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Written by 6:13 pm Blog, Securities Fraud Articles • 3 Comments

Cornerstone REIT, CIP Leveraged Fund Securities Investigation

Have you suffered investment losses in a Cornerstone real estate or CIP Leveraged Fund investment? If so, the following information may be of some assistance to you.

We continue to receive calls from investors who are concerned about their Cornerstone REIT, CIP Leveraged Fund, and Cornerstone Healthcare REIT investments. Many of these investors appear to have recently received notification from Cornerstone that their investments are not worth what had been previously disclosed to them.

Cornerstone is a real estate investment company based in Irvine, California. Cornerstone Industrial Properties (CIP) manages two entities that have used funds raised from investors to acquire and own real estate: (1) Cornerstone Realty Fund, LLC and (2) Cornerstone Core Properties Real Estate. Investment Trust (Cornerstone REIT).

CIP Leveraged Fund Advisors (CLFA) manages two real estate entities that it is has solicited sales for: (1) Cornerstone Healthcare Real Estate Fund, and (2) Cornerstone Growth and Income REIT.

Interestingly, CIP and CLFA do not have separate employees. Both are managed by Cornerstone Ventures, which is the managing member of each. Principals of Cornerstone Ventures are also the principals of the underlying real estate entities.

To further compound the conflict of interest of owning and operating each of these entities, certain of these Cornerstone investments were marketed and sold by Pacific Cornerstone Capital, a FINRA registered broker-dealer that is owned by Cornerstone Ventures, Inc. and exclusively markets products sold by the firm. According to a Letter of Acceptance, Waiver, and Consent entered into by Pacific Cornerstone Capital, Pacific Cornerstone Capital and its majority owner, Terry Roussel, violated FINRA Rule 2010 and NASD Rule 2110 by promulgating private placement memorandums and accompanying sales literature for Cornerstone Industrial Properties and CIP Leveraged Fund Advisors that contained material misstatements and omissions about key issues of the investments, including misstating targets as to when investors would receive the return of their principal, the targeted yield of the investments, how much money would be raised, and CIP’s ability to meet its expenses.

Many of the investors with whom we have spoken have expressed concerns that the Cornerstone investments discussed above had been misrepresented to them and that these same misstatements had been made by the financial advisor that sold them the Cornerstone and CIP investments. Although Pacific Cornerstone Capital exclusively offers Cornerstone and CIP investments, the products are sold by other brokerage firms that have selling agreements with Cornerstone.

Real estate investments, like Cornerstone, can be unsuitable for certain investors due to the risks of such investments, the liquidity problems with the investments, and the complexity of how these investments are structured. Another problem is that these investments are also high commission investments, often explaining the financial advisors motivation in pushing the products.

If you have concerns about your Cornerstone REIT, CIP Leveraged Fund, or Cornerstone Health Care investment, the securities attorneys of The White Law Group may be able to help. To speak to a securities attorney please call our Chicago office at 312-238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.

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