Breaking Cases (Part 2)
“CLAIMS AGAINST TONY THOMPSON, TNP SECURITIES AND THOMPSON NATIONAL PROPERTIES”
Lax & Neville LLP is investigating claims on behalf of investors regarding possible sales practices abuses in connection with Tony Thompson, TNP Securities LLC (“TNP Securities”) and Thompson National Properties LLC (“Thompson National Properties”) and the sale and marketing of various promissory notes linked to Tony Thompson’s real estate investments.
According to media reports, the Financial Industry Regulatory Authority, Inc. (“FINRA”) filed a complaint in late June/early August 2013, against well-known real estate investor, Tony Thompson, owner of Thompson National Properties, and his broker-dealer, TNP Securities, for allegedly deceiving and defrauding investors who purchased at least $50 million in high-yield real estate promissory notes sponsored by Thompson National Properties. These notes include the TNP 12% Notes Program LLC, the TNP 2008 Participating Notes Program LLC and the TNP Profit Participation Program LLC, which, from 2008 through 2012, were sold through various independent broker-dealers.
Furthermore, in early summer 2013, FINRA suspended former registered representative Wendy J. Worcester, TNP Securities’ co-chief compliance officer, for failing to adequately and independently conduct proper due diligence into TNP’s three private placement offerings, which compromised the independence of TNP Securities. Indeed, two of Thompson National Properties’ private placements paid old investors with new investor funds. According to FINRA, “[d]uring 2009 and 2010, the [TNP 12% Notes Program LLC and TNP Participating Notes Program LLC] were unable to pay certain investor distributions from operating cash . . . [and instead] relied on new investor proceeds or transfers from cash from [Thompson National Properties, TNP’s affiliate that sponsored the private placements,] or its affiliates in order to make distributions to investors.”
Most recently, it was reported that the broker-dealer Berthel Fisher & Co. Financial Services Inc. (“Berthel Fisher”), and its founder and Chief Executive Thomas Berthel (“Berthel”), who is a FINRA registered representative, are facing a prospective class action regarding the TNP 2008 Participating Notes Program LLC. According to the class action complaint, “Berthel Fisher had actual knowledge of misrepresentations and omission in the [TNP 2008 Note] and failed to investigate red flags that pointed to other misrepresentations and omissions . . . Through the use of the misleading TNP 2008 PPM, Berthel Fisher helped raise approximately [$26.2 million]” from more than 200 investors.
Tony Thompson and Thompson National Properties faced another lawsuit earlier this summer when an investor in the TNP 6700 Santa Monica Boulevard, also known as TNP Kodak, another Thompson National Properties sponsored program, filed a prospective class action lawsuit in the District Court for the Central District of California which alleged that Tony Thompson and his affiliated entities made “misrepresentations, [and engaged in] mismanagement, misappropriation of investor funds and other misconduct” with regard to the TNP 6700 Santa Monica Boulevard investment.
If you have lost money in any investment with Tony Thompson, TNP Securities, LLC or TNP National Properties LLC, Berthel Fisher & Co., or any other broker-dealer or registered representative regarding any TNP Securities related real estate promissory notes, including, but not limited to, the TNP 12% Notes Program LLC, the TNP 2008 Participating Notes Program LLC, the TNP Profit Participation Program LLC and the TNP 6700 Santa Monica Boulevard, a/k/a TNP Kodak, please call Lax & Neville LLP, (212) 696-1999. Lax & Neville LLP effectively assists investors, on both a regional and national level, that may have suffered losses as a result of their broker and broker dealer’s sales practice abuses, including fraud.
“CLAIMS AGAINST UBS FOR LOSSES IN THE UBS WILLOW FUND LLC”
Lax & Neville LLP is investigating claims on behalf of investors regarding possible misconduct in connection with UBS Financial Services, Inc.’s (“UBS”) sale and marketing of the UBS Willow Fund LLC (“UBS Willow Fund”). UBS recommended the Willow Fund to its investors as a distressed debt fund. In actuality, contrary to the representations made by UBS, the Willow Fund deviated from that investment strategy, and instead invested in speculative sovereign debt credit default swaps (“CDS”). The Willow Fund’s investment in sovereign debt CDS was much riskier and speculative than the investment strategy that UBS disclosed to its customers. Therefore, UBS customers were never informed of the true nature of the Willow Fund’s investment strategy. Due to this undisclosed strategy, the Willow Fund’s value and worth drastically declined, causing investors to suffer significant losses, which could be as high as 70%.
If you have lost money investing in the Willow Fund, please call Lax & Neville LLP, (212) 696-1999. Lax & Neville LLP has victoriously prosecuted numerous arbitrations against UBS, including, but not limited to UBS’s sale and marketing of principal protected notes issued by Lehman Brother’s Holdings. Lax & Neville LLP effectively assists investors, on both a regional and national level, that may have suffered losses as a result of their broker and broker dealer’s sales practice abuses, including fraud.
