GWG Holdings Lawsuit Investigation Update: GWG Files Chapter 11 Bankruptcy

Posted on April 20, 2022 by The White Law Group

Concerned about investment losses involving GWG Holdings (GWGH) L Bond offerings?

GWGH, a financial services firm, has been selling L Bonds since January 2012 under the name “Renewable Secured Debentures”. These debt securities were re-named “L Bonds” in January 2015 and in 2020, the company launched a new offering called the Liquidity Bond 2020, constituting secured debt of GWG Holdings, Inc.

April 20, 2022 – GWG Files Chapter 11 Bankruptcy Protection

According to a press release on April 20,2022, GWG Holdings, Inc. has just filed for Chapter 11 bankruptcy protection. This comes after the company reported in a new filing on April 1, that is would not be able to file its Annual Report on Form 10-K for the year ended December 31, 2021. Apparently, its independent registered public accounting firm quit in January. The company has missed numerous filing deadlines in the past.

According to the news release, GWG and its subsidiaries, GWG Life, LLC and GWG Life USA, LLC, have filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of Texas as part of a restructuring process. The company says it “expects restructuring to strengthen its financial position and enhance the value of its assets.”

According to filings with the SEC on January 18, 2022, due to the decreased sales of its L Bonds, GWG did not make the January 15, 2022 interest payment of approximately $10.35 million and principal payments of approximately $3.25 million with respect to its L Bonds. If the company fails to make the payments in the next 30 days it will result in default, according to the filing.

The company also noted that it believes that the filing of its Annual Report on Form 10-K for the year ended December 31, 2021, will likely be late as the independent registered public accounting firm it was working with declined to stand for reappointment. This would also likely result in a voluntary suspension of the sale of L Bonds. This is not the first time the company has failed to file timely financial reports.

On March 31, 2021 GWG reportedly notified the SEC of its inability to file its 2020 annual report within the prescribed time period because it required additional time to complete its financial statements and related disclosures.

The company received a letter on April 16, 2021 from the Nasdaq’s listing qualifications department notifying the company that it was not in compliance with a listing rule that requires the timely filing of annual financial reports, according to filings with the SEC.

While the letter states that the company is required to submit a plan to Nasdaq to regain compliance with the rule within 60 calendar days from the date of the letter, it apparently has no immediate effect on the listing or trading of GWGH’s common stock. If the plan is accepted, then it can grant GWG up to 180 calendar days from the due date of the annual report to regain compliance.

The company notes that it will file its report prior to the 60-day deadline and regain compliance with the Nasdaq continued listing requirements.

GWG Holdings Inc. (GWGH) finances its portfolio of life insurance assets through the sale of alternative investment products, according to its website. Although these products are touted as offering potentially higher yields than other investment assets that are correlated with the traditional stock and bond markets, they may come at a much greater risk to investors.

GWG Investment Offerings: What is an L Bond?

An L bond is an alternative investment vehicle that attempts to provide a high yield for a lender in exchange for bearing the risk that an insurance policy premium or benefits may not be paid. An L bond is an unrated life insurance bond that is used to finance the purchase and premium payments of life insurance settlement contracts purchased in the secondary market.

L Bonds were publicly offered and sold on a continuous basis in 2014, 2017 and again in 2020 for a total of $4 billion in principal. The most recent offering will reportedly run on a continuous basis through June 2023, according to the prospectus.

The GWG L Bond prospectus notes, “An investment in the L Bonds involves significant risks, including the risk of losing your entire investment, and may be considered speculative.”

GWG L bonds are illiquid investments, and the shareholders cannot sell them on the secondary market. Shareholders must wait until the bonds mature to redeem the principal amount and they cannot redeem the bond before the maturity date or the death or disability of the original policyholder. According to its prospectus, if GWG agrees to redeem the bond for any other reason, the bondholder will be charged a penalty of 6%.

The company warns “it may not be able to sell additional L Bonds on terms as favorable to the Company as past transactions or in quantities sufficient to fund all of the Company’s operating requirements,” according to financial statements filed with the SEC in November 2020. Further, GWGH may not be able to obtain additional borrowing under existing debt facilities or new borrowings with other third-party lenders.

