LPL Financial Found Liable For $1.367 Million to San Diego Retirees In Connection With Direct Invest Real Estate Investment Offerings

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A Financial Industry Regulatory Authority (FINRA) arbitration panel awarded $1,367,000 in compensatory damages, interest and costs to clients of the law firm of Miller & Milove against LPL Financial LLC.

A Financial Industry Regulatory Authority (FINRA) arbitration panel awarded $1,367,000 in compensatory damages, interest and costs to clients of the law firm of Miller & Milove against LPL Financial LLC. The award in Hardt v. LPL Financial LLC, et al, FINRA Case No. 11-00347 also included an assessment of the entire cost of the hearing against LPL Financial LLC.

The investments complained of involved two office parks, managed by NPV/Direct Invest, which LPL Financial LLC sold to Heinrich and Araceli Hardt in late 2007 and 2008. The Hardts alleged securities fraud, breach of fiduciary duty and elder abuse, amongst other claims.

The real estate investments at issue were Direct Invest – Heron Cove, located in Merrimack, New Hampshire and Direct Invest – Braintree Park, located in Braintree, Massachusetts. “LPL Financial knew that investors’ were not going to be paid income from operations of the properties. LPL Financial management was aware that the properties were incapable of generating income to pay the projected returns. Instead the plan all along was to repay the investors with their own money,” said Bradd Milove, one of the Hardts’ attorneys.

High yields on Tenant In Common (TIC) and non traded REIT real estate investments have been touted by the industry to lure unsophisticated investors who are not told that the yields are in fact financed by their own investment funds and borrowed money.

“Investors were paid monthly distributions for a few years, believing that the cash flow was profit from the office buildings. However, when the investors’ original investment funds were depleted, cash distributions stopped” said Mr. Milove.

“Miller & Milove has been representing investors in fraudulent real estate investments since the mid-1980’s,” stated Miller & Milove partner Brian Miller. “While the TIC form of ownership is relatively new, the same sort of fraudulent scheme to return investor money under the guise of ‘profit’, ‘return’ or ‘yield’ has been victimizing innocent investors for decades; and FINRA’s warnings have not diminished the willingness of some firms to sell these risky high commission investment products to retirees,” Brian Miller added.

LPL Financial’s Research Department was aware of the intent to utilize investors’ money as cash distributions and approved the Direct Invest TICs for sale to its clients nonetheless. Indeed, LPL Financial took the position in the FINRA arbitration that it is normal for TIC managers to make distributions, touted as “yield”, with the investors’ own money.

Miller & Milove continues to investigate FINRA arbitration claims on behalf of investors who suffered losses in NPV/Direct Invest offerings sold by LPL Financial.

Miller & Milove is an investment fraud and securities law firm with principal offices located in San Diego, California. Attorneys Brian Miller and Bradd Milove are experienced finance and business law attorneys focusing on the recovery of investor losses due to deceptive or fraudulent sales practices. For more information, please see http://www.thesecuritiesfraudlawyers.com/ or call (619) 696-5200.

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Bradd Milove
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