Questions of Stockbroker Misconduct After SEC Hotel Investment Fund Manager Raises $86M From 2000 Investors

Dallas-based Phoenix American Hospitality and president William Lee “Perch” Nelson were charged by the SEC with fraudulently raising $86M from 2,000 investors through misleading Regulation A REIT claims. Affected investors can work with a qualified Broker Fraud Attorney to pursue FINRA arbitration against financial advisors who unsuitably recommended or misrepresented these risky real estate investments.

Shepherd Smith Edwards and Kantas Broker Fraud Attorney teams (investorlawyers.com) are looking into claims of investor losses involving Phoenix American Hospitality. The Dallas-based hotel investment fund manager and its president William Lee “Perch” Nelson are accused of fraud by the US Securities and Exchange Commission (SEC) related to two Regulation A investment funds: American Hospitality Properties REIT I and REIT II.

The regulator contends that Phoenix American Hospitality and its president made false statements about hotel holdings and investor distributions when raising around $86M from 2000 investors. A settlement was reached, and the alternative asset company and Nelson agreed to pay $591,127 and more than $118,000, respectively.

If you suffered losses in Phoenix American Hospitality and your investment was sold to you by your broker, contact us today to request your free case consultation.

What Are The SEC Allegations Against Phoenix American Hospitality and Why Should Investors Be Worried?

• Investors were allegedly told they could earn double digit income, which, the Commission contends, was a misrepresentation.
•     American Hospitality Properties REIT I and  REIT II  were allegedly promoted with inaccurate marketing materials, including the claim that REIT I had bought up to 11 hotel properties. At the time, it had a preferred equity interest in just one hotel. American Hospitality Properties REIT II had zero hotel assets for most of the period at issue.
• Nelson is accused of telling investors that there would be regular yearly payouts of up to 12% from mandatory operating profits when, in fact, neither real estate fund was profitable.
• The SEC contends that when REIT I earned more than $200K through late 2022 and distributed more than $1.4M to investors, the funds they received were from new investor capital.

I’m A Phoenix American Hospitality Fund REIT Investor. Why Should I Explore My Legal Options With A Broker Fraud Attorney?

• The SEC settlement holds defendants to account for the fraud charges, but this does not give Phoenix American Hospitality Fund REIT I and II investors their money back.
• Regulation A REIT investments are considered risky, illiquid alternative real estate investments that are known for having a high risk of total failure. Your broker should have ensured that this kind of real estate investment trust was suitable for you given your investor profile.
• If unsuitability, due diligence failures, breach of fiduciary duty, negligence, misrepresentations and omissions, gross negligence, supervisory failures, excessive concentration, or Regulation BI violations by your broker was involved, you may be able to sue your financial advisor in Financial Industry Regulatory Authority (FINRA) arbitration.

  What Are Signs of Possible Broker Misconduct Involving My Phoenix American Hospitality Losses?

• Your financial advisor did not give you a full picture of the risks. They even may have  told you that your money was safe and returns were guaranteed.
• Rather than conduct their own due diligence, your broker-dealer depended solely on the issuer’s marketing materials to assess whether this was a good investment recommendation for you.
• There appears to be an imbalance of asset allocation in your portfolio. The financial advisor placed too much of your money in Regulation A REITs and other investments that were unsuitable for you.

Talk To Us About Your Phoenix American Hospitality Fund Losses

We are seasoned Regulation A REIT attorneys that are known for winning arbitration claims for investors against their brokers.  This is not the kind of legal case you want to make without a seasoned securities law firm advocating for you.

Call (800) 259-9010 or reach out to us online.

Because we work on a contingency basis, Shepherd Smith Edwards and Kantas only receives payment for our legal representation if we secure an award or negotiate a settlement for an investor.