The White Law Group has begun a securities fraud investigation into the sales practices of Questar Capital related to the sale of the alleged Ponzi Scheme IPDS (aka JP Mumbles) and the bankrupt Desert Capital REIT.
It appears that Questar customers that invested in these two investments have suffered a total loss.
Desert Capital investors received notification in June that Desert Capital was being forced into an involuntary Chapter 11 bankruptcy. Investors in Desert Capital are now struggling to recover their losses through the bankruptcy and many are pursuing their losses through FINRA arbitration in claims against the broker and brokerage firm that recommended and sold the investment. The White Law Group is currently representing many investors in claims through FINRA dispute resolution.
Brokerage firms have a fiduciary duty to research investments prior to recommending them for sale. Given what is now known about Desert Capital, it appears that brokerage firms will be unable to demonstrate that they performed the necessary due diligence on Desert Capital REIT prior to recommending it for sale to the investing public.
The alleged Ponzi Scheme IPDS, which according to a bankinvestmentconsultant.com article was later known as JP Mumbles, appears to have been perpetrated by an individual named John Konoski. The article states that “Grand larceny and fraud charges were brought earlier by the Suffolk County, N.Y. district attorney’s office against John Konoski, who ran the JP Mumbles scam.”
Information from a damaged investor and the aforementioned article indicate that at least one Questar Capital representative, Edward Gelb, sold the fraudulent IPDS (JP Mumbles) investment to customers. The article indicates he may have been “selling away” from Questar the IPDS (JP Mumbles) investment and says that FINRA documents show, “Gelb conducted his fraudulent investment activities with clients using a private email account.”
As we have blogged about previously, “selling away” is a major problem for brokerage firms because if a registered broker “sells away” from his firm, the firm may still be liable for negligent supervision of their broker agent.
If you invested in Desert Capital REIT or IPDS through Questar Capital or another registered brokerage firm you may be able to recover your investment losses through FINRA arbitration. If you would like to speak to a securities attorney about your investment losses and potential for recovery please call our Chicago office at 312/238-9650.
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 Boca Raton, Florida.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.