FINRA recently announced that it has filed a Temporary Cease-and-Desist Order (TCDO) to halt further fraudulent sales activities by Michigan-based WR Rice Financial Services and its owner Joel I. Wilson, as well as the conversion of investors’ funds or assets. FINRA also issued a complaint against WR Rice and Wilson charging fraud in the sales of limited partnership interests in entities affiliated with the Diversified Group and American Realty Funds Corporation, companies in which Wilson has ownership interest and control. FINRA is filing the TCDO based on the belief that ongoing customer harm and depletion of customer assets would likely continue before a formal disciplinary proceeding against WR Rice and Wilson could be completed.
In its complaint, FINRA alleges that WR Rice, Wilson and other registered representatives at the firm sold more than $4.5 million in limited partnership interests to approximately 100 investors from predominantly low-to-moderate-income households, while misrepresenting or omitting material facts. FINRA charges that Wilson and WR Rice raised funds promising that the proceeds would be invested in land contracts on residential real estate in Michigan, paying an interest rate of 9.9 percent, when in fact, investors’ funds were used to make unsecured loans to companies Wilson owned or controlled. In addition, FINRA alleges that WR Rice and Wilson failed to disclose to investors that Wilson extended the improper loans due to an inability to pay them as they became due.
Wilson is also charged with providing fabricated documents to FINRA related to the limited partnership offerings, and with failing to provide full and complete testimony during FINRA’s investigation of him and his firm after he was confronted with the falsified documents.
Under FINRA rules, the individuals and firms named in a complaint can file a response and request a hearing before a FINRA disciplinary panel. Possible sanctions include a fine, an order to pay restitution, censure, suspension or bar from the securities industry. The issuance of a disciplinary complaint represents the initiation of a formal proceeding by FINRA, in which findings as to the allegations in the complaint have not been made, and does not represent a decision as to any of the allegations contained in the complaint.
The foregoing information, which is publicly available on FINRA’s website, is being provided by The White Law Group. The White Law Group is a national securities fraud, securities arbitration and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
Unfortunately, this announcement by FINRA is not surprising. There has been a huge uptick in the number of fraudulent limited partnerships sold in the last few years and the litigation of these cases is ongoing. Due to the way that these investments are structured, it is simply too easy for the unscrupulous advisors to misrepresent such products and to take advantage of the unsuspecting public.
Fortunately for investors there is a way to attempt to recover any losses suffered in these products. Brokerage firms and financial advisors have a fiduciary duty to perform adequate due diligence on any investment they recommend and to ensure that such recommendations are appropriate for their client in light of that particular clients’ age, income, investment experience, investment objectives, and net worth. In the case of fraudulent limited partnership investments, investors may be able to hold their brokerage firm responsible for failure to abide by this fiduciary duty.
If you have questions about a limited partnership investment you purchased, please call the securities attorneys of The White Law Group at 312/238-9650 for a free consultation.
For more information on The White Law Group visit https://whitesecuritieslaw.com.Tags: American Realty Funds class action, American Realty Funds fraud, American Realty Funds investigation, American Realty Funds lawsuit, American Realty Funds litigation, American Realty Funds losses, Diversified Group class action, Diversified Group fraud, Diversified Group investigation, Diversified Group litigation, Diversified Group losses, Joel Wilson FINRA cease and desist, Joel Wilson FINRA investigation, limited partnership fraud attorney, limited partnership fraud lawyer, WR Rice FINRA cease and desist, WR Rice FINRA investigation, WR Rice limited partnership lawsuit, WR Rice limited partnership losses Last modified: June 23, 2023