“THE MERRILL LYNCH PHIL SCOTT TEAM LOSES FOR A THIRD TIME”
Lax and Neville LLP has been extremely successful in bringing claims by investors who lost money invested with the Merrill Lynch Phil Scott Team. Specifically, Lax & Neville LLP has won THREE FINRA arbitration awards (Clair R. Couturier, Jr. vs. Merrill Lynch, Pierce, Fenner & Smith, Inc., Phil Scott Group, et al FINRA No. 11-00867; Douglas and Kristin Mirabelli v. Merrill Lynch, Pierce, Fenner & Smith, Inc. - FINRA No. 10-03400; John J. Baker, Natalie N. Baker and Harriet B. Baker v. Merrill Lynch, Pierce, Fenner & Smith, Inc. - FINRA No. 09-06762) against Merrill Lynch and Phil Scott for purported sales practice abuses concerning the Merrill Lynch Phil Scott Team and the Merrill Lynch Phil Scott Team Income and Blue Chip Portfolios. The Merrill Lynch Phil Scott Team recommended that this investor invest 100% of his Merrill Lynch assets in the Merrill Lynch Phil Scott Team Income and Blue Chip Portfolios, which both were made up entirely of 100% equities. Lax and Neville LLP claimed that these recommendations were patently unsuitable as they were made without any regard of the investor’s risk tolerances and investment objectives. The Phil Scott Team also represented that the Merrill Lynch Phil Scott Team Income and Blue Portfolios would provide income and preservation of capital, which the investors argued was materially misleading and false. Lax and Neville LLP also claimed that Merrill Lynch failed to supervise Phil Scott and his team members. In finding for the Claimant in the most recent case, the Arbitration Panel stated in the Award that it was “particularly concerned by the following actions of Respondents: (i) Misrepresentations and omissions were contained in the unrestricted marketing materials supplied by Respondents to Greg Porter, who in turn, having been cloaked with apparent authority by Respondents, presented the misleading materials to Claimant. This wrongdoing was caused by Respondent Merrill Lynch, Pierce, Fenner & Smith Incorporated’s inadequate supervision before the fact and aggravated by its failure to take corrective action after it received notice of the communications; (ii) Respondents’ manner of using the Personal Investment Advisory Questionnaire as a disclosure device was misleading and had the capacity to deceive. Respondent Merrill Lynch, Pierce, Fenner & Smith Incorporated’s continuing approval of this use constitutes inadequate supervision; and (iii) Respondent Merrill Lynch, Pierce, Fenner & Smith Incorporated’s failure to comply with its own ARMOR report procedures constitutes a breach of its duties toward Claimant and another example of inadequate supervision.” (See FINRA Arbitration Award). In the Award, the Arbitration Panel further stated, “This list is not all-inclusive but is intended to give Respondents the benefit of some of the Panel’s conclusions so Respondents can modify their conduct accordingly.” (See FINRA Arbitration Award). In the most recent case, the FINRA arbitration award against Merrill Lynch and Phil Scott consisted of $1,100,000 in compensatory damages, $540,144 in attorneys’ fees, along with costs in the amount of $74,341.
If you invested with the Merrill Lynch Phil Scott Team and had a similar experience with the Merrill Lynch Phil Scott Team, please call Lax & Neville LLP, (212) 696-1999.
Lax & Neville LLP, has been retained by investors who lost money in MAT Five, which was inappropriately sold and marketed by Citigroup. The MAT Five was promoted to fixed-income investors who were seeking preservation of capital. In reality, the MAT Five was a very risky investment, which could drop sharply if the markets changed, or if the investments maintained in the MAT Five were not properly managed. Due to the very risky nature of the investment, the MAT Five plummeted in value. Many investors have been significantly damaged as a result of the inappropriate marketing and selling of the MAT Five by Citigroup. If you have lost money investing in the MAT Five or have information about Citigroup's marketing of the MAT Five, please call Lax & Neville LLP, (212) 696-1999.
Lax & Neville LLP will be initiating litigation against the Securities and Exchange Commission ("SEC") on behalf of Madoff victims seeking monetary damages for negligence under the Federal Tort Claims Act. Based upon the Inspector General's Report, we believe that a viable claim exists against the SEC. Please see link below.
If you have any questions regarding this matter, please contact our firm at (212) 696-1999.
On June 5, 2009, our firm filed a class action adversarial proceeding in the United States Bankruptcy Court for the Southern District of New York seeking to obtain a declaratory judgment, pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. § 2201, et seq., (i) that the Trustee's definition of "net equity" is incorrect as a matter of law, and (ii) that a customer's "net equity" under SIPA is the value of the securities reflected in the customer's Madoff account as of the SIPA filing date (even where the securities were never actually purchased) less any amounts the customer owes to Madoff.
