First Capital REIT: Kurta Law Investigates Investor Fraud Allegations

Kurta Law is representing multiple investors who invested in First Capital REIT. Unfortunately, these clients lost their entire investment after First Capital REIT disappeared from account statements. Your stockbroker should be ready with an explanation if your shares vanish or lose money. In either case, your next call should be to a securities attorney.

First Capital Real Estate Investment Trust is an NYC-based REIT. Brokers from National Securities may have recommended these risky investments to their clients.

The SEC alleges that former CEO Suneet Singal used First Capital REIT and other entities he controlled to perpetrate two public company frauds.  These allegations are discussed in detail below.

Suneet Singal SEC Bar

In 2021, Suneet Singal was barred from the securities industry. This followed an SEC complaint in December 2019 that alleged that Suneet Singal and First Capital REIT made material misrepresentations and omissions concerning the REIT’s ownership of 12 hotels. As a result, the REIT was enjoined from violating SEC regulations, but First Capital REIT still operates today.

Suneet Singal and First Capital Real Estate Investments agreed to return $3.2 million to investors, as well as $676,400 in prejudgment interest. Additionally, Suneet Singal consented to a $3.2 million civil penalty and a 10-year bar from acting as a director or officer of a public company. 

First Capital REIT: Material Misrepresentations

According to the SEC complaint, Suneet Singal misrepresented that he had contributed 12 hotels to First Capital REIT— hotels that he did not own—in order to complete a business deal that benefited him. Singal had expressed an intention to purchase the hotels but never made the required deposits. The complaint alleges that his “sham contribution” resulted in First Capital REIT selling shares at inflated prices. Suneet Singal allegedly should have known that the shares were overvalued.

Misrepresenting investments is a violation of FINRA Rule 2020, which states, “No member shall effect any transaction in, or induce the purchase or sale of, any security by means of any manipulative, deceptive or other fraudulent device or contrivance.”

What is a Non-Traded REIT?

REITs are companies that own income-producing real estate. Non-traded REITs do not trade on the public exchange. Because they are privately traded, they do not have to make their financial information public. These types of investments are illiquid, meaning the investor is usually expected to keep their money invested for years—even decades. This makes non-traded REITs unsuitable for most investors.

“Unsuitable investment recommendations” are a common cause for FINRA arbitration. Your stockbroker has an obligation to understand your financial needs and risk tolerance. If they did not inform you of the possibility of major losses and high fees associated with early withdrawal, you may have a case for an investment lawyer.

Suneet Singal and the Business Development Company

The SEC also alleged that Suneet Singal engaged in fraud related to a non-traded BDC. Suneet Singal allegedly acquired an ownership interest in the BDC’s investment adviser. He was the sole beneficial owner of the BDC from April 2017 to March 2018 and acted as the Chief Financial Officer. Singal also became a member of three-person investment committee.

According to the SEC, Suneet Singal recommended that the BDC loan his company $1.5 million. He allegedly misappropriated half of the proceeds for his own use. Furthermore, he allegedly did not disclose his conflict of interest regarding the BDC, in violation of SEC regulations.

Contact a Securities Attorney Today

If you lost money after purchasing shares of First Capital REIT, contact a securities attorney. An investment lawyer can walk you through the steps to recover your losses. FINRA requires brokers to recommend investments that suit their investor’s needs, and an investment lawyer can help you demonstrate that your broker should have known that First Capital REITs were too high risk.