GWG issues new series of “Liquidity” Bonds

The company issued two new series of L bonds in December 2020 called (the “Liquidity Bonds”). The Liquidity Bonds are currently being offered and sold to accredited investors as Reg D private placement investments. The company says the Liquidity Bonds will be issued as part of the Company’s strategy to expand its exposure to a portfolio of loans collateralized by cash flows from illiquid alternative assets. Six months after the issuance date of a Liquidity Bond, the holder may elect to exchange the Liquidity Bond, (at the beginning of each month and upon 30 days’ prior written notice to the Company) for that number of shares of the Company’s common stock.

According to Market Watch, the company’s stock closed yesterday at $6.98, down -20.68% in the past 12 months.

Potential Lawsuits to Recover Investment Losses

Unfortunately, many investors are not fully aware of the problems and risks associated with illiquid, high risk, private placement investments such as GWG L Bonds (Liquidity Bonds).

Alternative investments are complex and inherently risky products. Compared to traditional investments, such as stocks, bonds and mutual funds, these investments are significantly more complex and often better suited for sophisticated and institutional investors.

Another problem often associated with these recommendations is the high sales commissions brokers typically earn for selling them– as high as 15%. Brokers have an obligation to make investment recommendations that are consistent with their clients risk tolerance, net worth, investment objectives and experience in the market.

In many cases, the high sales commission may provide some brokers with enough incentive to make unsuitable investment recommendations.

Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Firms that fail to do so, may be held responsible for any losses in a FINRA arbitration claim.

If you are concerned about your investment in GWG L Bonds, the securities attorneys at The White Law Group may be able to help you. Please call the offices at 888-637-5510 for a free consultation.

For more information on The White Law Group and its representation of investors in FINRA arbitration claims, visit https://www.whitesecuritieslaw.com.

Moody National REIT II, Investigating Potential Securities Claims

Posted on November 18, 2021 by The White Law Group

Moody National REIT II, Investigating Potential Securities Claims

The White Law Group is investigating potential securities claims involving the liability brokerage firms may have for recommending Moody National REIT II to investors.

Moody National REIT II, a non-traded real estate investment trust (REIT), invests in hotel and securities. Last April, due to the global coronavirus (COVID-19) pandemic the company to suspended its public offering and distribution payments, as well as its share repurchase program. The company also terminated its IPO.

Potential Lawsuits to Recover Financial Losses

The trouble with non-traded REITs, like Moody National REIT II, is that they involve a high degree of risk. They are also typically sold as unregistered securities which lack the same regulatory oversight as more traditional investment products like stocks or bonds.

Non-traded REITs are also known for high sales commissions and due diligence fees. Brokers have an enormous incentive to push these products to unsuspecting investors who do not fully understand the risks. Sometimes brokers misrepresent the basic features of the products – usually focusing on the income potential and tax benefits while downplaying the risks.

Another problem with non-traded REITs, is the lack of liquidity. According to SEC filings, Moody plans to complete a liquidity event within three to six years from the termination of its IPO. If you want to sell your investment through a secondary market before then, you may lose money on the sale.

According to Central Trade and Transfer, shares of Moody National Reit II were recently sold for just $8.50 per share. This may mean significant losses for investors as the original purchase price was $25.00 per share.

If a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment, they may be found liable for investment losses in a FINRA arbitration claim.

If you are concerned about your investment in Moody National REIT II or another non-traded REIT, please contact The White Law Group at 1-888-637-5510 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington. The firm represents investors throughout the country in claims against their brokerage firm.

For more information on the firm and its representation of investors, visit www.WhiteSecuritiesLaw.com.

Altoona Advisor Michael Shillin Indicted after 37 Customer Complaints

Posted on October 28, 2021 by The White Law Group

Michael Shillin, of Shillin Wealth Management, Indicted on 10 Counts of Fraud

The White Law Group is currently representing investors in securities fraud claims against their brokerage firm involving financial advisor Michael Shillin (CRD#: 5927156,). If you have been a victim of Michael Shillin, the firm may be able to help you recover your financial losses through FINRA arbitration.

According to a press release, the U.S. Department of Justice on October 27, charged Michael Shillin, of Shillin Wealth Management, with nine counts of wire fraud, and one count of bank fraud.

Shillin allegedly defrauded clients by making misrepresentations to them such as telling them that he purchased stock on their behalf and that they had made hundreds of thousands of dollars on these investments, when in fact, Shillin allegedly had not purchased the stocks.

According to the DOJ, Shillin also persuaded clients to purchase insurance policies by purportedly misrepresenting their costs and benefits, some of which he received commission on.

The indictment further charges Shillin with defrauding a bank by obtaining two loans, totaling $462,000, by using allegedly fraudulent collateral.

