Real Estate Investment Loss Attorneys

Did You Invest In The MG Capital Real Estate Scam Through CrowdStreet?

Our Real Estate Investment Loss Attorneys Can Help You Assess Whether You Have Grounds for A Broker Fraud Lawsuit

Shepherd Smith Edwards and Kantas (investorlawyers.com) is investigating claims of losses in the $58M MG Capital real estate investment scam. The money was raised through the crowdfunding platform run by brokerage firm CrowdStreet Capital. Our real estate investment scam attorneys are exploring whether the broker-dealer should be held liable for these losses. Over 330 investors were believed to have been involved.

The real estate funds are: 

 

• MG Capital Management Residential Funds III
• MG Capital Management Residential Funds IV

In 2021, fund manager Eric C. Malley and his MG Capital Management LP were charged by the US Securities and Exchange Commission (SEC) with allegedly defrauding real estate investors in both funds. Not only that but also they are accused of falsely claiming to have managed two other supposedly successful real estate funds with a combined value of $1.18B. Malley and MG Capital also purportedly claimed that investors’ funds would be “100 protected from loss” and kept safe with a $250 million balance sheet that didn’t exist, among other misrepresentations made. The regulator said that the two of them also misappropriated over $8M in investor assets.

Later that year, in a parallel criminal case, Malley was sentenced to 5 years in prison for securities fraud.

What Was CrowdStreet’s Role in the Alleged MG Capital Scam?

CrowdStreet is a Financial Industry Regulatory Authority (FINRA)-registered brokerage firm. Had it done the proper due diligence, it may have—and if not, then it should have—seen the red flags indicating that the MG Capital Funds were part of a scam. It most certainly had a duty to investors to verify the claims made by an entity it helped fund. It also had an obligation to keep customers’ money safe.

Shepherd Smith Edwards and Kantas represent investors who have been the victims of broker fraud and negligence. Separate from any claims directed at MG Capital, if you are an investor who suffered losses in one of the MG Capital Funds, you may be able to file a FINRA arbitration claim against CrowdStreet requesting damages.

As a matter of fact, the brokerage firm has since been accused of enabling another purported real estate fraud involving real estate syndicator Nightingale, which has since filed for bankruptcy. Hundreds invested around $63M. Our skilled real estate investment loss recovery attorneys are also looking into whether Nightingale investors should sue CrowdStreet.

How Can Our Savvy Real Estate Fraud Lawyers Help?

Over the years, we have collectively recovered many millions of dollars for thousands of investors through litigation, arbitration, and mediation. More than 90% of our clients have gotten back full or partial financial recovery.

Real estate funds can be risky, especially for retail customers and retirees. Most of them should never get involved in alternative investments at all. Unfortunately, the lure of high commissions can compel brokerage firms to become careless and negligent and they end up making unsuitable investment recommendations, misrepresentations and omissions, best interest violations, diversification failures, and much more.

Call (800) 259-9010 today or fill out our online contact form.