First and foremost, the Trustee/SIPC Approach is an unlawful contravention of SIPA that deprives innocent victims of their SIPC recovery. It is also unprecedented. We are aware of no case in the history of SIPA where customers, who have been provided with written confirmations and account statements reflecting purchases and holdings of real securities (e.g., IBM, AT&T, etc.), had their "net equity" claims determined on the basis of the cash in, cash out approach being used by the Trustee and SIPC in this case. Indeed, in January of this year, SIPC President Stephen Harbeck acknowledged that, for this one case, SIPC took the extraordinary step of modifying the standard SIPC claim form used over the past 39 years. That form, which simply asks for the information required under the SIPA Definition (namely, what the debtor owes the customer and what the customer owes the debtor as of the filing date), was changed to ask for the customer's total deposits and total withdrawals (for what could be decades). Neither the Trustee nor SIPC has set forth any statutory basis for this departure from the SIPA Definition of "net equity" and past practice, and there is none.
Second, these adversely affected investors are not seeking a bail out from the government. SIPC was designed essentially as an insurance policy for investors defrauded by broker/dealers. The funding associated with these duly authorized SIPC payouts would come from SIPC funds, which are comprised of the yearly registration fee paid in by registered broker/dealers. Just recently, SIPC reviewed and increased its membership due's formula and has authorized increased contributions. Broker/Dealer registration in SIPC is voluntary, and contrary to the assertion made in the Times article, there are excellent alternatives other than taxpayers footing the bill for these payouts. SIPC could borrow the funds, increase membership dues, and seek retroactive contributions from its members.
In sum, this class action seeks a declaration by the Court on the definition of "net equity." We feel that our position is strongly supported by the law, and is supported by the policy arguments originally offered when SIPA was enacted.
If you have any questions regarding these matters, please contact either myself or partners Barry Lax and Brian Neville at (212) 696-1999.
Lax & Neville is currently acting on behalf of a group of approximately 300 investors called MadoffSurvivors, and represents many of its members. Brian Neville has been selected to head the legal steering committee, and is currently forming a legal strategy session for all attorneys involved, as well as congressional members who may help. The MadoffSurvivors exemplify the true victims of the Madoff ponzi scheme. They are individuals and families who worked their lifetimes to attain a modest nest egg for their retirement that was abruptly stolen from them on December 11, 2008.
If you are a victim of this fraud, and invested directly with Bernard L. Madoff Investment Securities LLC, and would like to retain Lax & Neville LLP to file a SIPC Claim on your behalf, please call Lax & Neville LLP, (212) 696-1999.
Lax & Neville LLP, has been retained by investors who lost money in the Aravali Fund, which was inappropriately sold by Deutsche Bank Securities and other brokerage firms in 2006 and 2007. The Aravali Fund was sold to investors who were seeking income and safety of principal as an alternative to a portfolio of municipal bonds. In reality, the Aravali Fund was a very risky interest arbitrage scheme comprised of a significant short position in treasury bonds, interest rate swaps and a highly levered pool of relatively illiquid municipal bonds. Not long after inception, due to the very risky nature of the investment, the Aravali Fund plummeted in excess of 90% in value, and is now being liquidated. Many investors have been significantly damaged as a result of the inappropriate marketing and selling of the Aravali Fund. Indeed, at least one Deutsche Bank broker who sold the Aravali Fund has claimed that it was misrepresented to him by Deutsche Bank. If you have lost money investing in the Aravali Fund or have information about Deutsche Bank's marketing of the Aravali Fund, please call Lax & Neville LLP, (212) 696-1999.
Lax & Neville LLP, has been retained by investors who lost money in Lehman Brothers Principal Protected Notes ("Lehman Principal Protected Notes"), which were inappropriately sold and marketed by several brokerage firms, including Lehman Brothers, Citigroup, UBS, Merrill Lynch and Wachovia. The Lehman Principal Protected Notes were marketed and sold as low-risk, conservative structured investment products to investors who were seeking income with capital preservation. Investors were advised that Lehman Principal Protected Notes would provide preservation of capital, a modest yield, and a slight gain in principal. Indeed, a brochure issued by Lehman Brothers and others, and distributed by the selling and marketing firms to their clients, stated that their "structured notes", which includes Lehman Principal Protected Notes, had "100 percent principal protection" and "uncapped appreciation potential" based upon the gains in the S&P 500 Index. However, in reality, the investments in Lehman Principal Protected Notes were subject to a significant amount of risk, including the risk of complete loss of the entire investment.
If you have lost money investing in Lehman Principal Protected Notes or principal protected note or structured products issued by another brokerage firm, or have information about the marketing of Lehman Principal Protected Notes or principal protected note or structured products issues by another brokerage firm, please call Lax & Neville LLP, (212) 696-1999.