November 7, 2016 Comments (0) Blog

Passco Waikoloa, LLC Investment Losses

(Last Updated On: December 7, 2016)

Have you suffered investment losses in Passco Waikoloa, LLC? If so, The White Law Group may be able to help you recover your losses by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment.

According to their website, “Passco Companies, LLC is a nationally recognized market leader in the acquisition, development, and management of multifamily and commercial properties throughout the U.S.” The company was formed in 1998 and is located in Irvine, CA.

Passco Waikoloa, LLC, a non-public real estate development fund, raised $12 million from 157 investors between May 2007 and September 2007 to provide equity capital to Passco-Metric Waikoloa LLC, a joint venture with Metric Waikoloa, LLC that purchased raw land on the Big Island of Hawaii to entitle it, and construct and/or sell parcels to accommodate a mixed-use project, according to an SEC filing.

The project was designed to include retail, hotel, multifamily and other commercial uses.  As the global recession took hold in 2008 through today, tenants have been unwilling to commit to such a project and lender financing for such a project is very difficult to obtain.  Additionally, a loan used to acquire the land is past due and the lender has foreclosed on the project subject to final court approval.  The lender has indicated verbally that if final loan extension documents are executed prior to receiving court approval of the foreclosure it will withdraw the foreclosure proceeding and will not take title to the project, but no binding agreement has been reached on this point.

In order to secure the capital required to extend the loan for an additional 3 years and continue operations, Passco Waikoloa, LLC commenced a new offering of preferred units in May of 2009 to raise between $1.79 million and $19.178 million in new capital.  To date, Passco Waikoloa has raised the minimum $1.790 million, which is sufficient to secure the extension and pay associated costs until November 30, 2011.  If the loan extension is received and foreclosure proceedings cancelled, Passco Waikoloa, LLC will seek final entitlements and tenants.  If negotiations are unsuccessful, then the foreclosure process will continue and the property will be transferred back to the lender and investor capital will be lost.

The trouble with alternative investment products, like Passco Waikoloa, LLC, is that they involve a much greater degree of risk compared to traditional investments, such as stocks, bonds or mutual funds. Alternative investments are typically sold as unregistered securities and lack the same regulatory oversight as more traditional investment products.

Unfortunately, some brokers may have downplayed the risks associated with alternative investments and misled investors into thinking that they are “safe” investment products. The high sales commission brokers earn for selling such products may provide some brokers with enough incentive to push the product to unsuspecting investors.

For more information on The White Law Group’s investigation of Passco see Passco Carrington Park Investment Losses.

Broker dealers that sell alternative investments are required to perform adequate due diligence on all investment recommendations to ensure that each investment is suitable for the investor in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience.

If a broker makes an unsuitable investment recommendations or fails to adequately disclose the risks associated with an investment they may be liable for investment losses.

To determine whether you may be able to recover investment losses incurred as a result of your purchase Passco Waikoloa, LLC or another Passco investment, please contact The White Law Group at 1-800-637-5510 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida. For more information on the firm, visit www.WhiteSecuritiesLaw.com.