David Lerner Associates Broker Rafael Klein May Have Unsuitably Recommended Energy 11 To Investors

Pending Customer Disputes Involving David Lerner Associates Broker Rafael Klein Seek $300K in Damages

Rafael Scott Klein, a David Lerner Associates broker and Spirit of America Management Corp. investment advisor, may have unsuitably sold investments in Energy 11, LP to customers. Energy 11 is a non-traded limited partnership set up to acquire and develop natural gas and oil properties in the United States. It was marketed and sold through David Lerner Associates but is no longer available to new investors. 

According to BrokerCheck, Rafael Klein, who has been a David Lerner Associates registered representative for 15 years, is currently the subject of two pending customer disputes. 

Both cases were brought in 2018 and allege unsuitability, breach of fiduciary duty, misrepresentations and omissions, and failure to supervise. One of the claims also alleges fraud and unauthorized trading. Both may involve losses in Energy 11.

Our broker fraud attorneys at Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) have been investigating David Lerner Associates brokers over allegations that they unsuitably sold Energy 11, as well as Energy Resources 12 and Spirit of America Energy Fund (SOAEX) to customers. Oil, gas, and energy investments tend to be volatile, illiquid and unsuitable for many kinds of investors, especially retail investors, retirees, older investors, and other conservative and inexperienced investors. 

Investors of Energy 11 Got Stuck with Illiquid Volatile Investments 

Energy 11 raised over $350M. It has invested in non-operated working interests in over 220 producing wells and nearly 250 future locations to be developed in North Dakota.   

Like all oil, gas, and energy investments, Energy 11 took a huge financial hit in the wake of COVID-19. In March 2020, this limited partnership announced that investor redemptions were suspended. As of late last year, the interest payments issued to investors may be all that they can expect as their return of capital.

Considering that Energy 11 was an illiquid, risky investment to begin with even before the pandemic, why was it recommended to retail and conservative investors at all? 

There are also reports that David Lerner Associates brokers may have overconcentrated some retail investors and retirees’ portfolios with Energy 11, Energy Resources 12, and Spirit of America Energy Fund while downplaying their risks.

Spirit of America Management Corp., where Rafael Klein is an investment advisor, appears to oversee the Spirit of America Mutual Funds, including Spirit of America Energy Fund. During his 23 years in the industry, Klein previously worked at other brokerage firms, including GKN Securities Corp. and HD Brous & Co.

Other disclosures on Klein’s BrokerCheck record include:

  • 2016: An unsuitability claim that was settled for over $20K.
  • 2011: A misrepresentation claim that was closed due to a lack of action.

Experienced Oil, Gas, and Energy Fraud Attorneys

For 30 years, we have fought for thousands of investors, recovering many millions of dollars on our clients’ behalf. Contact SSEK Law Firm today at (800) 259-9010 if you suffered losses in Energy 11 at the recommendation of David Lerner Associates broker Rafael Klein or another financial advisor. We represent investors nationwide. 

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