concentration threshold for combined holdings of alternative investments.
Customer D who made a $100,000 Automotive Portfolio investment in June 2018. At the time of the investment, Customer D was over 60 years old and retired with a moderate risk tolerance and an annual income and net worth that did not qualify him as an accredited investor as required to invest in Automotive Portfolio.
Dempsey Lord received a total of $24,000 in commissions from these four sales.
By making unsuitable recommendations of GPB Capital securities to these four customers, Dempsey Lord violated FINRA Rules 2111 and 2010.

Dempsey Lord Smith, LLC (CRD No. 141238)

Dempsey Lord Smith, LLC has been an SEC-registered broker-dealer and FINRA member since 2007. The firm, which is based in Rome, Georgia, is a full-service introducing broker-dealer licensed to sell securities in 52 U.S. states and territories. Dempsey Lord Smith, LLC currently has a roster of approximately 100 registered brokers across the country and 28 branch offices.

Dempsey Lord Smith has six different regulatory disclosures, according to the firm’s public disclosure report with FINRA.

Financial institutions like Dempsey Lord Smith must supervise financial advisors and customer accounts properly. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.

Dempsey Lord Smith, LLC, has used the following names to conduct business: 1SOURCE, WRS, WEST COBB INVESTMENT GROUP, TIM COUCH PC CPA, THE DIAMOND GROUP INC., SOUTHEAST ASSET MANAGEMENT, SHALIN FINANCIAL SERVICES, INC., SC RETIREMENT PLANNING, S M SHAW, ROGER’S RETIREMENT READINESS ALLIANCE, LLC, RETIREMENT STRATEGY CONNECTION, RETIREMENT SOLUTIONS INC., PREMIER TAX ADVISORS, PREFERRED FINANCIAL SOLUTIONS, LLC, PORTER INSURANCE AND FINANCIAL, PLUS POINT ADVISORS, PINPOINT FINANCIAL SERVICES, INC, PERRY GOSSETT INSURANCE, PARPARI ASSET MANAGEMENT INC., NEXSTONE FINANCIAL SOLUTIONS, INC, NATIC TAYLOR & CO LLC, MORGAN WEALTH MANAGEMENT, MICEL FINANCIAL, LLC, MARK MADDOX FINANCIAL, LYLES WEALTH MANAGEMENT, LEIGH FINANCIAL SERVICES, JLP INVESTMENTS INC, JESSE J GRIFFIN JR, ILLUMINATION FINANCIAL ADVISORS, HYDEPARK WEALTH ADVISORS, HOLLAND WEALTH MANAGEMENT, HN FINANCIAL GROUP, GRANDVIEW WEALTH MANAGEMENT, GIBSON RETIREMENT PLANNING, FRONT PAGE FINANCIAL ADVISORS, LLC, FOOTHILLS FINANCIAL STRATEGIES, FINANCIAL INTEGRITY GROUP, FALK WEALTH MANAGEMENT, EXCLUSIVE FINANCIAL STRATEGIES, DEMPSEY, LORD, SMITH, LLC, DEMPSEY LORD SMITH, LLC, DEANS CONSULTING, CRESCENT WEALTH MANAGEMENT, CRESCENT WEALTH ADVISORS, CORNERSTONE FINANCIAL, LLC, CORE CAPITAL MARKETS, LLC, COLABORATIVE INVESTMENT MANAGEMENT, CLAIR LORD JARRETT, CHARLES MURPHY INSURANCE, BROCK FINANCIAL SERVICES, INC., BREEN FINANCIAL, BLANTON FINANCIAL GROUP, BELMONT CAPTIAL ADVISORS, BAXTER INSURANCE AGENCY, AEGEUS FINANCIAL SOLUTIONS, INC., AAPT, LLC

About Iorio Law PLLC

Law Firm Investigating National Securities Corporation for the Sale of GWG L Bonds and GPB Capital Funds

Iorio Law PLLC — Fri, 08 Jul 2022 13:27:41 GMT

Our firm is a securities arbitration law firm based in New York, NY, is investigating potential lawsuits and securities arbitration claims against National Securities Corporation for its sale of L Bonds issued by GWG Holdings, Inc. (GWGH) and limited partnerships created by GPB Capital Holdings, LLC.

On June 23, 2022, the Financial Industry Regulatory Authority (FINRA) ordered National Securities Corporation (“NSC”) to pay nearly $9 million in monetary fines and restitution for violating various SEC, NASD, and FINRA rules, including negligently omitting material facts to retail investors connected with offerings related to GPB Capital Holdings, LLC (“GPB Capital”). NSC consented to the sanctions after FINRA alleged that between April 2018 and July 2018, NSC negligently omitted to tell investors in two offerings related to GPB Capital that the issuers failed to timely make required filings with the Securities and Exchange Commission (“SEC”), including audited financial statements.

Additionally, upon information and belief, National Securities Corporation was a part of a network of broker-dealers who sold the speculative, high-risk, and illiquid GWG L Bonds. GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for Chapter 11 bankruptcy in April 2022. Many GWG L Bond investors are skeptical that they will receive any significant portion of their principal back. Investment News has reported that one anonymous GWG L bond investor estimates that the GWG L Bonds may now be worth 20 to 30 cents on the dollar.

Investors who purchased GWG L Bonds or any GPB Capital Funds through National Securities Corporation or any other broker-dealer are encouraged to contact Iorio Law PLLC (gwglawyer.com) for a free and confidential consultation and to review their legal rights. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

For the latest on Iorio Law PLLC’s investigation of GWG L Bonds, including a key event timeline, visit our firm’s investigation page: Iorio Law PLLC’s Investigation of GWG L Bonds.

Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Western International Securities, Inc.

GWG L Bond Investors Seek Recourse After GWG Holdings, Inc. Files for Chapter 11 Bankruptcy

GPB Investors Have Won Monetary Awards in 10 of 11 Arbitration Cases This Past Year

About GWG L Bonds

An L bond is a financial product created by GWG Holdings, Inc. The L Bonds are speculative, high-risk, and illiquid alternative investment offerings.

GWG Holdings offered the L Bonds with a maturity ranging from 2 to 7 years and paying an interest rate of 5.50% to 8.50%.

GWG L Bonds were likely not suitable for investors with a low-to-moderate risk tolerance or investors who had liquidity needs.

Brokerage firms like Western International Securities, Inc. and National Securities Corporation are required to make investment recommendations that are suitable and in the best interest of their customers. Brokerage firms and financial advisors must also disclose all material facts and risks of a security when making a recommendation. Firms and brokers must also conduct reasonable due diligence on products they offer before recommending them to any clients. When a firm or advisor fails to meet these standards of conduct, they can be held liable for damages.

Investors who purchased GWG L Bonds should contact New York Securities arbitration law firm Iorio Law PLLC for a free and confidential consultation to review their legal rights.

About GPB Capital Funds

GPB Holdings, LP / GPB Holdings Qualified, LP.
GPB Automotive Portfolio, LP.
GPB Holdings II, LP.
GPB Waste Management, LP.

GPB Capital raised capital from private retail investors through private placement offerings that were sold by approximately sixty broker-dealers and investment advisory firms across the country, including National Securities Corporation. In total, the GPB funds have collectively raised over $1.8 million in capital from investors. While GPB Capital and financial advisors used promises of steady, 8% dividends from investment gains to lure investors, “a significant portion of GPB’s distributions were paid directly from investor funds,” according to numerous civil and criminal complaints. There are serious concerns that broker-dealers may have failed to conduct reasonable due diligence about GPB Capital and the GPB funds.

The false statements by GPB Capital were also discoverable by brokerage firms who sold the private placement offering to retail investors for large up-front commissions, including National Securities Corporation. For example, in 2016, GPB Automotive Portfolio’s financial reports revealed that the fund made $14.3 million in distributions to investors; however, it recorded only $5.4 million of income from operations. The significant gap between the amount in distributions paid out to investors and the entity’s operating income should have been a huge red flag to brokerage firms. Instead, the red flag was ignored, and GPB Automotive Portfolio was sold to retail investors by brokerage firms and investment advisory firms. This is just one example of how brokerage firms may have failed their due diligence obligations.

As a result of due diligence failures, or other sales practice violations, GPB investors may have legal claims against brokerage firms or investment advisory firms.

FINRA and National Securities Corporation entered into an AWC on June 23, 2022, after FINRA alleged that National Securities Corporation violated various SEC, NASD, and FINRA Rules. As part of the allegations, FINRA alleged between April 2018 and July 2018, NSC negligently omitted to tell investors in two offerings related to GPB Capital that the issuers failed to timely make required filings with the SEC, including filing audited financial statements. By virtue of the foregoing, NSC violated FINRA Rule 2010. Specifically, FINRA alleged:

