Posts tagged ‘DBSI fraud’

DBSI Executives Found Guilty

According to reports, CEO and president of DBSI, Douglas L. Swenson, was convicted of thirty-four counts of wire fraud and forty-four counts of securities fraud. Three other top DBSI executives were also convicted on multiple fraud charges. The jury convicted Ellison, 65, of Boise, David Swenson, 36, of Boise, and Jeremy Swenson, 41, of Meridian, on forty-four counts of securities fraud.

The Idaho Statesman reports that prosecutors described the fraud as a Ponzi scheme, however the term was prohibited from use in court. Prosecutors claimed that DBSI used money from new investors to make payments to old investors. The company filed for bankruptcy in 2008 when they no longer could meet payment obligations.

In a written statement, the U.S Attorney Office for the District of Idaho said ” the United States presented evidence that the defendants publicly represented that DBSI was a profitable company and had a net worth in excess of $105 million when they knew that DBSI’s real estate and non-real estate business activities were universally unprofitable.”

Sentencing date has not been set. The four defendants face up to 5 years in prison for each count of securities fraud. Douglas Swenson could face up to 20 additional years for each count of wire fraud.

The U.S Attorney’s Office statement said that the company will have a “firm restitution obligation” to DBSI investors.

Unfortunately, it is unknown if the company has the funds to repay investors for the financial losses they have suffered. As such, The White Law Group is investigating other avenues for investors to recover their losses, including the liability of broker-dealers that sold DBSI investments.

Broker-dealers have responsibility to perform adequate due diligence to determine the legitimacy of any investment and the likelihood of success. In addition, broker-dealers must have a reasonable bases for all investment recommendations based on the client’s age, net worth, investment experience, risk tolerance, and investment objectives. If a broker-dealer fails to perform adequate due diligence or makes unsuitable investment recommendations they can be held liable for investment losses.

To determine whether you may be able to recover investment losses incurred as a result of your purchase of a DBSI investment, please contact the securities attorneys of The White Law Group at 312-238-9650 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 Boca Raton, Florida.

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

Berthel Fisher Settles DBSI Lawsuit

According to InvestmentNews, broker-dealer Berthel Fisher & Co. Financial Services Inc., “one of the biggest seller of DBSI TICs,” recently settled a lawsuit with the DBSI Private Action Trust. According to the report, ”The trustee in 2010 sued Berthel Fisher and almost 100 other broker-dealers that sold DBSI TICs, seeking to claw back about $49 million in commissions from the broker-dealers.” Approximately 47% of the broker-dealers that sold tenant-in-common (TIC) investments sponsored by the now bankrupt real estate company DBSI are no longer in business. 

DBSI filed for chapter 11 bankruptcy following the market crash in 2008. The CEO of DBSI and three top executes are currently on trial for 89 criminal counts, including several counts of conspiracy and securities fraud. Additional information on the current trial is available, here.

Tenant-in-commons are a type of structured real estate investment that allows a group of investors to co-own a piece of commercial property together. Unfortunately, the risks and liquidity problems associated with TICs were not adequately disclosed to many investors. Furthermore, many broker-dealers targeted retired investors, often misrepresenting the potential income stream the property could generate.

Brokers-dealers that make unsuitable investment recommendations and/or mislead clients regarding DBSI may be in violation of securities law enforced by the Financial Industry Regulatory Authority (FINRA). If you purchased a DBSI TIC under fraudulent conditions the broker-dealer may be liable for investment losses through FINRA arbitration.

To determine if your broker-dealer may be liable for your investment losses in DBSI TIC, please call the securities attorneys of The White Law Group at (312)238-9650 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 Boca Raton, Florida.

To learn more about The White Law Group, visit http://www.whitesecuritieslaw.com.

Update on DBSI Inc Trial

According to The Associated Press, the DBSI trial is on hold after FBI agent, Rebekah E. Morse, died of a self-inflicted gunshot to the head following her testimony. Authorities have not released the details of Morse’s suicide note, and it is unknown if her testimony had any bearing on her death.

However, the report says that during her testimony Morse was accused of texting, which she denied. Morse’s phone was confiscated and reviewed by U.S. District Court Judge B. Lynn Winmill who determined that Morse was in fact texting, and that she lied about it under oath.

According to the Associated Press Winmill said, “It was innocuous banter back and forth with her husband,” and that “It was not in any way connected with the case.”

DBSI’s president, Douglas Swenson, and three top executives are are on trial for 89 criminal counts, including multiple counts of securities, wire fraud, and conspiracy. The now bankrupt company was once a multi-billion dollar real estate investment company that offered a number of TIC and private placements to investors.