If convicted, Shillin faces a maximum penalty of 20 years in federal prison on each wire fraud charge, and a maximum penalty of 30 years on the bank fraud charge.

FINRA Bars Michael Shillin from Securities Industry

In December we reported that FINRA barred former advisor Shillin from working in the securities industry after he purportedly refused to appear for on-the-record testimony.

According to a Letter of Acceptance Waiver and Consent (AWC) signed on December 18, 2020, FINRA was reportedly investigating Shillin after his member firm, Alliance Global Partners, filed an amended Form U5 stating that a client had complained that “Shillin made misrepresentations relating to the amount and source of expected dividends in his account.”

Shillin’s most recent member firm, Alliance Global Partners filed a Form U5 stating that Shillin had allegedly resigned while under investigation. The Form U5 is the Uniform Termination Notice for Securities Industry Registration. Broker-dealers, investment advisers, or issuers of securities must use this form to terminate the registration of an individual in the appropriate jurisdictions and/or self- regulatory organizations.

For FINRA’s full findings see FINRA Case # 202006822610.

According to his FINRA BrokerCheck report, Shillin was reportedly registered with the following firms:

05/23/2018 – 10/05/2020, A.G.P. / ALLIANCE GLOBAL PARTNERS (CRD#:8361), Altoona, WI
08/21/2014 – 06/11/2018, RAYMOND JAMES FINANCIAL SERVICES, INC. (CRD#:6694), CHIPPEWA FALLS, WI
07/18/2011 – 08/22/2014, EDWARD JONES (CRD#:250),CHIPPEWA FALLS, WI

Broker Misrepresentations

Of the 37 complaints filed against Shillin, many are allegedly involving Space-X shares and switching of life insurance policies.

On December 9, a customer alleges that Mike Shillin attempted to switch a client’s life insurance policy but kept the payments instead for paying for the new policy. On November 23, a client filed suit alleging that Shillin promised to purchase $25,000 worth of Space-X shares, but instead purportedly only purchased $20,000 of shares “although he alleges that $25,000 was withdrawn from the account; and that Mr. Shillin promised the SpaceX shares would be delivered into client’s account.”

Recovery of Financial Losses

Brokerage firms are required to adequately supervise their advisors. They must ensure they are complying with FINRA rules.

When brokers abuse client accounts and conduct transactions that violate securities laws, such as misrepresentation, the brokerage firm they are working with may be liable for investment losses. Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.

The brokerage firms can be held responsible for any losses in a FINRA arbitration claim if it is determined that they failed to properly supervise their agent.

For more information on the firm’s investigation, please see:

SEC Charges Barred Alliance Global Advisor Michael Shillin with Fraud

Barred Altoona Broker Michael Shillin has 27 Customer Complaints

WEAU: Former Altoona Investment Advisor Barred from Securities Industry

If you have suffered losses investing with Michael Shillin, the securities attorneys at The White Law Group may be able to help you. For a free consultation with a securities attorney, please call (888) 637-5510.

The foregoing information, which is all publicly available, is being provided by The White Law Group.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington. For more information, please visit our website, www.whitesecuritieslaw.com.

CNL Healthcare Properties Tender Offer Price Suggests Losses for Investors

Posted on October 27, 2021 by The White Law Group

CNL Healthcare Properties Inc. – Third Party Tender Offer

Recovery of Investment Losses involving CNL Healthcare Properties

The White Law Group continues to investigate potential claims involving broker dealers who may have improperly recommended non-traded REITs such as CNL Healthcare Properties to investors. The White Law Group may be able to help you to recover financial losses by filing a FINRA Arbitration claim against the brokerage firm that sold you the investment.

According to its website, CNL Healthcare Properties is a non-traded real estate investment trust (REIT) that “seeks to provide income and growth with a strategic focus on the seniors housing and healthcare sectors.”

Third Party Tender Offer for CNL Healthcare Properties, Inc. Shareholders

This week Comrit Investments has reportedly extended a third-party tender offer to purchase shares of the REIT from investors for $4.50 per share. This may suggest losses for investors as the original purchase price was $10 per share. The REIT reportedly suspended its stock redemption plan in July 2018. Unfortunately, many investors were not made adequately aware of the risks and liquidity problems associated with REITs. Compared to traditional investments, such as stocks, bonds and mutual funds, non-traded REITS, like CNL Healthcare Properties, are considerably more complex and involve a high degree of risk.