From 2013 through 2018, GPB Capital launched several limited partnerships, each focused on acquiring controlling interests in certain private-sector companies.
As relevant here, the GPB Capital limited partnerships included GPB Automotive Portfolio, LP (Automotive Portfolio), which was formed in 2013 to acquire and operate automotive dealerships, and GPB Holdings II, LP (Holdings II), which was formed in 2015 primarily to acquire and operate companies in the automotive retail and managed IT sectors.
These GPB Capital limited partnerships raised capital by selling limited partnership interests to retail investors. GPB Capital sold the limited partnership interests through, among other channels, broker-dealers.
The securities GPB Capital sold, including those issued by Automotive Portfolio and Holdings II, were not registered. Instead, the limited partnership interests were sold pursuant to Regulation D of the Securities Act of 1933.
As a condition of the offerings, only accredited investors were permitted to purchase the GPB Capital limited partnership interests.
After conducting due diligence on each offering, NSC approved Holdings II for sale by the firm’s registered representatives in December 2015 and then approved Automotive Portfolio in May 2016.
Making a negligent misrepresentation or omission of a material fact to customers violates FINRA Rule 2010, as it is inconsistent with just and equitable principles of trade.
On July 10, 2017, GPB Capital filed a lawsuit in New York against one of its former operating partners who had allegedly failed to acquire certain automotive dealership interests (the New York Litigation). In connection with the New York Litigation, the former partner asserted various counterclaims against GPB Capital and alleged that GPB Capital had falsified financial statements to conceal that GPB Capital was defrauding its investors. GPB Capital denied the former partner’s allegations, and the litigation remains pending.
On April 27, 2018, GPB Capital released what it characterized as important updates regarding the audited financial statements for certain of its limited partnerships, including Automotive Portfolio and Holdings II. The letters, which were sent to broker-dealers that sold GPB Capital-related investments, including NSC, stated that GPB Capital was in the process of registering certain classes of securities issued by certain of the limited partnerships, including Automotive Portfolio and Holdings II, with the SEC. As part of that process, Automotive Portfolio and Holdings II were required to file audited financial statements. The letters further stated that the delivery of Automotive Portfolio’s and Holdings II’s audited financial statements (which were due to be filed by April 30, 2018) would be delayed pending the completion of a forensic audit. Specifically, GPB Capital disclosed that it and its auditors “determined that it would be prudent to hire a third-party firm to complete a forensic audit in order to endeavor to put [the former partner’s] counterclaims and other allegations to rest.” The offering documents for Automotive Portfolio and Holdings II were not timely amended to disclose that the partnerships would be delayed in filing their audited financial statements with the SEC.
While NSC received the letters from GPB Capital notifying it of the delays and GPB Capital’s stated intention to complete a forensic audit, it sold 115 limited partnership interests in Automotive Portfolio and eight limited partnership interests in Holdings II after that announcement. The principal value of those sales, which occurred between April 30, 2018, and July 11, 2018, totaled approximately $8.7 million. NSC received a total of $701,480 in commissions from the sales.
In connection with these sales, however, NSC representatives did not inform the customers that Automotive Portfolio and Holdings II had not timely filed their audited financial statements with the SEC or the reasons for the delay. The delay in filing audited financial statements was material information that should have been disclosed.
Therefore, by negligently omitting material facts, NSC violated FINRA Rule 2010.

National Securities Corporation (CRD No. 7569)

National Securities Corporation (NSC) has been an SEC-registered broker-dealer and FINRA member since 1947. The firm, which is based in Boca Raton, Florida, is licensed to sell securities in 53 U.S. states and territories. NSC currently has a roster of approximately 574 registered brokers across the country and 119 branch offices.

The broker-dealer has also used the names Nat’l Securities Corp, Washington National Securities Corporation, NTL Insurance Agency, NSC Insurance Agency, National Securities of Washington, and National Securities Corp of Washington State to conduct business.

NSC has 82 different regulatory disclosures, according to the firm’s public disclosure report with FINRA.

In April 2022, NSC was censured, fined $300,000, and ordered to pay $363,447.67 in disgorgement (AWC No. 2019064508801). NSC contravened Section 17(a)(3) of the Securities Act of 1933 and violated FINRA Rules 2010 and 3110 by deceiving investors in connection with its sales of a “pre-IPO” private placement offering, failing to reasonably enforce its written supervisory procedures (WSPs), and failing to reasonably supervise the head of its “pre-IPO” offering business.

In May 2011, NSC was censured and ordered to pay $175,000 in partial restitution to investors in a private offering (AWC No. 2009019068201). NSC violated NASD Rules 2310, 3010, and 2110 and FINRA Rule 2010 when it failed to conduct reasonable due diligence and have a reasonable basis for recommending two private offerings.

Financial institutions like National Securities Corporation must supervise financial advisors and customer accounts properly. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.

About Iorio Law PLLC

SEC to Seek Receivership for GPB Capital

Iorio Law PLLC — Wed, 08 Jun 2022 02:47:02 GMT

**Update: June 17, 2022** The SEC and GPB’s court-appointed monitor have submitted court filings recommending that GPB Capital Holdings LLC be placed in receivership to prevent GPB founder and owner David Gentile from reasserting control over the firm that has been accused of running a Ponzi-like scheme by regulators. Joseph Gardemal, the GPB court-appointed monitor, said in a court filing that a receiver would reduce the financial drain from a management arrangement set up by Mr. Gentile before he resigned in early 2021 after being charged with fraud. Mr. Gardmal said that, without a receivership, said investors might wait many more years for any return of their invested capital. According to the to court filings, GPB management has been unable to formulate a distribution proposal, he said.

GPB Capital investors are encouraged to contact securities arbitration law firm Iorio Altamirano LLP to review their legal rights and options.

Original Post:

SEC to Seek Receivership for GPB Capital

According to news reports, the Securities and Exchange Commission (SEC) will seek to place GPB Capital Holdings LLC into receivership to return money to “defrauded investors.” The SEC is said to be prepared to present the plan to a federal judge in response to GPB founder David Gentile’s appointment of three new managers for the firm last month. GPB Capital is currently operating under a court-appointed monitor tasked with overseeing the firm’s assets and preventing it from taking actions that would harm investors.

The SEC alleges that the GPB founder’s actions undermine the court’s authority. Specifically, the SEC alleges that the move is meant to seize control of GPB Capital and its investment funds. “Through his actions of recent days, [Mr.] Gentile appears intent on seizing the controls of GPB Capital Holdings LLC and its investment funds, including their respective bank accounts, which hold nearly $1 billion that is earmarked for the victims of his fraud.” The SEC further stated that Mr. Gentile was trying to “usurp the court’s authority over the monitorship.”

In a June 2 letter to the U.S. District Judge who is presiding over the civil fraud case against GPB in the U.S. District Court for the Eastern District of New York, the SEC argued that Mr. Gentile’s actions violated the court order appointing a monitor to oversee the firm and that the violation represented a material breach in that order that permits the agency to convert the monitorship to a receivership to protect investor assets.

The SEC further stated that most of GPB’s assets, “all of which belong to investors defrauded by Gentile,” have been liquidated and that “It is time to get money back to investors” through a court-supervised receivership.

Thousands of investors are still waiting for news about how the GPB funds will be distributed. The timeline of when potential distributions may be made and the amounts paid remains uncertain.

New York securities arbitration law firm Iorio Altamirano LLP continues to investigate and evaluate potential claims for investors who have purchased GPB Automotive Portfolio, LP, GPB Holdings, LP, GPB Holdings II, LP, GPB Waste Management, LP, or GPB Cold Storage, LP.

GPB Capital investors are encouraged to contact Iorio Altamirano LLP for a free and confidential consultation and to review their legal rights. Iorio Altamirano LLP has represented numerous GPB investors in recovering losses.

GPB Investors Encouraged to File Arbitration Claims in 2022 to Preserve Legal Rights

GPB Investors Have Won Monetary Awards in 10 of 11 Arbitration Cases This Past Year

What Can GPB Investors Do?

GPB Capital investors should immediately contact a securities arbitration law firm to review their legal rights.

Investors who have purchased GPB Automotive, GPB Holdings, GPB Holdings II, or GPB Waste Management through a broker or brokerage firm have successfully recovered investment losses by filing securities arbitration claims.

Iorio Altamirano LLP is a national securities arbitration law firm based in New York, NY. The law firm pursues FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.

We have nearly 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf to recover your losses. We generally represent clients on a contingency fee basis. If we do not obtain a recovery, you do not owe us a legal fee.

Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Western International Securities, Inc.

Iorio Law PLLC — Wed, 04 May 2022 14:20:18 GMT

**Update: June 16, 2022** On June 15, 2022, the United States Securities and Exchange Commission filed a lawsuit against Western International Securities, Inc., and several of its brokers, in California Central District Court in connection with approximately $13.3 million in L bonds sold to retail customers. The firm is accused of failing to perform due diligence regarding the inherent risks associated with L Bonds. The brokers included in the suit are Steven Graham, Andy Gitipityapon, Thomas Swan, Nancy Cole, and Patrick Egan.

The complaint alleges that although the prospectus for the June 2020 offering stated that L Bonds were only suitable for customers with “substantial financial resources,” Western International did not set any criteria or thresholds for its customers to invest in L Bonds. Western International Securities also did not restrict the sale of L Bonds to customers with certain risk profiles or investment objectives.

The complaint also alleges that the named brokers misunderstood important issues regarding GWG Holdings, Inc. and the GWG L Bonds, including that GWG significantly changed its business model beginning in 2018 and that GWG L Bonds were not directly collateralized by life insurance policies. As a result, the brokers recommended GWG L Bonds to retail customers without a reasonable basis to believe that the investments were in the customers’ best interest.

Our law firm that represents GWG L Bond investors in filing individual claims to recover investment losses, encourages all investors who purchased L Bonds through Western International Securities, Inc. to contact the law firm for a free consultation to evaluate their options. Collectively, our law firm has filed claims seeking to recover over $2.5 million in losses and damages from brokerage firms for the improper sale of GWG L Bonds.

Original Post:

Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Western International Securities, Inc.

Our firm is a securities arbitration law firm based in New York, NY, investigating potential securities arbitration claims against Western International Securities, Inc. for its sale of L Bonds issued by GWG Holdings, Inc. Upon information and belief, Western International Securities, Inc. was a part of Emerson Equity LLC’s network of broker-dealers who sold the speculative, high-risk, and illiquid GWG L Bonds. Our law firm has spoken to several retail investors who purchased GWG L Bonds through the recommendation of broker Dan Beech, who was registered with Western International Securities in Westlake Village, CA, from May 10, 2016, until March 9, 2022.

On April 20, 2022, GWG Holdings, Inc. filed for Chapter 11 bankruptcy, allowing GWG Holdings to propose a reorganization plan. However, many GWG L Bond investors, who have not received interest or maturity payments since January 2022, are skeptical that they will see a return of their invested capital. Investment News has reported that one anonymous GWG L bond investor estimates that the GWG L Bonds may now be worth 20 to 30 cents on the dollar.