According to the Associated Press, “More than 22,000 claims have been filed with the bankruptcy trustee by investors, property owners, vendors and state and local governments[.]” The White Law Group continues to investigate other avenues of recovery on behalf of investors.

Brokerage firms have a fiduciary duty to perform adequate due diligence to determine that investment products have a reasonable likelihood of success. In addition, brokerage firms must take the necessary steps to determine if an investment is suitable for each individual client. Based on what is known about DBSI, it appears that some brokerage firms may have sold DBSI investments that were not consistent with their clients’ risk tolerance, investment objectives, net worth, and investment experience.

If your brokerage firm failed to perform the necessary due diligence or overlooked suitability requirements, they can be held liable for investment losses through a claim with the Financial Industry Regulatory Authority (FINRA).

To determine if you may be able to file a FINRA claim to recover DBSI losses, please call The White Law Group at (312)238-9650 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 Boca Raton, Florida.

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

DBSI Executives Indicted

Are you still trying to recover from financial losses as a result of investments made in DBSI products? If so, The White Law Group may be able to help you recover your losses.

According to a press release from the US Attorney’s Office of Idaho the CEO of DBSI, Inc., Douglas Swenson, and three top executives, including his two sons, were recently indicted on 83 counts “for conspiracy to commit securities fraud, wire fraud, mail fraud, and interstate transportation of stolen property.”

The press release states that “the defendants publicly represented that DBSI was a profitable company and had a net worth in excess of $105 million,” when in actuality “DBSI’s real estate and non-real estate business activities were universally unprofitable.”

DBSI is an Idaho-based real estate company that was founded in 1979. The company has been under investigation since 2008. DBSI investments were comprised mostly of risky tenant-in-common (TICs) and private placements offerings in commercial real estate.

“Master Lease” was one particular problematic DBSI product.  According to the press release, “Master Lease” “was loosing approximately $3 million dollars a month.” In addition, “the defendants are also charged with defrauding investors of approximately $89 million from a 2008 notes offering.”

The attorneys at The White Law Group continue to investigate potential FINRA arbitration against the brokerage firms that sold DBSI products. A list of brokerage firms that sold DBSI products is available here.

To determine whether you may be able to recover investment losses incurred as a result of your purchase of DBSI products, please contact the REIT fraud attorneys of The White Law Group 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, visit http://www.whitesecuritieslaw.com.

Recovery of DBSI TIC Losses

Have you suffered investment losses in a DBSI TIC investment?  If so, The White Law Group may be able to help you recover your losses through FINRA arbitration.

The White Law Group is investigating potential securities fraud claims against the broker-dealers that improperly or unsuitably recommended tenant in common (TIC) investments to its clients.

A TIC investment is when a property is sold to multiple investors who then own fractional interests in the property as co-owners.  The co-owners enjoy his/her share of the “pro rata” share of the net income (or expenses), appreciation, and share of the proceeds at the sale of the property.  Tenants in common investors are not involved in the day to day management of the property but do retain certain other rights regarding the management of the property.

Due to the relatively high interest or dividend offered by TICs, retired investors are often attracted to these products.  Unfortunately, TICs are generally unsuitable for retired or income seeking investors.  First, the investments themselves are unsuitably risky because they are entirely dependent on the performance of the underlying real estate properties and the overall health of the real estate market.  Additionally, TIC investments are generally illiquid, severely limiting the investors’ ability to access their funds should the need arise.

TICs typically pay a high commission – often as much as 10% (which often explains the stockbroker’s motivation in recommending the TIC investment to the investor).

DBSI TICs have suffered catastrophic losses over the last few years.  On November 10, 2008, DBSI filed for chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Delaware.  The bankruptcy trustee’s report details a company riddled with problems.  According to the report, not only did the company commit countless acts of fraud, but it commingled investors’ funds and misrepresented company profits.  DBSI has also subsequently been the subject of an investigation into fraud and gross mismanagement by the Securities and Exchange Commission.

The White Law Group’s investigation into the improper sales of TICs to investors includes, but is not limited to, recommendations to invest in the TICs offered by the following sponsors: DBSI, Cabot Investment Properties, Argus Realty, Covington Realty Partners, Evergreen Realty Group, FOR 1031, and Triple Net Properties (NNN).

To determine whether you may be able to recover investment losses incurred as a result of your purchase of a risky TIC investment, please contact The White Law Group 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, visit http://www.whitesecuritieslaw.com.