ATLANTA, June 3, 2011 (GLOBE NEWSWIRE) -- A regulatory lawsuit filed this week should alert holders of Apple REIT investments to consider their legal options, according to attorneys at The Doss Firm, LLC and Burke Harvey & Frankowski, LLC.
The Financial Industry Regulatory Authority (FINRA) sued David Lerner & Associates, Inc. for allegedly failing to satisfy its due diligence and suitability obligations in sales of Apple REITs to investors.
Since 1992, Lerner has sold more than $6 billion of Apple REITs into more than 100,000 customer accounts. This year, Lerner has sold more than $300 million of Apple REIT Ten. The firm, which has branch offices in New York, Connecticut, New Jersey and Florida, has received $600 million in related fees.
Attorney Jason R. Doss, of the Doss Firm, LLC, said, "The FINRA complaint alleges that the Apple REITs are illiquid and heavily concentrated in extended stay hotels. Many Lerner customers may be invested in more than one Apple REIT. This fact raises questions about the suitability of Lerner's solicitation of certain investors, particularly elderly investors, for placement of these products."
Attorney Richard Frankowski, of Burke Harvey & Frankowski, LLC, said, "FINRA alleges Apple REITs have maintained an unreasonable constant value of $11 price per share despite downturns in the commercial real estate market. The FINRA complaint suggested that a substantial portion of the distributions paid by Apple REITs comes from loan proceeds. This may indicate that the Apple REITs are over priced."
In soliciting customers to purchase Apple REIT Ten, the Lerner website provided distribution rates for all previous Apple REITs. According to FINRA, these distribution figures were misleading and omitted material information because they did not disclose recent distribution rate reductions or that distributions far exceeded income from operations and were funded by debt that further leveraged the REITs.
CONTACT: Attorney Contacts: Jason R. Doss The Doss Firm, LLC 800.939.8879 www.dossfirm.com Richard Frankowski Burke Harvey & Frankowski, LLC 888.930.9091 www.bhflegal.com