According to the bankruptcy filings, the SEC has been investigating the sales practices related to GWG L Bonds. We believe that this investigation includes the sales practices of Emerson Equity and its regional broker-dealers, such as Western International Securities, Inc.

Brokerage firms like Western International Securities, Inc. are required to make investment recommendations that are suitable and in the best interest of their customers. Brokerage firms and financial advisors must also disclose all material facts and risks of a security when making a recommendation. Firms and brokers must also conduct reasonable due diligence on products they offer before recommending them to any clients. When a firm or advisor fails to meet these standards of conduct, they can be held liable for damages.

Investors who purchased the L Bonds offered by GWG Holdings are encouraged to contact Iorio Law PLLC for a free and confidential consultation and to review their legal rights. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

For the latest on Iorio Law PLLC’s investigation of GWG L Bonds, visit our firm’s investigation page: Iorio Law PLLC’s Investigation of GWG L Bonds.

About GWG L Bonds

An L bond is a financial product created by GWG. Initially, GWG pooled money from bond investors to purchase life insurance policies on the secondary market, pay the policy premiums, and then collect the death benefit when the insured individual passed away. However, beginning in 2018, GWG used the investor capital to invest in a new business model, which exposed the company to much risker alternative assets. Many GWG L Bond investors were utterly unaware that GWG materially reoriented its business model, which, in our view, made it a much bigger credit risk. Additionally, many GWG L bond investors were not told by their financial advisors that GWG used investor capital to pay out the high distributions owed to other GWG L Bond investors in a Ponzi-like scheme.

GWG Holdings offered the L Bonds with a maturity ranging from 2 to 7 years and paying an interest rate of 5.50% to 8.50%.

GWG L Bonds were likely not suitable for investors with a low-to-moderate risk tolerance or investors who had liquidity needs.

Investors who purchased GWG L Bonds should contact New York Securities arbitration law firm Iorio Law PLLC for a free and confidential consultation to review their legal rights.

Western International Securities, Inc. (CRD No. 39262)

Western International Securities, Inc. is an SEC-registered broker-dealer and investment advisor based in Pasadena, CA. The firm was founded in Colorado in April 1995 and has been a FINRA member since November 1995.

Western International Securities, Inc., which is currently licensed to sell securities in 53 U.S. states and territories, currently has a roster of approximately 456 registered brokers and investment advisors across the country.

According to the firm’s public disclosure report, it has been sanctioned 11 times by regulators for alleged misconduct. The most recent sanction was settled in 2021.

Steven R. Graham (CRD No. 1977736)

Steven Graham has been a dually registered broker and registered investment advisor with Western International Securities, Inc. in Valencia, CA, since September 4, 2020. Mr. Graham has 32 years of experience in the securities industry and has been associated with six different firms.

According to the SEC’s complaint against Western International and Mr. Graham (the “Complaint”), Mr. Graham recommended and sold over $1 million worth of GWG L Bonds to retail investors between July 2020 and April 2021, which generated approximately $32,500 in commissions. The Complaint alleges that Mr. Graham failed to comply with Regulation Best Interest’s Care Obligation and constitutes violations of Regulation Best Interest’s General Obligation. Accordingly, according to the Complaint, Mr. Graham violated Rule 15l-1(a)(1) of the Exchange Act, 17 CFR § 240.15l-1(a)(1).

The Complaint details Mr. Graham’s recommendations to two retail customers:

In or around November 2020, Mr. Graham recommended that a 79-year-old retired truck driver purchase $100,000 in a two-year GWG L Bond. The customer had a moderate risk tolerance and investment objectives that did not include speculation. The customer had limited general investment knowledge and limited knowledge of bonds. At the time of his GWG L Bond purchase, the customer’s annual income was $35,000, and his liquid net worth was $300,000. The GWG L Bonds comprised of 10% of the customer’s net worth and 33% of his liquid net worth. The GWG L Bond was held in the customer’s individual account. In the “rationale” section of the firm’s disclosure forms, Mr. Graham wrote in full: “Customer is seeking a high rate of interest from funds sitting in a bank savings at .05%. They will utilize the interest for supplemental income each month. The Complaint alleges that Mr. Graham did not specify why he believed that the GWG L Bonds were in the customer’s best interest, as opposed to many other investments that offered greater than .05% interest rates. The SEC contends that Mr. Graham’s bases for believing that the $100,000 GWG L Bond investment was in the customer’s best interest were unreasonable, vague, and generic. The Complaint alleges that Mr. Graham did not exercise reasonable diligence, care, and skill to have a reasonable basis to believe his recommendation of the GWG L Bonds was in the customer’s best interest. The Complaint also alleges that Mr. Graham’s supervisor and Western International’s compliance department failed to raise questions or concerns regarding the customer’s bond investment.
In or around January 2021, Mr. Graham recommended that a 65-year-old retiree purchase $100,000 in a 3-year GWG L Bond. The customer had a moderate risk tolerance and investment objectives that did not include speculation. The customer’s investor profile with the firm represented that he had no general investment knowledge and limited knowledge of bonds. The customer had an annual income of $85,000, a net worth of $1.1 million, and a liquid net worth of $500,000. The GWG L Bonds constituted 9% of the customer’s net worth and 20% of his liquid net worth. The GWG L Bond was held in the customer’s individual retirement account. In the “rationale” section of the firm’s disclosure forms, Mr. Graham wrote that the customer was “seeking an additional income stream to supplement his retirement income” and that he wanted to “leverage a small portion of his IRA portfolio to accomplish this.” However, as pointed out in the SEC’s Complaint, the GWG L Bond was not a “small portion” of the customer’s IRA portfolio. In actuality, the $100,000 GWG L Bond investment constituted 50% of the IRA held at Western International. Mr. Graham’s supervisor and Western International’s compliance department failed to identify the discrepancy. The Complaint alleges that Mr. Graham’s bases for believing that the $100,000 GWG L Bond purchase was in the customer’s best interest were unreasonable, vague, generic, and premised on an erroneous assumption. The SEC contends that Mr. Graham did not exercise reasonable diligence, care, and skill to have a reasonable basis to believe his recommendation was in the customer’s best interest. The Complaint also alleges that Mr. Graham’s supervisor and Western International’s compliance department failed to raise questions or concerns regarding the customer’s bond investment.

Finally, the Complaint alleges that although Mr. Graham understood that there had been a change in GWG’s business, he failed to take the necessary actions to understand the company’s new business model or assets.

Andy Ravi Gitipityapon (CRD No. 4092978)

Andy Gitipityapon has been a dually registered broker and registered investment advisor with Western International Securities, Inc. in Northridge, CA, since April 9, 2018. Mr. Gitipityapon has 22 years of experience in the securities industry and has been associated with five different firms.

According to the SEC’s complaint against Western International and Mr. Gitipityapon (the “Complaint”), Mr. Gitipityapon recommended and sold approximately $330,000 worth of GWG L Bonds to retail investors between July 2020 and April 2021, which generated approximately nearly $10,000 in commissions. The Complaint alleges that Mr. Gitipityapon failed to comply with Regulation Best Interest’s Care Obligation and constitutes violations of Regulation Best Interest’s General Obligation. Accordingly, according to the Complaint, Mr. Gitipityapon violated Rule 15l-1(a)(1) of the Exchange Act, 17 CFR § 240.15l-1(a)(1).

Specifically, with respect to Mr. Gitipityapon, the Complaint made the following allegations:

Mr. Gitipityapon took a training course on GWG L Bonds prior to the issuance of L Bonds in June 2020, which may have been the basis for his misunderstanding of important issues regarding GWG and the GWG L Bonds that were disclosed by GWG in the 2020 Prospectus and subsequent public filings.
Mr. Gitipityapon did not understand the nature of the collateral for GWG L Bonds and failed to appreciate that the life insurance policies themselves did not collateralize the GWG L Bonds.
Mr. Gitipityapon did not know how GWG, after it became entangled with Beneficient, made its money or whether Beneficient generated revenues.

The Complaint details one of the recommendations made by Mr. Gitipityapon. In or around August 2020, Mr. Gitipityapon recommended that a 54-year-old restaurant server invest $30,000 into a two-year GWG L Bond. The customer had a moderate risk tolerance, and her investment objectives did not include speculation. She had an annual income of $75,000, a net worth of $400,000, and a liquid net worth of $150,000. The customer’s $30,000 GWG L Bond represented 7.5% of her net worth and 20% of her liquid net worth. The GWG L Bond was purchased in her individual account. In the “rationale” section of the firm’s disclosure forms, Mr. Gitipityapon wrote in full: ” Client had a CD that came due and does not need the funds for a few years. She likes the interest rate of the bond and understands the risk of the GWG bond. This bond meets all of her need and objectives.” The SEC contends that Mr. Gitipityapon’s bases for believing that the GWG L Bond purchase was in the customer’s best interest were unreasonable, vague, and generic. Accordingly, Mr. Gitipityapon did not exercise reasonable diligence, care, and skill to have a reasonable basis to believe his recommendation of the GWG L Bonds was in the customer’s best interest. The Complaint also alleges that Mr. Gitipityapon’s supervisor and Western International’s compliance department failed to raise questions or concerns regarding the customer’s bond investment.

Thomas Brian Swan (CRD No. 1698430)

Thomas Swan has been a registered broker with Western International Securities, Inc. in Westlake Village, CA, since May 27, 2008. Since October 14, 2014, he has also been an SEC-registered investment advisor with the firm. Mr. Graham has 33 years of experience in the securities industry and has been associated with nine different firms.

According to Mr. Swan’s public disclosure report with FINRA, he has been the subject of at least two customer complaints. In addition, in 2005, the California Department of Insurance alleged that Mr. Swan breached his fiduciary responsibility. The matter was settled, and Mr. Swan paid a fine of $20,000.

