Another Kalos Capital Broker Sold GPB Investments To Investors
Once again, our GPB investment lawyers at Shepherd Smith Edwards and Kantas (SSEK Law Firm) have filed an investor fraud lawsuit against Kalos Capital and one of its brokers, Kristian Finfrock.
In this latest broker fraud case, the Claimants are a retired couple who contend that Kalos Capital broker and investment advisor, Kristian Finfrock, pushed them into placing $750K of their life savings into alternative investments including non-traded real estate investment trusts (Non-traded REITs), annuity contracts, and GPB Capital private placements.
The latter were issued by GPB Capital Holdings, an alternative investment firm that has since been accused of operating a $1.8B Ponzi scam and remains under investigation by the Financial Industry Regulatory Authority (FINRA), the US Securities and Exchange Commission (SEC), and the Federal Bureau of Investigation (FBI).
Alternative Investments: Why These Aren’t Suitable For Inexperienced Investors
GPB private placements and non-traded REITs are risky investments and are not typically suitable for retiree investors. Annuities are illiquid investments and are also not ideal for older investors who may need easy access to their cash.
The GPB Holdings II, LP Fund, in particular, is highly speculative and has no performance record. Yet it was the largest single alternative investment that Finfrock made for the Claimants, placing $185K of their money into GPB.
Not only that but GPB Holdings II and the other GPB Funds have seen a significant drop in value of 25%-75% over the last year. Investor redemptions have been suspended for over a year and for years GPB Capital Holdings has failed to provide required audited financials to regulators and investors. Meanwhile, investors have not been able to access any of these GPB investments, which very well may be worthless at this point.
As for the non-traded REITs that Kalos Capital broker, Kristian Finfrock, had invested on behalf of the Claimants, these included the HPI Real Estate Opportunities Fund, ARC Trust, and Cottonwood Residential.
Retirees Wanted Conservative Investments, Instead Were Sold GPB Private Placements
Our clients had looked to Kalos Captial and its financial advisor, Finfrock, to help them ensure a comfortable retirement and the ability to cover medical bills after one of them was diagnosed with a terminal illness.
They articulated to the Kalos broker in question that they were looking to make modest returns and how because they were inexperienced investors they would be totally dependent upon their advisor to put together and implement a successful retirement plan.
Aside from being a Kalos Capital broker, Finfrock also operates under the company, Retirement Income Strategies. The Claimants said that the fact that he supposedly specialized in retirement appealed to them. They contend that Finfrock reassured them that he would place their funds in safe and secure investments for the most part.
Instead, he overconcentrated their money in the GPB investments and other illiquid securities that would earn him and Kalos the biggest commissions even though the securities were not in the couple’s best interests.
Finfrock also failed to apprise them of the risks and penalties potentially involved in some of their investments. This included how they wouldn’t be able to access most of their money because most of their funds had been placed in illiquid investments and annuities that would render big penalties if the money was withdrawn too soon.
Allegations Against Kalos Capital And Kristian Finfrock
The allegations being made against Kalos and its financial advisor by the Claimant include numerous instances of broker misconduct and investment fraud including the following:
- Negligent misrepresentations
- Self-dealing
- Misrepresentations
- Omissions
- Gross negligence
- Vicarious liability on Kalos’ part
The couple is seeking up to $500K in damages, with interest plus costs.
The Kalos Capital & GPB Capital Connection
As we mentioned earlier, SSEK has already filed other GPB investment fraud claims against Kalos and its brokers, as well as against other brokerage firms who allegedly sold these particular alternative investments. These firms include Ameriprise and Arkadios Capital.
Unfortunately, even as investors continue to have to fight to recover their investments and losses from these risky and likely fraudulent private placements, broker-dealers and their registered representatives have made off with $160M in commissions from selling GPB private placements.
GPB Investor Fraud Law Firm
Our GPB investment fraud lawyers work with clients throughout the United States. If Kalos Capital broker, Kristian Finfrock or any other broker invested your funds in GPB private placements, contact SSEK Law Firm today and ask for a free, no-obligation case consultation.