Decline in Net Asset Value

On March 12, 2021, the board of CNL Healthcare Properties Inc. declared a new net asset value per share of $7.38 for the company’s common stock as of December 31, 2020. There was a 4.7 percent decline in the appraised value of the company’s 71 assets when compared to the appraised values for the prior year’s NAV, according to filings with the SEC.

In May 2020 we reported that the company had seven coronavirus related resident fatalities across its 71 senior housing community properties. The company also advised that the current market conditions would likely delay the timeline of its ability to execute on any transactions to provide liquidity to shareholders.

Filing a Complaint against your Brokerage Firm

The White Law Group has represented numerous investors in claims against the brokerage firm that recommended CNL non-traded REITs to investors.

Broker dealers are required to perform adequate due diligence on any investment they recommend. They must ensure that all recommendations are suitable for the investor. Recommendations should be in line with the investor’s age, risk tolerance, net worth, and investment experience.

Broker dealers that fail to adequately disclose risks or make unsuitable investment recommendations can be held liable for investment losses.

If you are concerned about your investment in CNL Healthcare Properties and would like to speak to a securities attorney, please call The White Law Group at 1-888-637-5510 for a free consultation.

For more information on the firm’s investigation, please see:

CNL Healthcare Properties Decrease in Net Asset Value
Recovery of CNL REIT Losses
Did your Financial Advisor Recommend a Non-Traded REIT?

For more information on The White Law Group, please visit www.whitesecuritieslaw.com.

Former Alliance Global Advisor Michael Shillin Lawsuit Investigation

Posted on April 16, 2021 by The White Law Group

Michael Shillin Reportedly Barred after Allegations of Misrepresentations

Are you concerned about your investments with Michael Shillin, of Altoona, WI? If so, the securities attorneys at the White Law Group may be able to help you to recover financial losses.

The White Law Group is currently representing investors in securities claims involving financial advisor Michael Shillin and the liability his former employers may have for failure to properly supervise him.

The Financial Industry Regulatory Authority (FINRA) reportedly barred former advisor Michael Shillin (CRD#: 5927156, Altoona, WI) last December from working in the securities industry after he purportedly refused to appear for on-the-record testimony.

FINRA was reportedly investigating Shillin after his member firm, Alliance Global Partners, filed an amended Form U5 stating that a client had complained that “Shillin made misrepresentations relating to the amount and source of expected dividends in his account,” according to a Letter of Acceptance, Waiver and Consent.

Alliance Global Partners, Shillin’s most recent member firm, filed a Form U5 stating that Shillin had allegedly resigned while under investigation.

The Form U5 is the Uniform Termination Notice for Securities Industry Registration. Broker-dealers, investment advisers, or issuers of securities must use this form to terminate the registration of an individual in the appropriate jurisdictions and/or self- regulatory organizations.

The firm reported in the Form U5 that Shillin created and altered documents and emails “designed to show the existence of a long term care (LTC) insurance policy” that allegedly did not exist. Alliance Global further alleged that Shillin “directly making a series of payments to the ‘beneficiary’ of the non-existent LTC policy,” and Alliance Global stated that Shillin made “material misstatements and provid[ing] falsified/altered documents to Firm personnel during the investigation in an apparent effort to explain the situation.”

For FINRA’s full findings see FINRA Case # 202006822610.

Shillin’s broker report indicates that he was registered with Alliance Global Partners in Altoona, WI from 2018 until October 2020. Previously, he was registered with Raymond James in Chippewa Falls, WI for 4 years until he was discharged for “failure to follow firm directive regarding the payment of client CPA fees,” according to his broker report.

Shillin was apparently the owner of a private label entity for financial services called Shillin Wealth Management since May 2018, according to his broker record.

Michael Shillin reportedly has 27 customer complaints on his broker record, with two still pending.

Filing a Complaint against your Brokerage Firm

Brokerage firms are required to adequately supervise their advisors. They must ensure they are complying with FINRA rules.

The brokerage firms can be held responsible for any losses in a FINRA arbitration claim if it is determined that they failed to properly supervise their agent.

If you have suffered losses investing with Michael Shillin, the securities attorneys at The White Law Group may be able to help you. For a free consultation with a securities attorney, please call (888) 637-5510.

The foregoing information, which is all publicly available, is being provided by The White Law Group.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois. For more information, please visit our website, www.whitesecuritieslaw.com.