According to the SEC’s complaint against Western International and Mr. Swan (the “Complaint”), Mr. Swan, a resident of Acme, Washington, recommended and sold approximately $297,000 worth of GWG L Bonds to retail investors between July 2020 and April 2021, which generated approximately $12,500 in commissions. The Complaint alleges that Mr. Swan failed to comply with Regulation Best Interest’s Care Obligation and constitutes violations of Regulation Best Interest’s General Obligation. Accordingly, according to the Complaint, Mr. Swan violated Rule 15l-1(a)(1) of the Exchange Act, 17 CFR § 240.15l-1(a)(1).

Specifically, with respect to Mr. Swan, the Complaint made the following allegations:

Mr. Swan took a training course on GWG L Bonds prior to the issuance of L Bonds in June 2020, which may have been the basis for his misunderstanding of important issues regarding GWG and the GWG L Bonds that were disclosed by GWG in the 2020 Prospectus and subsequent public filings.
Mr. Swan erroneously bellied that GWG was continuing to invest in life insurance policies after 2018.
Mr. Swan did not understand the risks of the GWG L Bonds. He erroneously described the L Bones as relatively safe when in fact, they contained a “high degree of risk.”
Mr. Swan did not understand the nature of the collateral for GWG L Bonds and failed to appreciate that the life insurance policies themselves did not collateralize the GWG L Bonds.

The Complaint details two of Mr. Swan’s GWG L Bond recommendations:

In or around August 2020, Mr. Swan recommended that a 66-year-old retiree invest $55,000 into a seven-year GWG L Bond. The customer had an annual income of $30,000, and her investment objectives did not include speculation. The GWG L Bonds comprised of 10% of the customer’s liquid net worth. She had previously informed Mr. Swan that she did not want any capital risk to the money that provides the income portion of her retirement savings. In the Client Disclosure Form that accompanied the customer’s GWG L Bond purchase, Mr. Swan described her as “a conservative investor.” Neither Mr. Swan’s supervisor nor Western International Securitas’s compliance department identified this discrepancy. During a previous review of her IRA investments with Mr. Swan, the customer had told him she wanted to earn income safely without risking her principal. The SEC contends that Mr. Swan’s bases for believing that the $55,000 GWG L Bond investment was in the customer’s best interest were unreasonable, vague, and unsupported. The Complaint alleges that Mr. Swan did not exercise reasonable diligence, care, and skill to have a reasonable basis to believe his recommendation of the GWG L Bonds was in the customer’s best interest. The Complaint also alleges that Mr. Swan’s supervisor and Western International’s compliance department failed to raise questions or concerns regarding the customer’s bond investment.
In or around August 2020, Mr. Swan recommended that another 66-year-old retiree invest $80,000 into a seven-year GWG L Bond. The customer had a moderate-conservatives risk tolerance and identified preservation of capital as one of her investment objectives, but not speculation. The customer had an annual income of $75,000, a net worth of $1.5 million, and a liquid net worth of $900,000. She had limited general knowledge about investments and limited knowledge of bonds. The GWG L Bonds were purchased in her individual account. The SEC contends that Mr. Swan’s bases for believing that the $80,000 GWG L Bond investment was in the customer’s best interest were unreasonable, vague, and unsupported. Accordingly, the Complaint alleges that Mr. Swan did not exercise reasonable diligence, care, and skill to have a reasonable basis to believe his recommendation of the GWG L Bonds was in the customer’s best interest. The Complaint also alleges that Mr. Swan’s supervisor and Western International’s compliance department failed to raise questions or concerns regarding the customer’s bond investment.

Nancy Ellen Cole (CRD No. 2900724)

Nancy Cole has been a dually registered broker and investment advisor with Western International Securities, Inc. in Sacramento, CA, since August 29, 2008. Ms. Cole has 24 years of experience in the securities industry and has been associated with five different firms, including one firm that has since been expelled from the industry by FINRA.

According to Ms. Cole’s public disclosure report with FINRA, she has been the subject of at least one customer complaint.

According to the SEC’s complaint against Western International and Mr. Swan (the “Complaint”), Ms. Cole recommended and sold approximately $250,000 worth of GWG L Bonds to retail investors between July 2020 and April 2021, which generated approximately $10,000 in commissions. The Complaint alleges that Ms. Cole failed to comply with Regulation Best Interest’s Care Obligation and constitutes violations of Regulation Best Interest’s General Obligation. Accordingly, according to the Complaint, Ms. Cole violated Rule 15l-1(a)(1) of the Exchange Act, 17 CFR § 240.15l-1(a)(1).

Specifically, with respect to Ms. Cole, the Complaint made the following allegations:

Ms. Cole took a training course on GWG L Bonds prior to the issuance of L Bonds in June 2020, which may have been the basis for her misunderstanding of important issues regarding GWG and the GWG L Bonds that were disclosed by GWG in the 2020 Prospectus and subsequent public filings.
Ms. Cole did not know about GWG’s business combination with Beneficent until several months after she had recommended GWG L Bonds to customers. At the time that she had sold $250,000 worth of GWG L Bonds to two customers, she erroneously believed GWG was continuing to invest in life insurance policies.
Ms. Cole did not understand the risks of the GWG L Bonds. She erroneously described the L Bones as relatively safe when in fact, they contained a “high degree of risk.”

The Complaint details Ms. Cole’s GWG L Bond recommendations to a married couple. In or around December 2020, Ms. Cole recommended that a married couple purchase $250,00 worth of two-, three-, five-, and seven-year GWG L Bonds. At the time of the recommendations, the customers were 67 and 61 years old. The 67-year-old customer was retired. Ms. Cole described the customers as “not risk-takers” and “relatively conservative.” Their investment objectives did not include speculation. They had limited general knowledge about investments and limited knowledge of bonds. Collectively, the married couple had an annual income of $106,000 and a liquid net worth of $760,000. The GWG L Bonds, which were held in personal retirement accounts and a joint investment account, comprised 33% of their liquid net worth. The SEC contends that Ms. Cole’s bases for believing that the $250,000 GWG L Bond investment was in the customers’ best interest were unreasonable. Accordingly, the Complaint alleges that Ms. Cole did not exercise reasonable diligence, care, and skill to have a reasonable basis to believe her recommendations of the GWG L Bonds were in the customers’ best interest.

Patrick Michael Egan (CRD No. 2973478)

Patrick Egan has been a registered broker with Western International Securities, Inc. in Pasadena, CA, and Glendora, CA, since January 22, 1998. Since July 30, 2007, he has also been an SEC-registered investment advisor with the firm. Mr. Egan has 24 years of experience in the securities industry and has been associated with two different firms.

According to the SEC’s complaint against Western International and Mr. Egan (the “Complaint”), Mr. Egan recommended and sold approximately $184,500 worth of GWG L Bonds to retail investors between July 2020 and April 2021, which generated at least $5,397 in commissions. The Complaint alleges that Mr. Egan failed to comply with Regulation Best Interest’s Care Obligation and constitutes violations of Regulation Best Interest’s General Obligation. Accordingly, according to the Complaint, Mr. Egan violated Rule 15l-1(a)(1) of the Exchange Act, 17 CFR § 240.15l-1(a)(1).

Specifically, with respect to Mr. Egan, the Complaint made the following allegations:

Mr. Egan took a training course on GWG L Bonds prior to the issuance of L Bonds in June 2020, which may have been the basis for his misunderstanding of important issues regarding GWG and the GWG L Bonds that were disclosed by GWG in the 2020 Prospectus and subsequent public filings.
Mr. Egan erroneously believed that GWG’s transactions with Beneficient were not significant.
Mr. Egan acknowledged that the 2020 Prospectus described the GWG L Bonds as high risk but disregarded that disclosure.
Mr. Egan did not understand the nature of the collateral for GWG L Bonds and failed to appreciate that the life insurance policies themselves did not collateralize the GWG L Bonds.
Mr. Egan acknowledged that he should have reviewed Beneficient’s financial statements and admitted he did not do so but rather erroneously assumed that Beneficient was profitable.

The Complaint details one of Mr. Egan’s GWG L Bond recommendations. In or around August 2020, Mr. Egan recommended that a 75-year-old retiree with a moderate-conservative risk profile invest $20,000 into a 3-year GWG L Bond. The customer had an annual income of $50,000, a net worth of $250,000, and a liquid net worth of $250,000. He did not include speculation as an investment objective and had limited knowledge of investments in general and of bonds in particular. The GWG L Bonds, which were held in the customer’s individual account, represented 8% of both his liquid and total net worth. In the “rationale” section of the firm’s disclosure forms, Mr. Egan wrote in full: “Client had extra cash in the bank and wanted to earn more interest than can be done in his bank. Client will also have a large cash balance in his bank account in addition to the $20,000 at GWG.” According to the Complaint, besides the rationale section of the Client Disclosure Form, Mr. Egan did not document anywhere his bases for believing that the $20,000 GWG L Bond purchase was in the customer’s best interest. In addition, Mr. Egan did not document why he chose to recommend the GWG L Bonds to the customer as opposed to many other investments that offered higher interest rates than a bank account. The SEC contends that Mr. Egan’s bases for believing that the $20,000 GWG L Bond investment was in the customer’s best interest were unreasonable and not supported by the facts. Accordingly, the Complaint alleges that Mr. Egan did not exercise reasonable diligence, care, and skill to have a reasonable basis to believe his recommendation of the GWG L Bonds was in the customer’s best interest. The Complaint also alleges that Mr. Egan’s supervisor and Western International’s compliance department failed to raise questions or concerns regarding the customer’s bond investment.

Dan Beech (CRD No. 6169844)

Dan Beech is a stockbroker registered with Western International Securities, Inc. in Westlake Village, CA, from May 10, 2016, to March 9, 2022.

