Not too long after Berthel Fisher finishes settling investor claims related to to failed real estate deals managed by now bankrupt Diversified Business Services and Investments Inc., the financial services firm located in Marion, Iowa is now a defendant in a class action stemming from a failed deal with real estate investor Tony Thompson.
Investors in the Thompson TNP 2008 Participating Notes Program LLC, which defaulted in 2012 , sued the independent broker-dealer. The allegations include Berthel Fisher’s failure to perform due diligence on the TNP 2008 Participating Notes Program and make proper disclosures to investors.
According to the Class Action Complaint, which was filed July 8 in U.S. District Court for the Northern District of Iowa, “Berthel Fisher had actual knowledge of misrepresentations and omission in the 2008 [private-placement memorandum] and failed to investigate red flags that pointed to other misrepresentations and omissions.” “Through the use of the misleading TNP 2008 PPM, Berthel Fisher helped raise approximately [$26.2 million]” from more than 200 investors.
According to attorneys for the Plaintiff’s, Berthel Fisher didn’t sell the entire $26 million of the TNP 2008 Notes Program to its clients but the firm is the focus of the suit because it acted as the deal’s underwriter. The complaint also named Thomas Berthel, founder and chief executive of Berthel Fisher, as a defendant.
According to Mr. Berthel, “The investment in the TNP 2008 Participating Notes Program was expressly disclosed to be a high-risk investment, and the business plan was expressly disclosed as being an attempt to take advantage of opportunities created by the debt and real estate crisis that existed at the time of the offering,” “These risks were all clearly disclosed in the private-placement memorandum.”
For his part, Mr. Thompson said this complaint and that related to another Thompson deal (TNP Kodak) complaints were based on an “inaccurate” settlement last month between a former Thompson executive, Wendy J. Worcester, and the Financial Industry Regulatory Authority Inc. (FINRA). She was suspended her for five months in 2013 and fined $15,000 for failing to conduct adequate and independent due diligence on a number of Mr. Thompson’s deals. Mr. Thompson was barred by FINRA from the securities industry last month.
The experienced securities fraud attorneys at Colling Gilbert Wright & Carter have successfully represented investors and recovered damages for supervisory failures in the sale of alternative investments, including non-traded REIT’s promissory notes, ETFs and limited partnerships as well as variable annuity products. If you have suffered losses as a result of omissions or misrepresentations during the purchase of a security or variable annuity, please contact us for a free case evaluation