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Robert W Pearce
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Mr. Pearce has tried, arbitrated and mediated numerous disputes involving complex securities, commodities, administrative, contract, commercial, business tort and employment law issues for over 30 years. He has represented hundreds of clients in Federal and state courts (trial and appellate) as... More
My company:
The Law Offices of Robert Wayne Pearce, P.A.
My blog:
The Investor's Rights Law Blog
  • NINETY-SIX BROKER-DEALERS SUED FOR COMMISSIONS GENERATED FROM TENANT-IN-COMMON PONZI SCHEME 0 comments
    Jan 18, 2013 12:46 PM

    Mr. James Zazzali, trustee for the DBSI Inc. bankruptcy, is suing ninety-six broker-dealers to recover $49 million in commissions for securities fraud related to tenant-in-common investments (TICs). In the complaint, Mr. Zazzali alleged that DBSI's TIC deals were part of a $600 million Ponzi scheme. Mr. Zazzali contends that the broker-dealers should return investors' payments and commissions, which should be distributed to DBSI creditors.

    TICs are investment vehicles that allow individual investors to buy shares of real estate interests directly, rather than shares of stock, bond certificates, or other forms ownership. Properties can include a high-rise office building, a retail center, a triple-net lease from a national drugstore chain, oil or gas wells, or any other type of investment property. Investors are attracted to TICs because they can purchase an interest in expensive properties - typically $30 million or more in value.

    DBSI was one of the largest creators and distributors of TICs until it defaulted on investor payments and filed for Chapter 11 bankruptcy protection. Of the ninety-six broker-dealers that actively sold DBSI TICs, twenty-two are now defunct. The broker-dealers that made most of the commissions from selling to DBSI include Berthel Fisher & Company Financial Services Inc., QA3 Financial Corp., DeWaay Financial Network LLC, The Private Consulting Group, and Questar Capital Corp. Mr. Zazzali alleged that the commissions were fraudulent transfers by DBSI and that earlier investors benefited from funds invested by latter investors.

    Due diligence requires a reasonable investigation of all material facts before entering into an agreement or transaction with another person or entity. It is a measure taken to prevent unnecessary harm to an innocent party. In many instances, broker-dealers do not perform sufficient due diligence prior to offering products such as tenant-in-common investments. If broker-dealers do not perform their due diligence, they risk misrepresenting the true nature of the product and placing clients in an unsuitable investment. As a result, an investor can claim damages against the entity that sold the investment for not performing its due diligence prior to the offer and sale.

    Have you suffered a loss in a tenant-in-common investment? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.

    The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce atpearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

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