Upon information and belief, while registered as a broker with Western International Securities, Inc., Mr. Beech recommended and sold GWG L Bonds to retail investors. Our law firm is investigating potential securities arbitration claims arising out of Mr. Beech’s sales practices and Western International Securities, Inc.’s supervision of those sales practices.

Mr. Beech has eight years of experience in the securities industry and has been registered with five different firms. He is currently registered with Innovation Partners LLC.

According to Mr. Beech’s public disclosure report, he has had at least two customer complaints. In August 2021, a customer filed a written complaint alleging $62,500 in damages. Mr. Beech settled the matter for the total amount of the alleged damages. In 2019, a customer filed a lawsuit alleging that Mr. Beech made an unsuitable recommendation related to a Real Estate Investment Trust (“REIT”). The dispute was settled for monetary compensation by Western International Securities, Inc.

**Updates: June 16, 2021** This blog post has been modified from the original post to include individual sections on brokers Steven Graham, Andy Gitipityapon, Thomas Swan, Nancy Cole, and Patrick Egan.

About Iorio Law PLLC

GWG L Bond Investors Seek Recourse After GWG Holdings, Inc. Files for Chapter 11 Bankruptcy

Iorio Law PLLC — Wed, 20 Apr 2022 13:22:36 GMT

After months of working with legal and financial advisors to try and restructure outside of court, on April 20, 2022, GWG Holdings, Inc. filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Texas. The bankruptcy filing is a significant and troublesome development for GWG L Bond investors who invested substantial portions of their life savings into GWG L Bonds. According to GWG’s latest filing with the SEC, GWG has more than $1.6 billion in aggregate principal outstanding to GWG L Bond investors. A Chapter 11 bankruptcy will allow GWG Holdings to propose a reorganization plan.

Investment News has reported that one anonymous GWG L bond investor estimates that the GWG L Bonds may now be worth 20 to 30 cents on the dollar. Despite the unwelcomed news, GWG L bond investors are not without recourse. Many retail investors, including those represented by our securities arbitration law firm, are filing securities arbitration claims against brokerage firms that sold these speculative, high-risk, and illiquid financial products. These actions are separate and in addition to the bankruptcy proceedings.

GWG Holdings’ bankruptcy filing revealed for the first time that the ongoing investigation by the United States States Securities and Exchange Commission (SEC) includes an examination of sales practices of the GWG L Bonds by the Selling Group, including Emerson Equity LLC and its network of regional broker-dealers. According to the recent bankruptcy filing, the SEC issued subpoenas and document requests to individual brokerage firms beginning in late-2021.

For the latest on Iorio Law PLLC’s investigation of GWG L Bonds, visit our firm’s investigation page: Iorio Law PLLC’s Investigation of GWG L Bonds.

GWG L Bonds and Brokerage Firm Liability

GWG sold the L bonds through Emerson Equity LLC and a network of regional broker-dealers, who pitched the products to individual retail investors. The network of regional broker-dealers who sold L Bonds and shared in the selling commissions included the following firms, as well as other broker-dealers:

Centaurus Financial, Inc.
Great Point Capital LLC.
National Securities Corporation.
Western International Securities, Inc.
Aegis Capital, LLC.
Dempsey Lord Smith, LLC.
Coastal Equities, Inc.
International Assets Advisory, LLC.
Arete Wealth Management, LLC.
Capital Investment Group, Inc.
Lifemark Securities, Corp.
Westpark Capital, Inc.
Ausdal Financial Partners, Inc.
Moloney Securities.
IFP Securities, LLC.
Center Street Securities.
Cabot Lodge Securities LLC.
Kingswood Capital Partners, LLC.
American Trust Investment Services, Inc.
Ages Financial Services, LTD.
Landolt Securities, Inc.
Intervest International Equities Corporation.
Titan Securities.
NI Advisors.
JRL Capital Corporation.
The FIG Group, LLC.
M Stevens Securities, LLC.

Brokerage firms are required to make investment recommendations that are suitable and in the best interest of their customers. GWG’s L Bonds are speculative, high-risk, and illiquid securities sold as private placement offerings by brokerage firms across the country. The L Bonds were likely not suitable for investors with a low or moderate risk tolerance or investors who had liquidity needs.

Brokerage firms and financial advisors must also disclose all material facts and risks of a security when making a recommendation. Through the course of our law firms investigation, investors informed the firm that they were not aware that GWG significantly changed its business model beginning in 2018 or that GWG used investor capital to pay out high distributions to other GWG L bond investors in a Ponzi-like scheme.

When a firm or advisor fails to meet these standards of conduct, they can be held liable for damages.

Firms and brokers must also conduct reasonable due diligence on products they offer before recommending them to any retail investor. There are serious concerns that some broker-dealers recommended GWG’s L Bonds to customers without first conducting sufficient due diligence on the GWG L bonds or GWGH.

How to Recover Losses or Obtain a Free Consultation

In light of this most recent development, L bond investors are encouraged to contact Iorio Law PLLC, a leading securities arbitration law firm, to review their legal rights. Our firm is representing numerous GWG L bond investors in filing securities arbitration claims against firms such as Emerson Equity LLC and Centaurus Financial, Inc.for sales practice violations connected to the solicitation and sale of GWG L Bonds.

The L Bonds are speculative, high-risk, and illiquid private placement offerings. They were likely not suitable for investors with liquidity needs, low to medium risk tolerances, or senior or elderly investors.

About Iorio Law PLLC

GPB Investors Worried After GPB Automotive’s 10-K Annual Report Filing

Iorio Law PLLC — Fri, 15 Apr 2022 03:45:50 GMT

On April 14, 2022, GPB Automotive Portfolio, LP filed its Form 10-K Annual Report with the United States Securities and Exchange Commission. The filing has raised new concerns for GPB investors as GPB Automotive disclosed that it had commenced a plan to liquidate the Partnerships’ remaining assets and wind up the business, which is not expected to be complete until December 31, 2024.

In addition, GPB Capital continues to disclose that it, along with its former principals and representatives, are subject to numerous material litigation, which may take substantial time (several years) to resolve, and an unknown amount of outflow of cash from the Partnership to cover judgments, and legal costs.

Frustrating limited partnership investors, GPB is advancing funds to its principals and representatives, including David Gentile, for legal costs that they may incur to defend themselves in such disputes. Mr. Gentile has been criminally charged with securities fraud for allegedly running a Ponzi-like scheme.

As a result of the legal reserves and escrows, GPB Automotive has disclosed that distributions to Limited Partners may be delayed or withheld until such reserve is no longer needed or the escrow period expires. Worse, if the amounts of such reserves or escrows are insufficient, GPB Automotive has disclosed that Limited Partners themselves might have to return prior cash distributions to fund these liabilities.

GPB Capital investors are encouraged to contact Iorio Altamirano LLP for a free and confidential consultation and review their legal rights. Iorio Altamirano LLP has represented numerous GPB investors in recovering losses.

GPB Investors Have Won Monetary Awards in 10 of 11 Arbitration Cases This Past Year

GPB Automotive 10-K Filing (April 14, 2022)

GPB Automotive Portfolio, LP’s Annual Report for 2021 contains a wealth of disclosures that GPB investors should be aware of. The law firm of Iorio Altamirano LLP has combed through the lengthy filing and believes the following to be important disclosures:

Despite completing the sale of nearly all of its revenue-generating assets for $880 million, GPB Automotive has only $535 million in total net assets in liquidation and no significant revenue-generating assets.
GPB Automotive has commenced a plan to liquidate the Partnership’s remaining net assets and wind up the Partnership.
The liquidation is not expected to be completed until December 31, 2024.
As part of the United States Attorneys’ Office criminal proceedings against Mr. Gentile, Mr. Schneider, and Mr. Lash, which alleges conspiracy to commit securities fraud, as well as other charges, the USAO intends to seek criminal forfeiture.
GPB Automotive may not be able to pay liquidating distributions to its limited partners at the times and in the amounts expected. The Partnership does not know the timing or amount of any liquidating distributions, as uncertainties exist as to the ultimate amount of its expenses associated with completing our monetization strategy, its liabilities, its operating costs, and amounts to be set aside for claims, obligations, and expenses during the liquidation and winding-up process, and the related timing to complete such transactions.
If GPB Automotive fails to retain sufficient funds to pay the liabilities actually owed to its creditors, each Limited Partner receiving liquidating distributions could be liable for payment to its creditors for such Limited Partners’ pro-rata share of any shortfall, up to the amount actually distributed to such Limited Partner in connection with the dissolution.
Limited Partners may not receive distributions to return their invested capital fully.
GPB Automotive and GPB Capital are involved in material litigation arising from the Partnership’s operations, and they are subject to litigation risks. Resolving litigation disputes can be costly and time-consuming. As a result of outstanding litigation, the Partnership may incur significant legal fees.
The Partnership has incurred expenses in advancing funds to the General Partner to pay for its attorney’s fees and costs in that lawsuit and will continue to incur expenses in that regard.
In the event settlement discussions regarding class action lawsuits or any pending regulatory investigations are unsuccessful, any liability may require an outflow of cash from the Partnership. The amount and timing of any such outflow of cash are not estimable at this time.
GPB anticipates that resolving its legal matters will likely take substantial time; some or all of the pending matters may not be resolved for several years.
GPB Automotive is advancing funds to officers, directors, and representatives of the dealerships, as well as GPB, its principals, and representatives, for any reasonable costs they may incur in connection with defending themselves in such disputes as required by various agreements or governing law. This advancement of funds does not cover any potential future outcomes or settlements that result from these disputes.
GPB Automotive established reserves or escrows for legal actions when potential losses associated with the actions become probable and the costs can be reasonably estimated. The actual costs of resolving legal actions may be substantially higher or lower than the amounts reserved or placed in escrow for those actions. Distributions may be delayed or withheld until such reserves are no longer needed or the escrow period expires. If liabilities exceed the amounts reserved or placed in escrow, Limited Partners may need to fund the difference by refunding some or all distributions previously received.
With respect to all significant litigation and regulatory matters facing GPB Automotive, GPB Capital, and the former dealerships, GPB Automotive has considered the likelihood of an adverse outcome. It is possible that GPB Automotive could incur losses about these matters that may have a material adverse effect on its operational results, financial condition, or liquidity in any future reporting period. GPB Automotive knows that GPB Capital, the general partner, is currently paying legal costs associated with these actions for itself and certain indemnified parties. The Partnership expects to provide partial reimbursement to the General Partner as required by various agreements or governing law, but the amount is not reasonably estimable at this time.
GPB Automotive has identified material weaknesses in its internal controls. GPB Automotive will expend significant financial and other resources to comply with the requirements of being a public entity. These requirements may place a strain on our systems and resources. GPB Automotive expects to incur significant additional annual expenses related to its public company status and, among other things, to directors’ and officers’ liability insurance, director fees, reporting requirements of the SEC, and additional administrative expenses to GPB or affiliated entities to compensate them for hiring additional accounting, legal and administrative personnel, increased auditing and legal fees and similar expenses.
Expenses related to GPB and Highline are significant. Despite having almost no revenue-generating assets, GPB Automotive disclosed that it needs to make substantial profits to avoid depletion of its assets and provide a return to our Limited Partners.

