Alternative Investment Failures and Liquidity Issues Continue to Plague Investors

Representing Investors Nationwide

Alternative Investments (AI), as the name implies, are investments not found in a traditional asset class such as a stock or bond. Traditionally they were only marketed and sold to institutions and sophisticated, high net worth individual investors. The reason was simple, AI's are complex, have limited regulatory oversight and lack liquidity. The AI spectrum includes hedge funds, futures, commodities, derivatives and real estate related investment trusts and tenants in common ownership (TIC) in real estate.

The traditional marketing of AI's changed during the mid-2000's with looser credit standards and the accompanying boom in the commercial and residential real estate markets.  Substantial development fueled the need for easy access to cash to fund new projects. That need, combined with low returns on traditional income producing investments (bonds and income funds), created fertile ground for the marketing and sale of AI's to individual investors and not just those that were sophisticated with high-net worths.  The non-wire house firms and regional brokerages (VSR Financial Services, LPL Financial Services, Invest Financial Corp., Money Concepts and Securities America, Inc. are a few of the larger purveyors) pushed these often speculative investments on mom and pop investors and retirees because they paid a substantial upfront commission or concession to the broker and his firm. AI’s were attractive to the investors because they paid significantly higher distributions than more conventional, conservative income investments.  Until they didn't. When the credit and mortgage crisis hit in late 2007, credit dried up and the real estate markets crashed. Occupancy levels decreased dramatically, foreclosures increased and the distributions on real estate, credit and equipment related investments either were reduced or discontinued entirely.  In the worst cases, the sponsors filed for bankruptcy and the investors were summarily wiped out.

The products that have caused the biggest problems for individual investors are non-traded Real Estate Investment Trusts (REITs), promissory notes, limited partnerships and tenants in common (TICS).  A list of the most common AI's appear below. If you have invested in any of these products and don't believe they were properly explained as to risk and/or liquidity, please contact our office for a free consultation. The attorneys at Colling Gilbert Wright and Carter have represented and obtained recoveries for dozens of investors who experienced losses in Alternative Investments.

  • AmREIT Monthly Income and Growth

  • APC 2004-A and 2007-A

  • Atlas America Series 25-2004

  • Atlas Public 17

  • ArciTerra REIT

  • ArciTerra Note Fund I and III

  • Black Diamond 2006-B

  • Bradford Drilling Assoc.

  • Bradford XXV & XXVI

  • Cole Credit Property Trust

  • Cole Senior Notes III

  • Cypress Equipment Funds

  • Cypress Income Funds

  • Florida Capital Real Estate Partners 27, Ltd.

  • MAC Diversified Income Fund

  • Mewbourne Energy Partners 07-A and 08-A LTD Partnerships

  • MPF Income

  • MPF Senior Notes

  • NetREIT Common

  • Odyssey Diversified

  • Odyssey Operating Partnership II

  • Odyssey Properties III Inc.

  • United Development Funding

  • Waveland Drilling Partners 2007-A LP

  • Waveland Vanguard Partners LLC

  • Waveland Vestara-Class B