In June 2011, Desert Capital REIT was forced into an involuntary bankruptcy. Creditors with claims of over $43 million filed the petition to force the company into bankruptcy.
According to its website, Desert Capital was founded in 2003 and organized as a REIT with a goal to deliver attractive dividend income to investors through the acquisition of real estate loans and mortgage-backed securities.
Desert Capital REITs lost $21 million in 2007, $11 million in 2009, and another $26 million in the third quarter of 2010 alone. Desert Capital published a press release announcing it has “doubt as to ability to continue” and may have to be liquidated. In 2010, the Securities and Exchange Commission issued a subpoena to Desert Capital “pertaining to payments and transactions with related party, CM Capital.” CM Capital and CM Securities are brokers that marketed the REIT and were operated by the same CEO as Desert Capital, Todd Parriott.
Blum Law Group is currently representing investors that purchased Desert Capital REIT and other non-public REITs by recommendation of their brokers at firms other than CM Capital. In many instances, the brokers marketed these investments as safe and secure. FINRA recently announced that it is paying close attention to the sale of REITs and, in particular, the ways in which broker-dealers marketed and sold the products to investors.
If your broker recommended the purchase of Desert Capital REITs or any other non-publicly traded REITs, contact the law firm of Blum Law Group for a free consultation about your legal rights. Blum Law Group is a nationally recognized securities litigation and arbitration law firm which represents investors worldwide, typically on a contingency fee basis (no recovery, no fee).