What Can GPB Investors Do?

GPB Capital investors should immediately contact a securities arbitration law firm to review their legal rights.

GWG Holdings, Inc. Misses Deadline to File Its 2021 Annual Report with the SEC

Iorio Law PLLC — Fri, 01 Apr 2022 23:09:21 GMT

**Update: April 20, 2022** GWG Holdings, Inc. has filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Texas. As a result of the bankruptcy filing, all accrued principal and interest payment obligations owed to GWG L Bond investors have been halted as the case proceeds through bankruptcy court. Chapter 11 Bankruptcy cases can take anywhere from 17 months to five years for larger and more complex cases. GWG L Bond investors are encouraged to immediately contact our law firm for a free and confidential consultation and to review their legal rights.

**Update: April 4, 2022** According to the Wall Street Journal, GWG Holdings, Inc. is preparing to file for Chapter 11 bankruptcy in the coming days.

Original Post:

GWG Holdings, Inc. Misses Deadline to File Its 2021 Annual Report with the SEC

On April 1, 2022, GWG Holdings, Inc. disclosed that it was unable to timely file its 2021 annual report with the United States Securities and Exchange Commission (“SEC”). GWG Holdings, Inc. has now failed to timely file annual reports with the SEC in three of the past four years. The latest missed deadline comes after the company defaulted on its financial obligations to GWG L Bond investors earlier this year.

The Notification of Late Filing filed by GWG Holdings, Inc. indicated that the company was unable to file its Annual Report on Form 10-K for the year ended December 31, 2021, because the company required additional time to complete its financial statements and related disclosures.

According to the notice, GWG Holdings, Inc. missed the deadline in part because Grant Thornton, LLP, the company’s prior independent auditor, resigned on December 31, 2021. The accounting firm that replaces Grant Thornton will be GWG Holdings, Inc.’s fourth different independent auditor since August 2019. GWG Holdings, Inc. has not yet engaged an auditor to audit its financial statements for the year ended December 31, 2021. The notice also indicated that the company is in the process of “reviewing potential candidates.”

For the past several months, GWG Holdings has been working with legal and financial advisors to evaluate its restructuring alternatives. According to the Wall Street Journal, GWG Holdings is also seeking rescue financing to avoid bankruptcy, but a Chapter 11 bankruptcy filing is on the table as a last resort.

Meanwhile, GWG L Bond investors remain worried about what is going to happen to their principal investments.

Many investors, including those represented by our securities arbitration law firm, are filing securities arbitration claims against the selling broker-dealer in a bid to recover losses.

Investors who purchased the L Bonds offered by GWG Holdings are encouraged to contact Iorio Law PLLC for a free and confidential consultation. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

For the latest on Iorio Law PLLC’s investigation of GWG L Bonds, visit our firm’s investigation page: Iorio Law PLLC’s Investigation of GWG L Bonds

How to Recover Losses or Obtain a Free Consultation

About Iorio Law PLLC

GWG L Bond Investor Update: GWG Holdings, Inc. Officially Defaults on Its Obligations to L Bond Investors – February 14, 2022

Iorio Law PLLC — Mon, 14 Feb 2022 16:10:35 GMT

Original Post:

GWG L Bond Investor Update: GWG Holdings, Inc. Officially Defaults on Its Obligations to L Bond Investors – February 14, 2022

After missing interest and principal payments to L Bond investors on January 15, 2022, GWG Holdings, Inc. had a 30-day grace period to make the interest and maturity payments before it was officially in an event of default pursuant to the issuing documents for the L Bonds. The 30-day window for GWG Holdings to cure its deficiencies and meet its financial obligations to L Bond owners has now passed, and GWG Holdings is officially in an event of default.

On February 14, 2022, GWG Holdings, Inc. confirmed in a letter to investors that it will not make monthly interest and maturity payments on its L Bonds, or dividend payments to preferred stockholders. In addition, GWG holdings has confirmed that it will continue to defer requests for redemptions.

As a result of GWG Holdings, Inc.’s default, L Bond owners are left holding securities that cannot be sold or redeemed, and no longer paying their promised income.

Our New York securities arbitration law firm continues to evaluate potential claims for L Bond owners.

For the latest on Iorio Law PLLC’s investigation of GWG L Bonds, visit our firm’s investigation page: Iorio Law PLLC’s Investigation of GWG L Bonds.

GWG’s February 14, 2022 Letter to Investors

On February 14, 2022, GWG Holdings sent a notice to investors that the company would not make monthly interest and maturity payments on its L Bonds or dividend payments to preferred stockholders while the company continues to identify and evaluate restructuring alternatives with its advisors.

The company, which also disclosed that it would continue not to honor redemption requests at this time, stated that the process of identifying and considering various alternatives would take at least another three to four weeks and may take longer.

How to Recover Losses or Obtain a Free Consultation

About Iorio Law PLLC

Our Law Firm is Investigating the Sale of GWG L Bonds by Mark Williams, Formerly of Centaurus Financial, Inc.

Iorio Law PLLC — Wed, 09 Feb 2022 15:59:58 GMT

Our New York securities arbitration law firm is investigating the sales practices of broker Mark Williams connected with his recommendation of L Bonds issued by GWG Holdings, Inc. to senior and elderly customers. From November 2015 until March 2021, Mr. Williams was registered as a broker with Centaurus Financial, Inc. in Carmel, CA.

Our law firm has been contacted by numerous senior and elderly retail investors who were recommended and sold GWG’s L Bonds by Mr. Williams. GWG’s L Bonds are speculative, high-risk, and illiquid securities that were sold as private placement offerings. Brokerage firms received a commission of up to 5% of the principal amount sold.

On January 15, 2022, GWG Holdings Inc. missed interest and principal payments to L bond investors. The company is also reportedly seeking rescue financing in an effort to avoid bankruptcy after facing a series of accounting issues, financial stress, and an SEC investigation. In addition, GWG’s independent auditor resigned at the end of 2021, and the company has disclosed that its 2021 financials are not likely to be completed on time. These are just a few recent developments that have GWG L Bond investors concerned.

GWG L Bonds were likely not suitable for investors with a low-to-moderate tolerance for risk or investors who had liquidity needs.

Investors who purchased the L Bonds offered by GWG Holdings through Mark Williams or Centaurus Financial, Inc. are encouraged to contact Iorio Law PLLC for a free and confidential consultation. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

Mark John Williams (CRD No. 4061842)

Mark John Williams has 22 years of experience in the securities s industry and has been registered as a broker with the following firms:

Kingswood Capital Partners, LLC, from November 2021 through the present.
Forta Financial Group, Inc., from March 2021 until October 2021.
Centaurus Financial, Inc., from November 2015 through March 2021.
P. Turner & Company, L.L.C., from November 2007 through October 2015.
QA3 Financial Corp., from April 2006 through November 2007.
FSC Securities Corporation, from July 2001 through April 2006.
Advantage Capital Corporation in July 2001.
Merrill Lynch, Pierce, Fenner & Smith Incorporated, from January 2000 to June 2001.

According to his public disclosure report, Mr. Williams was the subject of a customer complaint in 2019. A customer alleged that from 2012 through March 2017, Mr. Williams recommended and misrepresented an unsuitable real-estate security. The customer did not file a securities arbitration complaint. Instead, the customer complained directly to the firms that employed Mr. Williams during the relevant time period. The firms, J.P. Turner & Company, L.L.C. and Centaurus Financial, Inc. denied any compensation to the customer. Mr. Williams also denied the allegations.

FINRA’s BrokerCheck tool can be used to obtain Mr. Williams’ complete and updated disclosure reports.

About the L Bonds

An L bond is a specialty high-yield bond created and issued by GWG Holdings.

Brokerage firms are required to make investment recommendations that are in the best interest of their customers. Financial advisors also have an obligation to be truthful and disclose all material facts and risks to customers when making investment recommendations. Firms and brokers are also required to conduct reasonable due diligence of products they offer before recommending them to any clients. Our law firm is investigating whether Mr. Willaims and Centaurus Financial, Inc. met these obligations in connection with their sale of L Bonds to retail investors.

About Iorio Law PLLC

Investor Alert: Our Law Firm is Investigates the Sale of L Bonds by Emerson Equity LLC

Iorio Law PLLC — Sat, 29 Jan 2022 12:06:55 GMT

Our New York securities arbitration law firm Iorio Law PLLC is investigating potential securities arbitration claims against Emerson Equity LLC and its network of broker-dealers for their sale of L Bonds issued by GWG Holdings, Inc. (Nasdaq: GWGH).

