EquiAlt LLC Charged with Alleged Ponzi-scheme
SEC Reportedly Charges EquiAlt LLC and Execs Executives with Defrauding More Than 1,000 Retail Investors
The White Law Group is investigating potential securities fraud claims involving broker dealers and sales agents who may have unsuitably recommended EquiAlt to investors.
On February 18, 2020, the Securities and Exchange Commission (SEC) announced an emergency enforcement action and a temporary restraining order and asset freeze against EquiAlt LLC, its CEO, and its Managing Director, in connection with an alleged fraudulent unregistered securities offering that raised more than $170 million from at least 1,100 investors, a number of whom invested their retirement funds, according to a press announcement.
According to the SEC’s complaint, EquiAlt, and the two execs, allegedly raised millions of dollars by making material misrepresentations to investors about EquiAlt’s investment strategy, the financial condition of the investments, and the uses of investor proceeds.
The defendants allegedly told investors they would pool investor funds and use approximately 90% of the money to purchase under-valued real estate, rent or flip the properties, and pay investors 8-10% annual interest generated from the real estate investments. Instead, the SEC alleges, investor money went to support the two execs’ lavish lifestyle, and less than 50% of the funds raised were used to invest in properties.
Further, money from one investment fund controlled by EquiAlt was allegedly used to make Ponzi-like payments to investors in another fund.
Brokerage firms and RIAs are required to perform due diligence on any offering they recommend. They must ensure that all recommendations are suitable in light of the client’s age, investment experience, net worth, income, and investment objectives.
If a firm fails to perform due diligence or makes an unsuitable recommendation, a broker-dealer can be held responsible for any losses in a FINRA arbitration claim and an RIA can be held responsible either in a private arbitration or in court.
Filing a complaint against your Brokerage Firm
If you are concerned about your investment in EquiAlt LLC, the securities attorneys at The White Law Group may be able to help you. Please call 888-637-5510 for a free consultation with a securities attorney.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on The White Law Group and its representation of investors in FINRA arbitration claims, visit https://www.whitesecuritieslaw.com.