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Investor Sues Berthel Fisher Over TNP 2008 Participating Notes Program LLC

Investor Jon Hanson is suing Berthel Fisher & Co. Financial Services Inc. for allegedly not conducting the necessary due diligence on the TNP 2008 Participating Notes Program or making the proper disclosures to parties like him that backed the high-risk investment. The private placement went into default in 2012.

The independent brokerage firm, which not so long ago settled the majority of investor claims over real estate deals involving Diversified Business Services and Investments Inc., (a real estate manager that is now bankrupt), could be facing a class action securities case involving a failed deal with Tony Thompson, the real estate investor. This would be the first time that a broker-could be hit with a class action over a Thompson National Properties LLC-sponsored product.

According to Hanson’s securities fraud lawsuit, Berthel Fisher allegedly know there were misrepresentations and omission in the TNP 2008 Participating Notes Program memorandum yet did not probe further into the red flags. Instead, the financial firm used the “misleading TNP 2008 PPM” to help collect about $26.2M from more than 200 investors. Although the independent broker-dealer did not sell all of the TNP 2008 Notes Program and not all of the $26M was sold to its clients, it is a defendant of this private placement case because it was the underwriter of the deal.

Also named as a defendant is Berthel Fisher CEO and founder Thomas Berthel. He contends that the investment in the TNP 2008 private placement was disclosed as a risky investment and its business plan revealed that this was an effort to avail of opportunities from the real estate and debt crisis.

Meantime, the legal problems against Thompson continue to grow. Last month, an investor in the TNP 6700 Santa Monica Boulevard submitted likely class action securities case against him and other executives associated with that company. Carol Prock contends that there were “misrepresentations, mismanagement, misappropriation…” and other misconduct involving the investment, also referred to as the TNP Kodak, and that such behavior was the case in other TNP-sponsored deals.

In May, TNP Kodak sold the property at a $6.4 million loss so foreclosure wouldn’t happen. Investors then got back about 37% of their initial investment.

Thomson’s legal team says that the allegations in the two potential class action securities case are untrue and based on an earlier settlement between FINRA and ex- Thompson CFO Wendy J. Worcester that was “inaccurate.” Worcester, who also served as co-chief compliance officer of Thompson-controlled broker dealer TNP Securities LLC, was suspended from the industry for allegedly not conducting independent and proper due diligence in a number of Thompson’s real estate deals. She was ordered to pay a $15,000 fine. Thompson settled without denying or admitting to the allegations.

Our private placement fraud lawyers are here to help investors recoup their losses. Contact Shepherd Smith Edwards and Kantas, Ltd, LLP today.

Investor sues Berthel Fisher over failed Tony Thompson deal, Investment News, July 26, 2013
Carol Prock v. Thompson National Properties LLC et al, Justia

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