EquiAlt Real Estate Securities Ponzi Scheme Class Action

The sales agents were unlicensed, the securities were unregistered, the investors were not accredited, and the investors’ money did not go where they thought it would go: This was EquiAlt and its Ponzi scheme, says the complaint for this class action. The first defendant is Paul Wassgren, who was a partner, at different times, at each of the other two defendants, DLA Piper, LLP (US) and Fox Rothschild, LLP.

EquiAlt and its principals are not the defendants in this case. The complaint asserts, “EquiAlt and its promoters could not have perpetuated the massive fraudulent Ponzi scheme without the active assistance and participation of their lawyers, accountants and accommodating banks. Instead, it brings suit against Wassgren, Fox Rothschild, and DLA Piper, “the lawyers who knowingly aided and abetted the fraudulent scheme.”

The scheme was sizable, taking more than $170 million from at least 1,100 investors in different states. According to the complaint, “A large percentage of the EquiAlt investors are elderly and many of them invested their life savings in the unregistered EquiAlt securities.”

The Securities and Exchange Commission (SEC) filed an enforcement action against EquiAlt, its investment funds, and its promoters on February 11, 2020. It charged that EquiAlt had been operated as a Ponzi scheme and that it had committed violations of federal securities laws: “Defendants promised investors that substantially all of their money would be used to purchase real estate in distressed markets in the United States and their investments would yield generous returns. Instead, EquiAlt [and its promoters] misappropriated millions in investor funds for their own personal use and benefit.”

EquiAlt was placed in a liquidating receivership. The Receiver’s Report noted that the investments had not been registered with state or federal authorities. “The offerings were purportedly made pursuant to federal exemptions from registration…. However, none of the first four [EquiAlt] Funds qualified for a Regulation D exemption or any other exemption from registration.”

Also, the complaint alleges, “The sales agents, who were largely unlicensed insurance producers and financial advisors, provided investment advice concerning the EquiAlt Securities, counseling their clients that the debentures were conservative, safe investments providing healthy investment returns with little or no investment risk.”

The counts include aiding and abetting fraud, aiding and abetting breach of fiduciary duty, civil conspiracy, and financial abuse under the Elder Abuse Act, among other things.

The four classes for this action are state classes.

  • The Florida, California, Arizona, and Colorado Classes consist of all residents of the respective states who were sold an EquiAlt security.
  • There is also a California Elder Subclass, which includes all California residents who were at least 65 years of age when sold an EquiAlt security.
Article Type: Lawsuit
Topic: Investments

Most Recent Case Event

EquiAlt Real Estate Securities Ponzi Scheme Complaint

July 21, 2020

The sales agents were unlicensed, the securities were unregistered, the investors were not accredited, and the investors’ money did not go where they thought it would go: This was EquiAlt and its Ponzi scheme, says the complaint for this class action. The first defendant is Paul Wassgren, who was a partner, at different times, at each of the other two defendants, DLA Piper, LLP (US) and Fox Rothschild, LLP.

EquiAlt Real Estate Securities Ponzi Scheme Complaint

Case Event History

EquiAlt Real Estate Securities Ponzi Scheme Complaint

July 21, 2020

The sales agents were unlicensed, the securities were unregistered, the investors were not accredited, and the investors’ money did not go where they thought it would go: This was EquiAlt and its Ponzi scheme, says the complaint for this class action. The first defendant is Paul Wassgren, who was a partner, at different times, at each of the other two defendants, DLA Piper, LLP (US) and Fox Rothschild, LLP.

EquiAlt Real Estate Securities Ponzi Scheme Complaint
Tags: Offering or Sale of Unregistered Securities, Ponzi Scheme, Securities, Securities Frauds