On January 15, 2022, GWG Holdings Inc., a company known for selling life-insurance bonds, missed interest and principal payments to L bond investors. The company is also reportedly seeking rescue financing in an effort to avoid bankruptcy after facing a series of accounting issues, financial stress, and an SEC investigation.

GWG’s L Bonds are speculative, high-risk, and illiquid securities that were sold as private placement offerings.

GWG sold the L bonds through Emerson Equity LLC and a network of regional broker-dealers, who pitched the products to individual retail investors. Emerson Equity LLC, an SEC-registered broker-dealer and FINRA member based in San Mateo, California, received a commission ranging from 0.75% to 5.00% of the principal amount of the L Bonds sold. The firm also received additional compensation and commissions, up to 8% of the aggregate gross proceeds from the sale of L Bonds. The network of regional broker-dealers who shared in the commissions included Centaurus Financial, Inc., Aegis Capital, LLC, NI Advisors, Western International Securities, Inc., and over 100 other firms.

Brokerage firms are required to make investment recommendations that are in the best interest of their customers. Financial advisors also have an obligation to be truthful and disclose all material facts and risks to customers when making investment recommendations. Firms and brokers are also required to conduct reasonable due diligence of products they offer before recommending them to any clients. There are serious concerns that some broker-dealers recommended GWG’s L Bonds to individuals even though the product was not suitable for them. There are also concerns that firms failed to perform reasonable due diligence about GWG’s L Bond before selling the risky products to their customers.

Investors who purchased the L Bonds offered by GWG Holdings through Emerson Equity LLC, Centaurus Financial, Inc., Aegis Capital, LLC, NI Advisors, Western International Securities, Inc., or any other broker-dealer are encouraged to contact Iorio Law PLLC for a free and confidential consultation. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

About the L Bonds

An L bond is a financial instrument created by GWG, which pooled money from bond investors to purchase life-insurance policies on the secondary market, and then used payouts from the policies when people died to repay investors.

GWG Holdings began selling L Bonds in 2012. According to a firm Form 8-K, it began selling a $2 billion L Bond offering in the summer of 2020 to a growing network of advisors from 127 firms.

GWG Holdings offered the L Bonds with a maturity ranging from 2 to 7 years and paying an interest rate of 5.50% to 8.50%.

The L Bonds are speculative, high-risk, and illiquid private placement offerings. They are secured by the assets of GWG Holdings and a pledge of all of the common stock by its largest stockholders. According to the June 2020 offering prospectus, the key features and risks of the L Bonds include:

Speculative, High-Risk, Illiquid: “Investing in our L Bonds may be considered speculative and involves a high degree of risk, including the risk of losing your entire investment…. The L Bonds are only suitable for persons with substantial financial resources and with no need for liquidity in this investment.”
Illiquid: “We do not intend to list our L Bonds on any securities exchange during the offering period, and we do not expect a secondary market in the L Bonds to develop. As a result, you should not expect to be able to resell your L Bonds regardless of how we perform. Accordingly, an investment in our L Bonds is not suitable for investors that require liquidity in advance of their L Bond’s maturity date.”
6% charge to redeem early: “In the event we agree to redeem L Bond upon the request of an L Bond holder — other than after death, bankruptcy or total permanent disability— we will impose a redemption fee of 6% against the outstanding principal balance of the redeemed L Bond.
Subordinate Debt: “We maintain senior borrowing arrangements that subordinate to our senior lenders the right to payment on, and the collateral securing, the L Bonds. In addition, these borrowing arrangements restrict our receipt of distributions from certain of our operating subsidiaries, subject to certain exceptions. These provisions will restrict cash flows available for payment of principal and interest on the L Bonds. From time to time we may add or replace senior lenders and the particular arrangements under which we borrow from them.”
L Bonds Sold as “Units” of $1,000: L Bonds will be sold as “Units,” with each whole Unit representing $1,000 in principal amount of L Bonds.

L Bonds were likely not suitable for investors with a low-risk tolerance or investors who had liquidity needs.

About Iorio Law PLLC

The Founder and Former CEO of GPB Capital Now Wants GPB Capital to Pay Legal Fees to Defend Him Against Criminal and Civil Fraud Charges

Iorio Law PLLC — Thu, 23 Dec 2021 14:12:35 GMT

David Gentile, the disgraced founder and former CEO of GPB Capital Holdings LLC, has sued GPB Capital. Mr. Gentile seeks to make GPB Capital, which an independent court-appointed monitor is now overseeing, cover the legal costs for his defense against criminal and civil securities fraud.

In February 2021, Mr. Gentile was criminally charged with securities fraud, wire fraud, and conspiracy in federal court. The criminal complaint alleged that Mr. Gentile, among others, engaged in a scheme to defraud investors by misrepresenting the source of funds used to make monthly distributions to investors and the amount of revenue generated by two of GPB’s investment funds, GPB Holdings, LP, and GPB Automotive Portfolio, LP.

Separately, the SEC has charged Mr. Gentile, GPB Capital, and related entities with running a Ponzi-like scheme that raised roughly $1.8 billion from securities issued by GPB Capital. The SEC believes that as many as 17,000 retail investors nationwide have been defrauded.

The SEC’s fraud case has been put on hold pending the outcome of related criminal fraud cases against GPB founder David Gentile and two others.

Despite being accused of running a Ponzi-like scheme when he was running GPB Capital, Mr. Gentile filed a legal action in Delaware Chancery Court to compel GPB Capital to pay over $755,000 that he owes to lawyers who are defending him in the criminal and civil actions. The legal fees and expenses are for work already performed by Mr. Gentile’s lawyers. They do not include future legal expenses that Mr. Gentile will incur to defend himself in the impending criminal trial and numerous civil litigations.

Separately, Mr. Gentile is asking for court-supervised mediation to obtain a distribution of more than $5 million to cover his personal tax liability from last year.

Meanwhile, limited partners of GPB Capital private placement funds, such as GPB Automotive Portfolio LP, have not received distributions since 2018. Worse, their investments remain illiquid, as there is no secondary market to sell their units.

In light of the recent news, the future of GPB Automotive Portfolio, LP remains uncertain. Investors of GPB Automotive Portfolio LP are encouraged to act now and contact our securities arbitration law firm for a free consultation and review of their legal rights.

What can GPB Automotive investors do?

Our law firm is investigating claims on behalf of defrauded investors who were victims in the GPB funds scheme. The GPB funds were marketed to independent broker-dealers and investment advisers who would, in turn, sell the GPB funds to their retail investors.

GPB Capital, an alternative asset management firm, sold unregistered and high commission limited partnership interests through independent broker-dealers and investment advisers who would, in turn, sell the GPB Funds to their retail investors. There are serious concerns that broker-dealers may have failed to conduct reasonable due diligence about the GPB Funds and GPB Capital.

Investors who purchased any of the following private placement investments issued by GPB Capital should contact securities arbitration law firm Iorio Law PLLC for a free and confidential consultation and review of their legal rights:

GPB Holdings, LP / GPB Holdings Qualified, LP.
GPB Automotive Portfolio, LP.
GPB Holdings II, LP.
GPB Waste Management, LP.

Investors who have purchased limited partnership units in these illiquid funds through a broker or brokerage firm have successfully recovered investment losses by filing securities arbitration claims.

If you lost money in the GPB funds, you might have a claim.

About Iorio Law PLLC

GPB Investors Have Won Monetary Awards in 10 of 11 Arbitration Cases This Past Year

Iorio Law PLLC — Thu, 18 Nov 2021 18:01:55 GMT

Over the past calendar year, GPB Capital investors have won over $2.4 million in monetary awards in 10 out of 11 (nearly 91%) arbitration claims that have proceeded to a final hearing. According to public records, many other claims filed against broker-dealers who sold the private placements offered by GPB Capital have been settled for monetary compensation.

The judgments and awards come after years of filing lawsuits and arbitration claims by GPB Capital investors.

For our latest posts related to GPB Capital, please click here.

Earlier this year, the SEC has charged GPB Capital, Ascendant Capital, and Ascendant Alternative Strategies with running a Ponzi-like scheme that raised roughly $1.8 billion from securities issued by GPB Capital. The SEC believes that as many as 17,000 retail investors nationwide have been defrauded.

GPB Capital had four flagship funds, which were sold as private placement offerings:

GPB Holdings, LP / GPB Holdings Qualified, LP.
GPB Automotive Portfolio, LP.
GPB Holdings II, LP.
GPB Waste Management, LP.

Brokers and brokerage firms are obligated to make suitable recommendations in their customers’ best interests. Among other things, the broker must have a reasonable basis to believe that a recommendation is suitable for a customer based on the particular customer’s investment profile. In addition, the broker and firm must have a reasonable basis to believe, based on reasonable diligence, that the recommendation is suitable for at least some investors. FINRA has stated that “reasonable diligence” means that the firm’s and/or broker’s due diligence “must provide the firm or associated person with an understanding of the potential risks and rewards of the recommended security or strategy.”

Brokerage firms may have failed to conduct reasonable diligence into the GPB funds before selling the private placement offerings to their customers. The firms’ compliance departments likely ignored or missed many red flags such as inflated revenue reports, fabricated profits, kickbacks, and investor funds being funneled into the pockets of GPB’s principals.

Iorio Altamirano LLP is investigating claims on behalf of defrauded investors who were victims in the GPB funds scheme. The GPB funds were marketed to independent broker-dealers and investment advisers who would, in turn, sell the GPB funds to their retail investors.

Investors that have purchased any of the following private placement investments issued by GPB Capital should contact securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of their legal rights:

GPB Holdings, LP / GPB Holdings Qualified, LP.
GPB Automotive Portfolio, LP.
GPB Holdings II, LP.
GPB Waste Management, LP.

