Clients Of Sigma Financial Corporation Lost More Than $300,000 On An Allegedly Misrepresented TIC Type Investment

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The Law Offices of Jeffrey A. Feldman represents a California couple in a FINRA arbitration claim against Sigma Financial Corporation and its associated persons. The claimants lost over $300,000 on a TIC type investment allegedly misrepresented as safe by Sigma Financial Corporation and its broker.

The Law Offices Of Jeffrey A. Feldman currently represents a California couple who lost a substantial sum of money when a broker at Sigma Financial Corporation (“Sigma”) sold them a risky Delaware Statutory Trust, or TIC-type investment called USA Houston Levee DST (“Houston Levee”), which was misrepresented as safe, according to allegations in a statement of claim filed with FINRA (FINRA Case No. 12-00972). More information about the Law Offices of Jeffrey A. Feldman can be found at http://www.jeffreyfeldman.com.

The Claimants were referred to broker Joral Schmalle (“Schmalle”) at Sigma Financial when they were seeking a like kind exchange (“1031 exchange”) for a rental property they owned, per allegations in the claim filed with FINRA. As alleged in the FINRA claim, Schmalle recommended that the Claimants invest the funds from the sale of their rental property in the USA Houston Levee DST (“Houston Levee”), a TIC-type investment. Houston Levee was a property being packaged to investors as a security, and according to allegations in the claim filed with FINRA, it consisted of undivided fractionalized interests in a multi-family community in Cordova, Tennessee.

In offering the USA Houston Levee DST for purchase, Schmalle emphasized the many benefits of purchasing the investment, including the ability to purchase fractionalized interests in real property through the IRS 1031 Exchange process, allowing the Claimants to avoid paying taxes on the capital gains from the sale of their property, per the claim filed with FINRA. Schmalle went on to say that instead of purchasing other real property directly, the Claimants would be purchasing professionally managed property that would appreciate in value, and generate monthly income, according to allegations in the FINRA arbitration claim.

The claim filed with FINRA alleges that the Houston Levee property sold to the Claimants was not what it was represented to be by Sigma’s broker. In addition to being virtually illiquid, the Houston Levee investment has stopped making promised distributions, and is worth substantially less than what the Claimants paid for it, if anything at all, per allegations in the FINRA claim. This investment, as alleged in the FINRA claim, was high risk, speculative in nature, and was completely unsuitable for the Claimants.

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Jeffrey Feldman
Law Offices of Jeffrey Feldman
(415) 391-5555
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