Shopoff Land Funds and other private placement investments are generally categorized as alternative investments and may be unsuitable for many inexperienced investors or those with a modest net worth. Private placements are investments that are not publicly registered with the Securities and Exchange Commission that are offered via various exemptions from registration that permit the sales. Sales of certain private placements including those offered under an exemption known as “Regulation D” are largely limited to sales to “accredited investors” who meet certain eligibility criteria established by the Securities and Exchange Commission (SEC). For example, an investor would be accredited if they had a net worth over $1 million, excluding primary residence (individually or with spouse or partner) or income over $200,000 (individually) or $300,000 (with spouse or partner) in each of the prior two years, and reasonably expects the same for the current year. Investors can also be deemed accredited based upon professional experience.

Shopoff private placement offerings have reportedly included the following:

• Shopoff Land Fund I
• Shopoff Land Fund II
• Shopoff Land Fund III
• Shopoff Land Fund IV
• Shopoff Land Fund V
• Shopoff Commercial Growth and Income Fund
• Shopoff Commercial Growth and Income Fund II
• Shopoff Commercial Growth and Income Fund III
• Vertimass, LLC
• SCF – 4440 VKA, LLC
• SCF – 2100 Q Street, LLC
• SCGIF II – Franklin, LLC
• SCGIF II – Skypointe, LLC
• SCGIF II – Des Plaines, LLC
• TSG Fund IV

Private placements are generally speculative and illiquid, in comparison to publicly traded securities such as common stocks listed on exchanges or mutual funds. However, private placements have been popular with certain independent broker-dealer firms because private placement investments generally carry commissions many times higher than publicly traded securities. Many private placements may carry commissions and other upfront costs ranging from 7% to 12% in total fees, costs, due diligence fees, and selling commissions to the brokerage firm. According to SEC filings on “Form D”, some of the Shopoff investments listed above carry a 7% selling commission and 3% in due diligence and underwriting costs, for a total of 10% in commissions and fees. The commissions vary from investment to investment and selling commissions listed may or may not include expenses such as reimbursement of organization and offering expenses.

As members and associated persons of FINRA, brokerage firms and their financial advisors must ensure that adequate due diligence is performed on any investment that is recommended to investors- including private placements under Regulation D. Further, firms and their brokers must ensure that investors are informed of the risks associated with an investment, and must conduct a suitability analysis to determine if an investment meets an investor’s stated investment objectives and risk profile. Either an unsuitable recommendation to purchase an investment or a misrepresentation concerning the nature and characteristics of the investment may give rise to a claim against a stockbroker or financial advisor.

Investors who wish to discuss a possible claim may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation. Attorneys at the firm are admitted in New York, Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules).

The charges were filed by the Securities and Exchange Commission and claim that Snisky used insurance agents to sell Arete LLC interests, which he claimed were safer and more profitable than annuities. Furthermore, the SEC’s claims allege that Snisky told investors that their funds would be used to purchase government-backed agency bonds at a discount by eliminating middlemen fees, which would then be used for overnight banking sweeps. However, he allegedly misappropriated around $2.8 million, using these funds to pay commissions and mortgage payments. According to securities arbitration lawyers, scams like this are far too common and, unfortunately, many investors are either unaware or too embarrassed to come forward.

Reportedly, Snisky described Arete LLC as an “annuity plus” with up to 7 percent in guaranteed annual returns. Furthermore, he allegedly claimed that investors could earn interest and take principal from the investment without penalty, even after 10 years. According to the SEC’s allegations, Snisky stated that the investments were safe, exhibited falsified investor account statements that showed earnings to staff and drafted documents to be used as offering materials by salespeople.

Unfortunately, seniors are common targets for fraud because they often have sizeable savings or retirement funds, according to investment fraud lawyers. In addition, health problems, mental issues and a trusting disposition are other reasons they are targeted by fraudsters.

If you or a loved one has been the target of elder financial abuse through affinity fraud or other investment fraud schemes, you may be able to recover losses through securities arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.