If you lost money in the GPB funds, you might have a claim.

A Year of Awards for GPB Capital Investors

Below is a summary of cases that have been identified from publicly available records where investors filed securities arbitration claims seeking to recover investment losses due to, in part, private placement offerings of GPB Capital. The list includes only cases that have proceeded to a hearing. It does not include numerous cases that were settled.

Date	Case Number	Hearing Site	Respondent(s)	Award
11/16/2021	20-01124	Boca Raton, FL	Sandlapper Securities, LLC	$155,188 + $50,000 attorney’s fees
11/1/2021	20-00604	Atlanta, GA	Capital Financial Services, Inc.	$88,760 + $16,000 attorney’s fees and costs
10/12/2021	19-00440	Cleveland, OH	McDonald Partners, LLC and Thomas M. McDonald	$160,000
8/13/2021	19-03721	New York, NY	Hightower Securities, LLC	$163,201
8/11/2021	20-1967	Tampa, FL	Berkely Creighton Badger	$126,734
7/16/2021	20-01385	New York, NY	Hightower Securities, LLC	Denied
5/10/2021	20-04209	St. Louis, MO	Moloney Securities Co. Inc.	$1,750
4/21/2021	20-00687	Boca Raton, FL	Sandlapper Securities, LLC, Concorde Investment Services, LLC, and Fortitude Investment Group, LLC	$100,000
4/20/2021	20-01415	Denver, CO	Triad Advisors, LLC	$55,000
1/28/2021	19-01143	Detroit, MI	Arete Wealth Management LLC	$186,639
11/11/2020	19-02820	Boca Raton, FL	Crystal Bay Securities, Inc.	$1,300,803

How to Recover GBP Investment Losses

GPB Capital investors should immediately contact a securities arbitration law firm to review their legal rights.

Submit a form here to schedule a free and confidential consultation.

Iorio Altamirano LLP is investigating claims on behalf of GPB investors who purchased the security through a broker-dealer or registered investment advisor, including, but not limited to the following firms:

GPB Automotive Portfolio, LP Files 10-Q with SEC; Future Remains Uncertain for GPB Automotive Investors

Iorio Law PLLC — Tue, 16 Nov 2021 04:28:57 GMT

Between July 2013 and June 2018, limited partners invested $675 million into GPB Automotive Portfolio, LP, which was sold as a private placement offering by broker-dealers and registered investment advisory firms across the country. Financial advisors, who received large commissions for selling limited partnership units of GPB Automotive, lured investors into this high-risk and illiquid security by emphasizing a high rate of return and monthly distributions. Unfortunately for investors, distributions have not been paid since December 2018.

With the recent announcement that GPB Automotive Portfolio, LP agreed to sell Prime Automotive for $880 million, limited partners have been wondering what that means for them.

Below, we delve into GPB Automotive LP’s latest quarterly filing with the SEC to look for answers.

GPB Automotive Portfolio, LP’s 10-Q Filing (9/30/2021)

On November 15, 2021, GPB Automotive Portfolio, LP filed its Form 10-Q with the SEC for the third quarter of 2021, ending on September 30, 2021.

The Sale of Prime Automotive and Unwinding Its Business:

On September 12, 2021, GPB Automotive agreed to sell Prime Automotive to Group 1 Automotive, Inc. for $880 million.
The deal includes the sale of GPB Automotive’s remaining 30 car dealerships and three collision centers located in the Northeast of the United States.
The sale’s closing is expected to be substantially completed by the end of 2021, subject to various closing conditions and the approval of the court-appointed monitor overseeing GPB.
Once the sale is complete, GPB Automotive will no longer own any car dealerships.
According to a press release issued by Group 1 Automotive, Inc., the Prime Automotive dealerships generated $1.8 billion in annual revenues in 2020.
Growth through acquisitions had been a key component of GPB Automotive’s long-term strategy. For the three and nine months ended September 30, 2021, GPB Automotive did not acquire any dealerships.
For the three months ended September 30, 2021, and 2020, GPB Automotive generated revenues of $519.8 million and $713.5 million, respectively. This represents a decrease of $193.7 million, or 27.1%, in total revenues across all revenue streams. The decrease in total revenue across all revenue streams was primarily attributed to GPB Automotive’s disposition of three of its dealership groups, FX Caprara, Ron Carter, and KRAG, in September and October 2020, which accounted for revenue reductions of $36.5 million, $48.8 million, and $65.3 million, respectively totaling $150.6 million. In addition, there was a $42.4 million decrease revenue attributed to GPB Automotive’s existing dealerships, as a result of lower vehicle inventory related to the COVID-19 pandemic supply chain shortages.

Raising Capital, Debt, and Legal Expense Reserves:

In 2018, GPB Automotive primarily relied on raising capital from Limited Partners in the amounts of $185.4 million. Capital raising activities were suspended in June 2018.
After that, GPB Automotive relied primarily on cash on hand, cash flows from operations, floorplan lines of credit, and borrowings under its credit facilities as the main sources for liquidity.
As of September 30, 2021, the maximum financing available under GPB Automotive’s financing agreements (for new vehicles and used vehicles combined) was $206.9 million.
As of September 30, 2021, GPB Automotive had total liabilities of $461 million.
In addition, GPB Automotive had an undisclosed amount of money set aside for the costs of the numerous legal actions (consisting of an SEC civil matter, a federal criminal case against GPB’s founder and other former principals, two state-initiated matters, and at least 20 other civil legal actions).
With respect to all significant litigation and regulatory matters facing GPB Automotive, its general partner, and its dealerships, GPB Automotive has considered the likelihood of an adverse outcome. It is possible that GPB Automotive could incur losses pertaining to these matters that may have a material adverse effect on its operational results, financial condition, or liquidity in any future reporting period. The general partner is currently paying legal costs associated with these actions for itself and certain indemnified parties. GPB Automotive expects to provide partial reimbursement to the General Partner as required by various agreements or governing law, but the amount is not reasonably estimable at this time.
If the legal expense reserves are insufficient to cover the actual costs of the extensive legal actions, GPB Automotive may seek to recoup distributions that have already been paid to investors.
For the nine months ended September 30, 2021, GPB Automotive recorded $3.7 million of legal indemnification expenses.
GPB agreed to pay former Prime Automotive majority owner David Rosenberg $30 million to settle litigation and arbitration claims. The original lawsuit was filed in July 2019, when Mr. Rosenberg and Rosenberg family trusts filed a lawsuit in Massachusetts Superior Court against GPB, alleging that GPB retaliated against Mr. Rosenberg after he tried to address alleged fraudulent activity at GPB.

Restrictions on GPB Automotive’s Ability to Pay Distributions to Investors:

The aforementioned financing agreements include covenants that limit GPB Automotive’s ability to make certain payments, including distributions to shareholders.
Additionally, GPB Automotive disclosed to investors that it might delay or withhold distributions until legal reserves are no longer needed or the escrow period expires.

The Impact of the Sale of Prime Automotive

The sale of Prime Automotive will generate $880 million in cash for GPB Automotive. At first blush, that would seem to be a positive development for limited partnership investors. However, a closer look reveals that the forecast remains foggy for limited partners of GPB Automotive.

For starters, when GPB Automotive agreed to sell Prime Automotive, it also agreed to sell its primary revenue stream. According to reports, the Prime Automotive dealerships generated $1.8 billion in annual revenues in 2020.

Owning and operating retail automotive dealerships was GPB Automotive’s primary business model. A key component of its long-term strategy was to grow through acquisitions. Over the past nine months, GPB Automotive has been selling its dealerships instead of acquiring new car dealerships. Once the Prime Automotive sale is complete, likely before the end of the year, GPB Automotive will no longer own any car dealerships. GPB Automotive appears to be unwinding its business.

As of September 30, 2021, GPB Automotive had total liabilities of $461 million. If the business is indeed unwinding, the sale proceeds from the Prime Automotive deal would likely be used to pay off the partnership’s financial obligations.

The use of the remaining proceeds, including whether investors would receive back a portion of their principal investments, remains unclear. We know that the partnership is subject to significant litigation and regulatory matters and must pay a portion of the legal expenses for these proceedings. As disclosed in the latest SEC filing, GPB Automotive have considered the likelihood of an adverse outcome and has considered the possibility that GPB Automotive could incur losses pertaining to these matters that may have a material adverse effect on its operational results, financial condition, or liquidity in any future reporting period.

With potentially years of litigation ahead, GPB Automotive investors may be discouraged. However, they are not without options.

What Can GPB Automotive Investors Do?

GPB Automotive investors should immediately contact a securities arbitration law firm to review their legal rights.

Investors who have purchased GPB Automotive through a broker or brokerage firm have successfully recovered investment losses by filing securities arbitration claims.

For example, in August 2021, a FINRA arbitration panel in New York, New York, ruled in favor of a brokerage customer that invested in GPB Automotive Portfolio LP and GPB Waste Management LP at the recommendation of his financial advisor at Hightower Securities, LLC.

The arbitration panel ordered Hightower Securities, LLC to refund $163,201 to the customer in exchange for returning the limited partnership interests, essentially making the customer whole. The customer had purchased the limited partnership interests for $170,000 and had previously received $6,799 from the investments as a return of capital.

Our law firm is investigating claims on behalf of defrauded investors who were victims in the GPB funds scheme. The GPB funds were marketed to independent broker-dealers and investment advisers who would, in turn, sell the GPB funds to their retail investors.

Investors that have purchased any of the following private placement investments issued by GPB Capital should contact securities arbitration law firm Iorio Law PLLC for a free and confidential consultation and review of their legal rights:

GPB Holdings, LP / GPB Holdings Qualified, LP.
GPB Automotive Portfolio, LP.
GPB Holdings II, LP.
GPB Waste Management, LP.

If you lost money in the GPB funds, you might have a claim.

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